Canadian Market Access Requirements for Foreign Investment – Canada Investment Act
Canada’s investment business is managed by the Canadian Department of Foreign Affairs and International Trade, Industry and Heritage. The Ministry of Foreign Affairs and International Trade is responsible for investment promotion and promotion. The Ministry of Industry is responsible for the examination of non-cultural projects. The Department of Heritage is responsible for examining the investment in cultural projects.
The Canadian Investment Code is the only Canadian federal government applicable law governing foreign investment that restricts foreigners’ investment or ownership of certain specific areas and industries in Canada. The Canadian Investment Law stipulates that any foreign investment needs to be filed with the government or governed by the government. Government audits standards more complicated, but mainly depends on the investment project and its amount. For more information about the Canadian Investment Act, go to www.investincanada.gc.ca.
- Threshold for Direct Investment Review: Investment by WTO Members (Except in the Field of Sensitive Economy) Since the WTO member countries directly acquired more than $ 299 million Canadian companies since 2010, they are subject to review by the Canadian government. If the amount involved is under CAD299 million, you just need to file with the government. Canada every year to review the threshold of WTO members to adjust the investment directly, the government must be January 1 each year to determine and publish the audit threshold of the year. Non-WTO members investing and direct investments in sensitive areas subject to a government audit of more than $ 5 million require that they be filed with the government only for $ 5 million or less.
- Indirect investment audit threshold: WTO members investment (except sensitive areas of the economy) does not require review. Non-WTO members investing and indirect investments in sensitive areas in excess of $ 50 million require government approval unless the Canadian representative holds more than 50% of the company’s total assets among the indirectly acquired assets. Investment transactions that do not require government review need to be filed with the government within 30 days of completion of the transaction or establishment of a new business. Investment transactions subject to government vetting After submitting an application to the Ministry of Industry, the Minister of Industry will review the following points within 75 days and make a decision of approval or disapproval, based on the following 5 points:
- The substantial impact that foreign investment has on Canadian economic activity;
- The extent to which investment has been involved in business and industry in Canada and its significance;
- Impact of investment on Canadian productivity, technological development and innovation;
- Impact of investment on Canadian domestic industry competition;
- Compatibility with domestic industrial, economic and cultural policies in Canada;
- The Impact of Investment on Canada ‘s Competitiveness in the Global Economy.
- Foreign-funded policies in the sensitive economy: In order to prevent foreign investment from infringing upon and damaging some domestic industries and economic development and even affecting the country’s sovereignty and fundamental interests, Canada has set some restrictions on the foreign-funded investment in its sensitive economy. These sensitive areas mainly include uranium production, financial services, transport services and cultural industries.
- Special Provisions in the Investment Law: Additional federal and provincial laws and regulations have imposed additional restrictions on the proportion of foreign capital in special industries:
- Banking: For large banks (with assets exceeding or exceeding $ 5 billion) their assets must be “widely held” that no individual, irrespective of nationality, may acquire more than 20% of the bank’s voting shares or more than 30% Non-voting shareholding. Any individual holding small and medium-sized banks (assets below 1 billion Canadian dollars) shares, prior approval of the Ministry of Finance.
- Mass Communications: Foreign shareholders may not own 46.7% of any mass media company in Canada (including 20% of direct investment and 1/3 / 26.7% indirect investment in the remaining 80% of the shares owned by the holding company).
- Fisheries: Any Canadian fishery processing company that holds more than 49% foreign ownership will not be able to obtain a commercial fishing license.
- Uranium mining: Foreign investors do not hold more than 49% of the shares in uranium mining and processing companies, except where it can be shown that the establishment is effectively controlled by Canadians.
- Transportation: The foreign shareholding of Air Canada plus shipping companies should not exceed 25%. The Canadian shipping industry must be borne by vessels flying the Canadian flag, but some of these freights are not forbidden to be owned by foreign shipowners.
- Communications: Currently, Canada maintains the maximum of 46.7% (excluding 20% of direct investment and the remaining 80% owned by the holding company) of all other facilities-based telecommunications service providers except for fixed satellite services and submarine cables. One third of the shares, or 26.7% indirect investment). In addition to the shareholding ratio restrictions, Canada also requires that basic telecommunications facilities be controlled by “Canadians,” thus requiring that at least 80% of board members be Canadian nationals. Foreign investors are not subject to the aforesaid shareholding ratio if they invest in companies that rent rented facilities for “value-added telecommunications” and “enhanced telecommunications” services such as electronic data transmission or leased lines for long distance service.
- Canada’s Insurance Companies Act requires that any individual, irrespective of nationality, must obtain the approval of the Ministry of Finance when acquiring more than 10% of the shares of Canadian federal-controlled insurers.
- Some provinces restrict non-Canadian citizens from having some form of land.
- Other areas of foreign investment subject to federal and provincial laws and regulations include oil and gas, agriculture and animal husbandry, book distribution and sales, aviation, fisheries, alcohol sales, mining, depository institutions, engineering, optometry, medicine and securities trading .
Foreign companies (including Chinese companies) in Canada, the main forms of investment company offices, limited companies, joint ventures and so on. Investment involves the development of resources, industrial production, construction contracting, agriculture, animal husbandry and fishery, catering industry, science and technology exchange, trade, financial services, transportation, consulting services.
- Investment application process: According to Article 11 of the Canadian Investment Law, if a non-Canadian investment is to establish a new business in Canada, it should only be reported to the regulatory authority for the record. This means that investors only need to inform Canadian investment authorities before the start of the investment or within thirty days of the start of the investment. In general, investors do not need to report further information. Unless the enterprise is a protected industry, the investment need not be reviewed or approved.
- Investment Audit Process: If a non-Canadian invests in certain special industries or takes over an existing business, the investment needs to be declared not only and needs to be reviewed in accordance with the Canadian Investment Law. Under section 15 of the Canadian Investment Act, protected industries include books, magazines, periodicals, newspapers, films or video products, music audio cassettes or videotapes, and the publishing, production, distribution and display of printed or machine readable music Or sales of non-Canadian acquirers who acquire Canadian corporate assets directly (not indirectly through the control of Canadian commercial establishments under a pretext of acquisition of non-Canadian companies) and whose Canadian assets exceed CAD $ 5 million, or indirectly Acquisition of corporate assets in Canada more than 50 million Canadian dollars, or indirectly acquired assets of 5 million to 50 million Canadian dollars in corporate assets accounted for more than 50% of the total investment transactions, usually need to fulfill the notice procedures. If the investment application needs to be reviewed, the investor must provide detailed information about the individual investor and the investment plan.Pursuant to Articles 16, 20 and 21 of the Canadian Investment Act, each investment project will be assessed on a case-by-case basis to determine whether this investment project is good for Canada. The factors to be considered in the project assessment mainly include whether the investment has an impact on the economic activities and the nature of Canada, including the increase in efficiency of employment, raw material processing, domestic equipment, spare parts and services, and the expansion of exports to enhance Canada’s competitiveness in the international market Beneficial; whether Canadian nationals can be fully engaged and employed in the industries to which new or new businesses belong; whether the investment can enhance productivity and efficiency, promote technological development and product innovation, and diversify the product; and the investment in related industries What is the impact on competition and whether it is compatible with the national industrial, economic and cultural policies. In the examination and approval of the scale of foreign investor investment projects, the direct acquisition of Canadian companies by WTO member economies (excluding the sensitive economy) amounting to more than 299 million Canadian dollars requires the approval of the Canadian government at a cost of 299 million Canadian dollars The following, just to the Canadian government for the record. Investments in non-WTO member economies and direct investments in sensitive areas of over $ 5 million need to be audited by the government; only $ 5 million is required for filing with the government.
- Project Amendments: Investing Applications If it is not an investment project that is “good for Canada”, the applicant may provide the competent authority with a justification of the future operating plan and objectives and provide assurances for obtaining the investment permit. Competent authorities may review the investments approved in this manner in the future to determine whether the investor has fulfilled its original commitment.
- Opinion on unfair competition: According to the Investment Law, the Competition Bureau of Industry Canada’s investment projects for mergers and acquisitions need to give their opinions on fair trade competition and investment detriment. Even if investment projects that do not need to be examined by the investment law go beyond the limit, they must be filed with the Bureau before the merger. Therefore, when an investment enterprise seeks to expand the operation scale of an investment enterprise by acquiring the existing Canadian enterprise controlling interest, it must first consult the examination of the Bureau of Fair Play. Canada revises its investment laws based on NAFTA and WTO rules on free trade.The implementation of the “Canadian Investment Law” has a positive impetus to Canada’s use of foreign investment to develop its economy, promote industrial innovation and increase employment. The Canadian government, by constantly amending the relevant laws and regulations, has increasingly increased the degree of openness of its domestic market to foreign investment. At present, the Standing Committee on Industry, Natural Resources, Science and Technology of the Canadian House of Representatives is studying “Canada’s 21st Century Industry” and focuses on three major areas of energy, manufacturing and service industries. The study includes the policy of accepting foreign investment Conduct a framework study and review the Canadian Investment Law.
- Investor Definition: Canadian Investors means any entity controlled by Canadian citizens, permanent residents, government and institutional controlled trust companies, joint ventures or Canadians as specifically defined by the Canadian Investment Act. Non-Canadian investors refer to investors who do not meet the above definition. In accordance with the requirements of Canadian laws and regulations, the majority of the company’s directors should be Canadian residents. In Ontario, if the company has only one director, the director must be a Canadian resident, and if two directors, one of them must be a Canadian resident. In British Columbia, most directors must be Canadian residents, one of whom must be a resident of the province. In Alberta, at least half of the directors must be Canadian residents. Non-naturalized permanent residents qualify as residents of Canada in certain provinces, and in some provinces may only have Canadian resident status at some time. Investors do not absolutely want to live in Canada, investors who do not reside in Canada as long as they can comply with the provisions of the Canadian investment law procedures can be. In addition, the conduct of Canadian investors must comply with Canadian anti-trust laws, consumer protection laws, environmental protection laws, patent laws and anti-counterfeiting laws.
- Investment restrictions: In addition to the investors should pay attention to apply for general investment law, for some special industries, there are some special rules or restrictions. Major industries include Banking, Broadcasting, Uranium Mining, Press, Aviation, Fisheries, Coastal Shipping, Sales Finance and Consumer Loans. Banks in Canada, for example, have restrictions on the ownership of Canadian banks. The maximum ownership of any one of the shareholders shall not exceed 10%, and the total ownership of a shareholder, Central African Canadian resident, shall not exceed 25% (subsidiaries of some newly established banks or foreign banks are not subject to this restriction).