ARCHIVED — Vol. 149, No. 6 — March 25, 2015

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Registration

SOR/2015-65 March 13, 2015

INVESTMENT CANADA ACT

Regulations Amending the National Security Review of Investments Regulations

P.C. 2015-311 March 12, 2015

His Excellency the Governor General in Council, on the recommendation of the Minister of Industry, pursuant to subsections 35(1) and (1.1) (see footnote a) of the Investment Canada Act (see footnote b), makes the annexed Regulations Amending the National Security Review of Investments Regulations.

REGULATIONS AMENDING THE NATIONAL SECURITY REVIEW OF INVESTMENTS REGULATIONS

AMENDMENTS

1. Paragraph 4(a) of the National Security Review of Investments Regulations (see footnote 1) is replaced by the following:

  • (a) if the Minister sends a notice referred to in subsection 25.2(1) of the Act to the non-Canadian, the period beginning on the day on which the notice is sent and ending 45 days after that day; or

2. Section 6 of the Regulations is replaced by the following:

Extension

5.1 For the purposes of subsection 25.3(7) of the Act, the prescribed period is the period beginning on the day on which the notice is sent to the non-Canadian and ending 45 days after that day.

Governor in Council order

6. For the purposes of subsection 25.4(1) of the Act, the prescribed period is the period beginning on the day on which the investment is referred to the Governor in Council by the Minister and ending 20 days after that day.

3. Paragraph 7(g) of the Regulations is replaced by the following:

  • (g) Communications Security Establishment;

COMING INTO FORCE

Sections 140 and 141 and subsection 142(1) of Act

4. These Regulations come into force on the day on which sections 140 and 141 and subsection 142(1) of Economic Action Plan 2013 Act, No. 1, chapter 33 of the Statutes of Canada, 2013, come into force, but if they are registered after that day, they come into force on the day on which they are registered.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Issues

The national security review process applies under Part IV.1 of the Investment Canada Act (the Act) to investments that could be injurious to national security. The length of the existing prescribed time periods for the review process may not be sufficient to undertake a thorough review and analysis of national security concerns in the case of complex investment transactions. The provisions in the Economic Action Plan 2013 Act, No. 1, (Bill C-60) provide for the extension of the timelines associated with the various stages of the national security review process when they are brought into force. This requires the Government to prescribe the length of certain periods in the national security review process through amendments to the National Security Review of Investment Regulations (the Regulations).

Background

In February 2009, the Act was amended to include a new Part IV.1, Investments Injurious to National Security. Part IV.1 provides the Government of Canada with the authority to review a foreign investment that could be injurious to national security. Under Part IV.1, if national security threats associated with investments in Canada by non-Canadians are identified, primarily by Canada’s security and intelligence agencies, they will be brought to the attention of the Minister of Industry. Once identified, the Minister of Industry, after consultation with the Minister of Public Safety is responsible for referring the investment to the Governor in Council (GIC) if he considers it could be injurious to national security. If the Minister of Industry makes such a referral, the GIC then determines whether a review should be ordered. If the GIC orders a review, the Minister of Industry, after consultation with the Minister of Public Safety, will conduct the review and, if necessary, submit a report to the GIC with recommendations. Upon submission of the Minister of Industry’s report and recommendations, the GIC has the authority to take any measures in respect of the investment that it considers advisable to protect national security. The Act specifies that each step of the review process is to occur within prescribed time periods. Changes to the Act in Bill C-60 provide for the extension of certain time periods in the review process.

Objectives

The objectives of the Regulations are to prescribe the review time periods, as well as list the investigative bodies with which confidential information can be shared and which may use that information for the purposes of their own investigations.

The objectives of the Regulations Amending the National Security Review of Investments Regulations (the amendments) are to

  • Provide the Government of Canada with the flexibility to extend time periods for the review of investments that could be injurious to national security;
  • Facilitate a thorough analysis of concerns over national security brought about by complex investments, at all stages of the national security review process; and
  • Provide the GIC with additional time to take measures, if necessary, to protect national security.

Description

The amendments make the following changes to the periods prescribed in Part IV.1 of the Act:

  • (1) Amendment of the prescribed period under paragraph 4(a) of the Regulations
  • If the Minister of Industry has reasonable grounds to believe that an investment by a non-Canadian could be injurious to national security, the Minister of Industry may [under subsection 25.2(1) of the Act] notify the non-Canadian investor that the investment may be reviewed. If the Minister of Industry notifies the investor in such a manner and subsequently refers the investment to the GIC, the GIC must decide whether to order a national security review of the investment [under subsection 25.3(1) of the Act]. Currently, where a notice is sent to an investor, the GIC has 25 days from the date of the notice to order a review of the investment. The amendments change this 25-day period to 45 days.
  • (2) Extension of the prescribed period for the national security review under section 5 of the Regulations (section 5.1)
  • Once a review has been ordered by the GIC, the Minister of Industry consults with the Minister of Public Safety who in turn consults other concerned departments and agencies listed as investigative bodies in the Regulations, as appropriate. Following these consultations, if the Minister of Industry is satisfied that, or is unable to determine whether, the investment would be injurious to national security, the Minister of Industry must submit a report, with recommendations to the GIC under subsection 25.3(6) of the Act. Under section 5 of the Regulations, the time period for the Minister of Industry to submit a report and recommendations is 45 days from the date on which the GIC issued the order for a review of the investment. Subsection 25.3(7) of the Act provides that if the Minister of Industry is unable to complete the consideration of an investment within the prescribed period of 45 days, the Minister of Industry can extend this 45-day period by an additional prescribed period. The amendment sets the prescribed period at 45 days (section 5.1 of the Regulations), with a further possible extension with the agreement of the non-Canadian investor [subsection 25.3(7) of the Act].
  • (3) Amendment and extension of the prescribed period by which the GIC may take any measures under section 6 of the Regulations
  • If the Minister of Industry submits a report with recommendations to the GIC under subsection 25.3(6) or subsection 25.3(7) of the Act, the GIC [under subsection 25.4(1) of the Act] may then order any measure it considers advisable to protect national security. Under current section 6 of the Regulations, the time period within which the GIC has to make an order is 15 days from the date on which the Minister of Industry referred the investment to the GIC for consideration. The amendments change this 15-day period to 20 days.
  • (4) Amendment to the list of investigative bodies
  • The amendments also make a minor technical amendment to reflect the fact that the Communications Security Establishment is no longer part of the Department of National Defence.

“One-for-One” Rule

The “One-for-One” Rule does not apply to this proposal, as there is no change in administrative costs to business.

Small business lens

The small business lens does not apply to this proposal, as there are insignificant costs to small business.

Consultation

No formal consultations have taken place regarding the extension of national security review timelines, given that this matter relates to national security.

Rationale

The amendments provide for extended timelines for various stages of the national security review process. The amendments will provide the time for proposed investments to be rigorously reviewed under the national security provisions of the Act. The Minister of Industry’s ability to extend certain time periods will allow the Government to perform a more thorough evaluation of national security concerns in complex cases that warrant it.

Contact

Jenifer Aitken
Director General
Investment Review Sector
Industry Canada
235 Queen Street
C.D. Howe Building, Room 554A, West Tower
Ottawa, Ontario
K1A 0H5
Telephone: 343-291-1698
Fax: 613-996-2515