Canada Issues Policy Statement on Investments Linked to Russia under the Investment Canada Act
In response to the ongoing conflict in Ukraine, on March 8, 2022, the Minister of Innovation released a Policy Statement under the Investment Canada Act (“ICA”) indicating that investments by Russian investors will be subject to in-depth scrutiny and prolonged timelines.
Key Takeaways for Business
- Under the ICA, non-Canadian investors are required to submit filings when they propose to acquire control of Canadian businesses. The filings require that the investor identify its country of origin and any material connections to a non-Canadian state or government.
- The policy confirms that the Government of Canada will effectively block investments by Russian investors which are subject to any direct or indirect influence of the Russian Federation for the foreseeable future. Over the last decade, only three Russian investments have been subject to national security reviews. Of these, one was blocked, one withdrawn, and one allowed after review.[1]
- This policy will apply to acquisitions of control as well as minority voting interests and establishments of new businesses in Canada, but not to existing investments. It applies to any investor that is determined to be state-influenced, which may extend well beyond the lists of Russian entities and individuals that have been designated under Canada’s economic sanctions against Russia.
- While the policy is silent on how the Minister will treat the sale of Canadian businesses by Russian investors, we anticipate those investments may also be subjected to enhanced scrutiny to verify that such a sale does not circumvent sanctions or other financial measures currently imposed by Canada or its allies. (See our recent bulletins on Canada’s economic sanctions, implications for contracts between Russian and Canadian companies, Canada’s support of Russia’s removal from the SWIFT banking system and the revocation of Russia’s most favored nation treatment and banning of oil imports into Canada.)
Please reach out to us, or to your usual McMillan contact, if you have any questions about these developments, or in connection with a new investment in Canada.
[1] Innovation, Science and Economic Development Canada, “Investment Canada Act Annual Report 2020-2021”; Innovation, Science and Economic Development Canada, “Investment Canada Act Annual Report 2018-2019”.
by Joshua Krane, Neil Campbell, Sarah Stirling-Moffett
A Cautionary Note
The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.
© McMillan LLP 2022
Insights (5 Posts)View More
Ontario (Might get the) Right to Repair – An overview of Bill 187 the Right to Repair Consumer Electronic Products, Household Appliances, Wheelchairs, Motor Vehicles and Farming Heavy Equipment Act, 2024
Ontario considers new right to repair legislation for consumer products and motor vehicles.
More Than Meets the Eye: The Legal Implications of British Columbia’s Agreement to Recognize Aboriginal Title Over Haida Gwaii
An analysis of legal implications related to the BC Government's agreement with the Haida Nation to recognize Aboriginal title over Haida Gwaii.
Lessons Learned from the TTC’s Ransomware Attack
Lessons learned from the recent investigation by the Ontario IPC into the effectiveness of the TTC's cybersecurity measures and ransomware attack response
Don’t Get Caught by Canada’s Patent Novelty Grace-Period
The key difference between Canada and other jurisdictions like the United States when relying on the grace-period for inventor disclosures.
Shifting Gears – Canada to Consider New Motor Vehicle Equipment Regulations to Help Prevent Auto Theft
Transport Canada announces plan to update safety standards to combat auto theft.
Get updates delivered right to your inbox. You can unsubscribe at any time.