Can a foreign buyer buy a Canadian business?

Buyers from outside Canada often assume acquiring a small Canadian business requires government approval. For the great majority of main-street transactions it does not — but there is a federal filing regime, and the exceptions to the ordinary treatment are the part worth understanding before committing.

Notification and review are different things

The Investment Canada Act distinguishes investments that must simply be notified from those subject to review. A notifiable investment is filed and proceeds; a reviewable one requires a determination that it is of net benefit to Canada before it can close. Which category a transaction falls in turns on thresholds that are set federally and change, so the current figure should be confirmed rather than assumed from an article.

Sector matters more than size in two cases

Cultural businesses — publishing, film, music, broadcasting — are subject to lower thresholds and distinct treatment. Separately, any investment by a non-Canadian can be examined on national-security grounds irrespective of value, which has become a more active part of the regime. A buyer in either area should take advice early rather than treat the size of the deal as determinative.

Competition law is a separate question

The Competition Act imposes its own pre-merger notification regime where transaction-size and party-size thresholds are met. It applies to Canadian and foreign buyers alike and has nothing to do with the buyer’s nationality. Most small-business purchases fall well below it; a strategic buyer already large in the same market may not.

Provincial land rules can bind where federal rules do not

Some provinces restrict non-resident ownership of land, and a business that owns its premises can run into those limits even where the federal position is straightforward. Prince Edward Island and Saskatchewan both have regimes of this kind. Check the land question separately from the business question.