Net benefit review (Investment Canada Act)

A net benefit review applies only to an investment by a non-Canadian that the Investment Canada Act makes reviewable. It is separate from the Competition Act and from the notice filed for an investment that is not reviewable. Because section 16 of the Act, subject to its exceptions, bars implementing a reviewable investment until the review is done, sellers who may entertain a foreign buyer should know it can sit between signing and closing.

How it works

Section 16 of the Investment Canada Act says a non-Canadian shall not implement a reviewable investment unless it has been reviewed and the Minister is satisfied or deemed satisfied that it is likely to be of net benefit to Canada, subject to the exceptions in subsection 16(2). Section 20 lists the factors to be taken into account where relevant, which include the effect on the level and nature of economic activity in Canada, including employment, on productivity and product innovation, and on competition within industries in Canada. Under subsection 21(1) of the Investment Canada Act, subject to the subsections and sections it names, the Minister shall, within 45 days after the certified date, send the applicant a notice that the Minister is satisfied the investment is likely to be of net benefit to Canada. The investor files an application for review under section 17, and the Investment Canada Regulations prescribe the information it must contain. Which investments are reviewable depends on the type of investor and the business, so read sections 14 to 15.

What to check or ask

• Whether the buyer is a non-Canadian under the Act
• Whether the investment is reviewable or only notifiable
• How the agreement handles timing and any undertakings

The review threshold answer explains the tests, and notification is the lighter filing.