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Investment Canada Regulations (SOR/85-611)

Regulations are current to 2024-05-01 and last amended on 2020-07-01. Previous Versions

Investment Canada Regulations

SOR/85-611

INVESTMENT CANADA ACT

Registration 1985-06-27

Regulations Respecting Investment in Canada

P.C. 1985-2044 1985-06-27

Her Excellency the Governor General in Council, on the recommendation of the Minister of Regional Industrial Expansion, pursuant to sections 12, 14, 15, 17 and 35 of the Investment Canada ActFootnote *, is pleased hereby to make the annexed Regulations respecting investment in Canada, effective June 30, 1985.

Short Title

 These Regulations may be cited as the Investment Canada Regulations.

Interpretation

 In these Regulations,

Act

Act means the Investment Canada Act; (Loi)

American

American[Repealed, SOR/95-25, s. 1]

authorized body

authorized body means the board of directors of an entity, a committee of the board of directors, a person or group of persons that performs the functions of a board of directors or a director or officer of the entity who is authorized to make the fair market value determinations referred to in sections 3.3 to 3.5; (organe autorisé)

class

class means any class of securities and includes a series of a class; (catégorie)

controlled by a CUSMA investor

controlled by a CUSMA investor has the same meaning as in subsection 24(4) of the Act; (sous le contrôle d’un investisseur ACEUM)

controlled by a NAFTA investor

controlled by a NAFTA investor[Repealed, SOR/2020-76, s. 1]

controlled by an American

controlled by an American[Repealed, SOR/95-25, s. 1]

controlled by a WTO investor

controlled by a WTO investor[Repealed, SOR/2015-64, s. 1]

CUSMA investor

CUSMA investor has the same meaning as in subsection 24(4) of the Act; (investisseur ACEUM)

equity security

equity security means a security of an entity that carries a right to vote in all or certain circumstances, a residual right to participate in the earnings of the entity or a right to receive the remaining property of the entity on its dissolution or liquidation, but does not include

  • (a) a right, warrant or option to acquire such a security or a privilege to convert to such a security; or

  • (b) a bond, debenture, note or similar instrument representing indebtedness, whether secured or unsecured; (titre de participation)

fair market value

fair market value means the monetary consideration that, in an open and unrestricted market, a reasonably prudent and informed buyer would pay to a reasonably prudent and informed seller, when acting at arm’s length from one another; (juste valeur marchande)

financial statements

financial statements means financial statements prepared in accordance with generally accepted accounting principles; (états financiers)

investor

investor means a non-Canadian required to give notice of an investment under section 12 of the Act or a non-Canadian required to file an application for review of an investment under subsection 17(1) of the Act; (investisseurs)

NAFTA investor

NAFTA investor[Repealed, SOR/2020-76, s. 1]

principal market

principal market, in relation to a class of equity securities, means the published market on which the greatest volume of trading in those securities occurred during the trading period; (marché principal)

publicly traded entity

publicly traded entity means an entity whose equity securities are listed on a published market; (unité ouverte)

published market

published market, in relation to a class of equity securities, means a market inside or outside Canada on which the securities are traded, if the prices at which the securities are traded are regularly published either electronically or in a newspaper or financial or business publication of general circulation; (marché publié)

trading period

trading period, in relation to a class of equity securities of an entity, means

  • (a) the most recent 20 days of trading before the first day of the month that immediately precedes the month in which the complete notice of investment or complete application for review of an investment is filed, in cases where the notice or application is filed before the implementation of the investment, or

  • (b) the most recent 20 days of trading before the first day of the month that immediately precedes the month in which the investment was implemented, in all other cases; (période d’opération)

WTO investor

WTO investor[Repealed, SOR/2015-64, s. 1]

 [Repealed, SOR/95-25, s. 2]

 For the purposes of paragraph (f) of the definition CUSMA investor in subsection 24(4) of the Act, the following forms of business organizations are, with respect to Mexico, specified:

  • (a) sociedad de responsabilidad limitada; and

  • (b) fide comiso.

 [Repealed, SOR/2015-64, s. 2]

Acquisitions Subject to Section 14 and Subsection 14.1(1.1) of the Act

[
  • SOR/2015-64, s. 3
]

 [Repealed, SOR/95-25, s. 3]

  •  (1) In this section, non-Canadian refers to

    • (a) a non-Canadian, other than a WTO investor or a trade agreement investor, if the Canadian business that is the subject of the investment is controlled by an investor, other than a WTO investor or a trade agreement investor, immediately prior to the implementation of the investment;

    • (b) a non-Canadian if the Canadian business that is the subject of the investment is a cultural business as defined in subsection 14.1(6) of the Act; or

    • (c) a state-owned enterprise.

  • (1.1) For the purposes of section 14 and subsection 14.1(1.1) of the Act, if a non-Canadian acquires control of a Canadian business by acquiring only the assets that are used in carrying on the Canadian business or by acquiring only control of an entity that is carrying on the Canadian business, the value of the assets is the value of the aggregate of all assets acquired, or of all assets of the entity, as shown in the audited financial statements of the entity carrying on the business for its fiscal year immediately preceding the implementation of the investment.

  • (2) For the purposes of section 14 and subsection 14.1(1.1) of the Act, if a non-Canadian acquires control of a Canadian business by acquiring control of an entity carrying on the Canadian business and also, directly or indirectly, acquires control of one or more other entities in Canada, the value of the assets is the value of the aggregate of all assets shown in the audited financial statements consolidated for all the entities for their fiscal year immediately preceding the implementation of the investment.

  • (3) For the purposes of section 14 and subsection 14.1(1.1) of the Act, if a non-Canadian acquires control of a Canadian business by acquiring control, directly or indirectly, of a corporation incorporated outside Canada that controls, directly or indirectly, an entity in Canada that is carrying on a Canadian business, the value of the assets of all entities, both inside and outside Canada, whose control is acquired, directly or indirectly, is the value of the aggregate of all assets shown in the audited financial statements consolidated for all the entities for their fiscal year immediately preceding the implementation of the investment.

  • (4) If the consolidated financial statements of the entities referred to in subsection (2) or (3) are not available, the value of the assets for the purposes of section 14 and subsection 14.1(1.1) of the Act is the value of the aggregate of the assets of all the entities as shown in the audited financial statements of each entity for its fiscal year immediately preceding the implementation of the investment, excluding

    • (a) any amount shown to represent an ownership interest in any other entity the control of which is acquired, directly or indirectly; and

    • (b) any amount representing duplication arising from transactions between any entities the control of which is acquired, directly or indirectly.

  • (5) For the purposes of this section, where an individual or entity does not ordinarily prepare financial statements for audit or where financial statements for its fiscal year immediately preceding the implementation of the investment have not been audited, unaudited statements may be used.

  • (6) Where the first fiscal year of an entity has not been completed immediately preceding the implementation of the investment, a reference in this section to fiscal year shall mean the fiscal period that ends immediately preceding the implementation.

  • (7) The value of the assets calculated under this section shall be expressed in Canadian dollars.

  • (8) Any conversion into Canadian dollars that is required to calculate the value of the assets under this section shall be based on the noon exchange rate quoted by the Bank of Canada on the last day of the period covered by the financial statements referred to in this section.

  • SOR/93-604, s. 4
  • SOR/95-25, s. 4
  • SOR/2015-64, s. 4
  • SOR/2017-168, s. 1

Acquisitions Subject to Subsection 14.1(1) and Section 14.11 of the Act

[
  • SOR/2017-168, s. 2
]

 In sections 3.3 to 3.5, non-Canadian refers to

  • (a) a WTO investor or trade agreement investor, that is not a state-owned enterprise; or

  • (b) a non-Canadian, other than a WTO investor or trade agreement investor, that is not a state-owned enterprise if the Canadian business that is the subject of the investment is controlled by a WTO investor or a trade agreement investor immediately prior to the implementation of the investment.

  • SOR/2015-64, s. 5
  • SOR/2017-168, s. 3

Publicly Traded Entities

  •  (1) For the purposes of subsections 14.1(1) and 14.11(1) and (2) of the Act, if control of a publicly traded entity that is directly or indirectly carrying on a Canadian business is acquired by a non-Canadian in the manner described in paragraph 28(1)(a) or (b) or subparagraph 28(1)(d)(i) or (ii) of the Act, the enterprise value of the assets of the Canadian business is equal to the market capitalization of the entity, plus its liabilities, minus its cash and cash equivalents.

  • (2) For the purposes of subsection (1),

    • (a) an entity’s market capitalization is equal to the total of

      • (i) for each class of its equity securities that are listed on one or more published markets, the average daily number of its equity securities of that class that are outstanding during the trading period multiplied by the average daily closing price of its equity securities of that class on the principal market during the trading period, and

      • (ii) for each class of its equity securities that are not listed on a published market, the amount that the authorized body of the non-Canadian determines in good faith and represents to be the fair market value of the outstanding securities of that class;

    • (b) an entity’s liabilities are equal to the total liabilities, other than operating liabilities, that are listed in its most recent quarterly financial statements released

      • (i) before the filing of the notice of investment or application for review of an investment, in cases where the notice or application is filed before the implementation of the investment, or

      • (ii) before the implementation of the investment, in all other cases; and

    • (c) an entity’s cash and cash equivalents are equal to the total cash and cash equivalents that are listed in its most recent quarterly financial statements released

      • (i) before the filing of the notice of investment or application for review of an investment, in cases where the notice or application is filed before the implementation of the investment, or

      • (ii) before the implementation of the investment, in all other cases.

  • (3) If the non-Canadian does not know the number of equity securities in a class that are outstanding during the trading period, the most recently published information concerning the number of outstanding equity securities shall be used.

  • (4) The enterprise value of the assets of the Canadian business as well as the entity’s market capitalization, liabilities and cash and cash equivalents shall be expressed in Canadian dollars.

  • (5) Any conversion into Canadian dollars that is required to calculate the enterprise value of the assets under this section shall

    • (a) in determining the market capitalization of the entity, be based on the average of the noon exchange rates quoted by the Bank of Canada during the trading period; and

    • (b) in determining the liabilities and cash and cash equivalents of the entity, be based on the noon exchange rate quoted by the Bank of Canada on the last day of the period covered by the financial statements referred to in paragraphs (2)(b) and (c),

  • SOR/2015-64, s. 5
  • SOR/2017-168, s. 4

Entities That Are Not Publicly Traded

  •  (1) For the purposes of subsections 14.1(1) and 14.11(1) and (2) of the Act, if control of an entity that is not publicly traded and that is directly or indirectly carrying on a Canadian business is acquired by a non-Canadian in the manner described in paragraph 28(1)(a) or (b) or subparagraph 28(1)(d)(i) or (ii) of the Act, the enterprise value of the assets of the Canadian business is equal to the total acquisition value of the entity, plus its liabilities, minus its cash and cash equivalents.

  • (2) For the purposes of subsection (1),

    • (a) if the non-Canadian is acquiring 100% of the voting interests in the entity, the entity’s total acquisition value is equal to the total amount of the consideration payable for the acquisition of the Canadian business, as determined in accordance with the transaction documents that are used to implement the investment; and

    • (b) if the non-Canadian is acquiring less than 100% of the voting interests in the entity, the entity’s total acquisition value is equal to the total of

      • (i) the amount of the consideration payable by the non-Canadian investor, as determined in accordance with the transaction documents that are used to implement the investment,

      • (ii) the amount of the consideration payable by any investors other than the non-Canadian, as determined in accordance with the transaction documents that are used to implement the investment, and

      • (iii) the amount that the authorized body of the non-Canadian determines in good faith and represents to be the fair market value of any portion of the voting interests in the entity that is not being acquired by the investors referred to in subparagraphs (i) and (ii).

  • (3) If the total consideration payable is not quantified at the time that the investment is implemented, the entity’s total acquisition value is equal to the total of

    • (a) the amount, if any, calculated in accordance with subsection (2); and

    • (b) the amount that the authorized body of the non-Canadian determines in good faith and represents to be the fair market value of the portion of the total consideration that has not been quantified.

  • (4) Despite subsections (2) and (3), if the parties to the investment are not acting at arm’s length or if no or only nominal consideration is payable for the acquisition of the Canadian business, the total consideration payable is the amount that the authorized body of the non-Canadian determines in good faith and represents to be the fair market value of the Canadian business.

  • (5) For the purposes of subsection (1), an entity’s liabilities are equal to the total liabilities, other than operating liabilities, that are listed in its most recent quarterly financial statements released

    • (a) before the filing of the notice of investment or application for review of an investment, in cases where the notice or application is filed before the implementation of the investment; or

    • (b) before the implementation of the investment, in all other cases.

  • (6) For the purposes of subsection (1), an entity’s cash and cash equivalents are equal to the total cash and cash equivalents that are listed in its most recent quarterly financial statements released

    • (a) before the filing of the notice of investment or application for review of an investment, in cases where the notice or application is filed before the implementation of the investment; or

    • (b) before the implementation of the investment, in all other cases.

  • (7) The enterprise value of the assets of the Canadian business as well as the entity’s total acquisition value, liabilities and cash and cash equivalents shall be expressed in Canadian dollars.

  • (8) Any conversion into Canadian dollars that is required to calculate the enterprise value of the assets under this section shall

    • (a) in determining the total acquisition value of the entity, be based on the average of the noon exchange rates quoted by the Bank of Canada over the month that immediately precedes the month in which

      • (i) the complete notice of investment or complete application for review of an investment is filed, in cases where the notice or application is filed before the implementation of the investment, or

      • (ii) the investment is implemented, in cases where the notice or application has not been filed; and

    • (b) in determining the liabilities and cash and cash equivalents of the entity, be based on the noon exchange rate quoted by the Bank of Canada on the last day of the period covered by the financial statements referred to in subsections (5) and (6).

  • SOR/2015-64, s. 5
  • SOR/2017-168, s. 5
 

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