OTTAWA — The federal government is raising the monetary threshold for a review of a foreign takeover of a Canadian company to $1 billion from $330 million over a four-year period.
Ottawa is also creating a formal mediation process under the Investment Canada Act that will offer a voluntary means of resolving disputes when the minister believes a foreign buyer has failed to live up to its obligations.
“Canada has a strong investment climate and these targeted changes will ensure that our foreign investment review process continues to encourage investment and spur economic growth,” Industry Minister Christian Paradis said in a statement Friday. “Foreign investment is vital to the Canadian economy. It helps Canadian companies find new capital and enables them to expand, innovate and create jobs for Canadians.”
The details released Friday follow a promise last month by the federal government that it would provide more disclosure on decisions to block foreign takeovers that it judges would be detrimental to Canadian interests.
Ottawa also said it would accept security bonds from foreign companies should a court levy penalties on a foreign investor for breaking contractual commitments.
The long-promised update to the rules follow a decision in 2010 by then industry minister Tony Clement to veto the takeover of PotashCorp. by Anglo-Australian mining firm BHP Billiton. It was deemed that the takeover did not meet the key “net benefit” test, a closed-door review of whether a particular investment would benefit Canada.
Opposition critics said Friday that the government did nothing to clarify what a net benefit would be in the regulatory changes.
Read more at Herald Business