ANNOUNCEMENT 08 Mar 2022
In March 2022, the government of Canada decided to make the FDI net benefit and national security reviews stricter for Russian investors in response to the Russian invasion of Ukraine.
NUMBER OF INTERVENTIONS
Government of Canada. News release "Policy Statement on Foreign Investment Review and the Ukraine Crisis". 08/03/2022. Available at: https://www.ic.gc.ca/eic/site/ica-lic.nsf/eng/lk81228.html
On 8 March 2022, the government of Canada announced tighter rules on the Russia-related investments' net benefit reviews under the Investment Canada Act (ICA). This change is introduced in response to the Russian invasion of Ukraine.
According to the announcement, the Minister of Industry responsible for the net benefit assessment will approve the acquisition of control over a Canadian business only in exceptional circumstances. The government will still consider every case on its merits separately, in line with the ICA and the relevant guidelines.
Additionally, If the investor is controlled or "subject to influence" by the Russian government, it is sufficient evidence for the Minister of Industry to determine that the investment, regardless of its value, can threaten Canada’s national security. This rule is an addition to the enhanced scrutiny stipulated by the National Security Guidelines for investment screening introduced in March 2021 (see related state act).
Normally, under the net benefit review a foreign investor needs to demonstrate to the Minister of Industry that a proposed acquisition of control of a local entity above a certain value threshold is potentially beneficial to Canada.
The measure policy is in effect until further notice, throughout the period of "escalated risks of national security and economic injury associated with Russia’s unprovoked attacks on Ukraine".
In this context, the government press release stated: "President Putin launched an unprovoked and unjustifiable invasion of Ukraine. Russia’s continued attacks on Ukraine have created an environment of elevated national security and economic risk to Canada, including risks related to foreign direct investment in Canada with ties to Russian entities and/or Russian investors".