Investment Canada Regulations

3.3 (1) For the purposes of subsection 14.1(1) 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) 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),