Investment Canada Regulations (SOR/85-611)

Entities That Are Not Publicly Traded

• 3.4 (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).

Canadian Businesses Acquired by Acquisition of Assets

• 3.5 (1) For the purposes of subsections 14.1(1) and 14.11(1) of the Act, if control of a Canadian business is acquired by a non-Canadian in the manner described in paragraph 28(1)(c) of the Act, the enterprise value of the assets of the Canadian business is equal to the total acquisition value, plus its liabilities, minus its cash and cash equivalents.

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

  • (a) the total acquisition value is 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;

  • (b) the liabilities are equal to the total liabilities, other than operating liabilities, that are assumed by the non-Canadian, as determined in accordance with the transaction documents that are used to implement the investment; and

  • (c) the cash and cash equivalents are equal to the total cash and cash equivalents that are transferred to the non-Canadian, as determined in accordance with the transaction documents that are used to implement the investment.

• (3) Despite subsection (2), 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.

• (4) The enterprise value of the assets of the Canadian business as well as the total acquisition value, 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 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

  • (a) 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 investment is implemented, in cases where the notice or application has not been filed.

Acquisitions Exempted from Review by Subsection 14.1(4) of the Act

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

  • (a) a WTO investor; or

  • (b) a non-Canadian, other than a WTO investor, if the Canadian business that is the subject of the investment is controlled by a WTO investor immediately prior to the implementation of the investment.

  However, it does not refer to a non-Canadian if the Canadian business that is the subject of the investment is a cultural business

• (2) For the purpose of section 12 of the Act, if the acquisition of a Canadian business by a non-Canadian is exempted from review by subsection 14.1(4) of the Act, the value of the assets of the Canadian business is their value calculated in accordance with section 3.1.

Signing Authority

• 4 (1) When a notice or application is required by section 12 or 17 of the Act, it shall be signed by

  • (a) the investor, if the investor is an individual;

  • (b) a director or officer of the investor, if the investor is a corporation; or

  • (c) an individual who exercises the powers of a director or officer, if the investor is an entity other than a corporation.

• (2) The person who signs the notice or application shall represent that the information it contains is complete and correct to the best of their knowledge and belief.

Notice of Investment

5 A notice required to be given by an investor under section 12 of the Act shall be in writing, contain the information prescribed in Schedule I and be sent to the Director.

Application for Review

6 An application required to be filed by an investor under subsection 17(1) of the Act shall be in writing, be sent to the Director and contain

• (a) the information prescribed in Schedule II, if the application relates to an investment that is reviewable under section 14 of the Act; or

• (b) the information prescribed in Schedule III, if the application relates to an investment that is reviewable under section 15 of the Act.

Information Respecting a Canadian Business

7 Where control of an entity carrying on a Canadian business and control of one or more other entities in Canada is acquired, directly or indirectly, the information required under sections 5 and 6 relating to the Canadian business shall include information respecting all entities so acquired whose business activities comprise the Canadian business.

Prescribed Business Activities

8 For the purposes of paragraph 15(a) of the Act, the specific types of business activities set out in Schedule IV are hereby prescribed.