On 28 October 2022, Canada's Government released a policy clarifying the application of the Investment Canada Act to foreign state-owned enterprises (SOEs) investing in critical minerals sectors.
On 4 July 2024, the Government of Canada published a Ministerial Statement on Net Benefit Reviews of Canadian Critical Minerals Companies. The Statement clarifies that, under the Net Benefit Review regime of the Investment Canada Act (ICA), transactions involving foreign investors in "important Canadian mining companies engaged in significant critical minerals operations will only be found of net benefit in the most exceptional of circumstances".
"[...] Today, as the Minister responsible for the Investment Canada Act, I am building further on these efforts with a clear signal about how Net Benefit reviews under the legislation will be conducted when it comes to important Canadian mining companies engaged in significant critical minerals operations. Henceforth, such transactions will only be found of net benefit in the most exceptional of circumstances. This high bar is reflective of the strategic importance of Canada's critical minerals sector and how important it is that we take decisive action to protect it." (Ministerial Statement on Net Benefit Reviews of Canadian Critical Minerals Companies, Ministry of Innovation, Science and Industry, 4 July 2024)
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"Definitions
3 In this Act, [...]
Canadian means
(a) a Canadian citizen,
(b) a permanent resident within the meaning of subsection 2(1) of the Immigration and Refugee Protection Act who has been ordinarily resident in Canada for not more than one year after the time at which he or she first became eligible to apply for Canadian citizenship,
(c) a Canadian government, whether federal, provincial or local, or an agency thereof, or
(d) an entity that is Canadian-controlled, as determined under subsection 26(1) or (2) and in respect of which there has been no determination made under any of subsections 26(2.1), (2.11) and (2.31) or declaration made under subsection 26(2.2) or (2.32); (Canadien)
Canadian business means a business carried on in Canada that has
(a) a place of business in Canada,
(b) an individual or individuals in Canada who are employed or self-employed in connection with the business, and
(c) assets in Canada used in carrying on the business; (entreprise canadienne)
[...]
new Canadian business, in relation to a non-Canadian, means a business that is not already being carried on in Canada by the non-Canadian and that, at the time of its establishment,
(a) is unrelated to any other business being carried on in Canada by that non-Canadian, or
(b) is related to another business being carried on in Canada by that non-Canadian but falls within a prescribed specific type of business activity that, in the opinion of the Governor in Council, is related to Canada's cultural heritage or national identity; (nouvelle entreprise canadienne)
[...]
PART IV - Review [...]
Reviewable investments
14 (1) The following investments by non-Canadians are reviewable under this Part:
(a) an investment to acquire control of a Canadian business in any manner described in paragraph 28(1)(a), (b) or (c), where the limits set out in subsection (3) apply;
(b) an investment to acquire control of a Canadian business in the manner described in subparagraph 28(1)(d)(i), where the limits set out in subsection (3) apply;
(c) an investment to acquire control of a Canadian business in the manner described in subparagraph 28(1)(d)(ii), where the circumstances described in subsection (2) and the limits set out in subsection (3) apply; and
(d) an investment to acquire control of a Canadian business in the manner described in subparagraph 28(1)(d)(ii), where the circumstances described in subsection (2) do not apply and the limits set out in subsection (4) apply.
[...]
Limits for WTO investors that are state-owned enterprises
(1.1) Despite the limits set out in subsection 14(3), an investment described in paragraph 14(1)(a) or (b) by a WTO investor that is a state-owned enterprise or — if the Canadian business that is the subject of the investment is, immediately prior to the implementation of the investment, controlled by a WTO investor — by a state-owned enterprise, other than a WTO investor, is reviewable under section 14 only if the value calculated in the manner prescribed, of the assets described in paragraph 14(3)(a) or (b), as the case may be, is equal to or greater than the applicable amount determined under subsection (2).
[...]
Prohibition
16 (1) A non-Canadian shall not implement an investment reviewable under this Part unless the investment has been reviewed under this Part and the Minister is satisfied or is deemed to be satisfied that the investment is likely to be of net benefit to Canada.
[...]
Net benefit
21 (1) Subject to subsections (2) to (8) and sections 22 and 23, the Minister shall, within 45 days after the certified date referred to in subsection 18(1), send a notice to the applicant that the Minister, having taken into account any information, undertakings and representations referred to the Minister by the Director under section 19 and the relevant factors set out in section 20, is satisfied that the investment is likely to be of net benefit to Canada.
[...]
PART IV.1 - Investments Injurious to National Security
Application
25.1 This Part applies in respect of an investment, implemented or proposed, by a non-Canadian
(a) to establish a new Canadian business;
(b) to acquire control of a Canadian business in any manner described in subsection 28(1); or
(c) to acquire, in whole or in part, or to establish an entity carrying on all or any part of its operations in Canada if the entity has
(i) a place of operations in Canada,
(ii) an individual or individuals in Canada who are employed or self-employed in connection with the entity's operations, or
(iii) assets in Canada used in carrying on the entity's operations.
[...]
Reviewable investments
25.3 (1) An investment is reviewable under this Part if the Minister, after consultation with the Minister of Public Safety and Emergency Preparedness, considers that the investment could be injurious to national security and the Governor in Council, on the recommendation of the Minister, makes an order within the prescribed period for the review of the investment.
Notice
(2) The Minister shall, without delay after the order has been made, send to the non-Canadian making the investment and to any person or entity from which the Canadian business or the entity referred to in paragraph 25.1(c) is being acquired, a notice indicating that an order for the review of the investment has been made and advising them of their right to make representations to the Minister.
Condition for investment
(3) If a non-Canadian has not implemented a proposed investment when they receive a notice under subsection (2), they shall not implement the investment unless they receive
(a) a notice under paragraph (6)(b) indicating that no further action will be taken in respect of the investment; or
(b) a copy of an order made under section 25.4 authorizing the investment to be implemented.
[...]
Governor in Council's powers
25.4 (1) On the referral of an investment under paragraph 25.3(6)(a) or subsection 25.3(7), the Governor in Council may, by order, within the prescribed period, take any measures in respect of the investment that he or she considers advisable to protect national security, including
(a) directing the non-Canadian not to implement the investment;
(b) authorizing the investment on condition that the non-Canadian
(i) give any written undertakings to Her Majesty in right of Canada relating to the investment that the Governor in Council considers necessary in the circumstances, or
(ii) implement the investment on the terms and conditions contained in the order; or
(c) requiring the non-Canadian to divest themselves of control of the Canadian business or of their investment in the entity.
[...]
PART V - Rules and Presumptions
Manner of acquiring control
28 (1) For the purposes of this Act, a non-Canadian acquires control of a Canadian business only by
(a) the acquisition of voting shares of a corporation incorporated in Canada carrying on the Canadian business;
(b) the acquisition of voting interests of an entity that
(i) is carrying on the Canadian business, or
(ii) controls, directly or indirectly, another entity carrying on the Canadian business,
where there is no acquisition of control of any corporation;
(c) the acquisition of all or substantially all of the assets used in carrying on the Canadian business; or
(d) the acquisition of voting interests of an entity that controls, directly or indirectly, an entity in Canada carrying on the Canadian business, where
(i) there is no acquisition of control, directly or indirectly, of a corporation incorporated elsewhere than in Canada that controls, directly or indirectly, an entity in Canada carrying on the Canadian business, or
(ii) there is an acquisition of control described in subparagraph (i).
Rules and presumptions respecting control of entities
(2) Subject to subsections (4) to (5), (6.1) and (6.2), for the purposes of this Act,
(a) where one entity controls another entity, it is deemed to control indirectly any entity or entities controlled directly or indirectly by that other entity;
(b) an entity controls another entity directly
(i) where the controlling entity owns a majority of the voting interests of the other entity, or
(ii) where the other entity is a corporation and the controlling entity owns less than a majority of the voting shares of the corporation but controls the corporation in fact through the ownership of one-third or more of its voting shares;
(c) entities that are controlled, directly or indirectly, by the same entity are deemed to be associated with each other, with any other entities controlled by any one or combination of them and with the entity or entities that control them; and
(d) where entities that are associated pursuant to paragraph (c) own voting interests of the same entity, the associated entities may be treated as one entity for the purposes of establishing direct or indirect control of the entity in which they own voting interests.
Presumptions respecting acquisition of control
(3) Subject to subsections (4) to (5), (6.1) and (6.2), for the purposes of this Act,
(a) the acquisition of a majority of the voting interests of an entity or of a majority of the undivided ownership interests in the voting shares of an entity that is a corporation is deemed to be acquisition of control of that entity;
(b) the acquisition of less than a majority of the voting interests of an entity other than a corporation is deemed not to be acquisition of control of that entity;
(c) the acquisition of less than a majority but one-third or more of the voting shares of a corporation or of an equivalent undivided ownership interest in the voting shares of the corporation is presumed to be acquisition of control of that corporation unless it can be established that, on the acquisition, the corporation is not controlled in fact by the acquirer through the ownership of voting shares; and
(d) the acquisition of less than one-third of the voting shares of a corporation or of an equivalent undivided ownership interest in the voting shares of the corporation is deemed not to be acquisition of control of that corporation.
[...]
Guidelines and interpretation notes
38 The Minister may issue and publish, in such manner as the Minister deems appropriate, guidelines and interpretation notes with respect to the application and administration of any provision of this Act or the regulations.[...]" (Investment Canada Act (R.S.C., 1985, c. 28 (1st Supp.)), last amended on 2021-04-01, Sections 3, 14, 14.1, 21, 16, 21, 25.1, 25.3, 25.4, 28 and 38)
Ministerial Statement on Net Benefit Reviews of Canadian Critical Minerals Companies, Ministry of Innovation, Science and Industry, 4 July 2024
Investment Canada Act (R.S.C., 1985, c. 28 (1st Supp.)), as amended on 2021-04-01
Policy Statement Regarding Foreign Investments from State-Owned Enterprises in Critical Minerals under the Investment Canada Act (28 October 2022)
Investment Canada Act Guidelines - Investment by state-owned enterprises - Net benefit assessment
[<a href="https://www.canada.ca/en/innovation-science-economic-development/news/2024/07/ministerial-statement-on-net-benefit-reviews-of-canadian-critical-minerals-companies.html">Statement</a>],[<a href="https://laws-lois.justice.gc.ca/eng/acts/I-21.8/">Act</a>],[<a href="https://ised-isde.canada.ca/site/investment-canada-act/en/policy-regarding-foreign-investments-state-owned-enterprises-critical-minerals-under-investment">Policy</a>],[<a href="https://ised-isde.canada.ca/site/investment-canada-act/en/investment-canada-act/guidelines/all-guidelines#p2">Guideline</a>],[<a href="https://www.canada.ca/en/campaign/critical-minerals-in-canada/critical-minerals-an-opportunity-for-canada.html">Other</a>]