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Investment Canada Regulations (SOR/85-611)

Regulations are current to 2020-06-17 and last amended on 2017-09-21. Previous Versions

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

Canadian Businesses Acquired by Acquisition of Assets

  •  (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.

  • SOR/2015-64, s. 5
  • SOR/2017-168, s. 6
 
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