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New National Security Review Guidelines and Other Important Updates on the Investment Canada Act

April 1, 2021

Reviews of foreign investments under the Investment Canada Act (ICA) remain a priority item in the current economic and political climate in Canada. On March 24, 2021, the Government of Canada (Government) updated its Guidelines on the National Security Review of Investments (Guidelines) under the Investment Canada Act. These Guidelines are intended to inform investors of the policies that will be followed by the Government in administering the national security review process under the ICA.

Separately, on March 26, the Standing Committee on Industry, Science and Technology (INDU) issued a report entitled The Investment Canada Act: Responding to the COVID-19 pandemic and facilitating Canada’s recovery (Report). The Report makes nine recommendations to the federal government for a “more cautious, responsive, and transparent approach to regulating foreign investments” through the ICA’s national security and net benefit review provisions.


  • Investors looking to acquire or establish a business in Canada must be mindful of the new Guidelines and the possibility that their investment may be subject to an ICA national security review. In particular, investors should be conscious of the Guidelines when partnering with a state-owned enterprise (SOE), acquiring sensitive technologies, engaging in the supply of critical goods and services to Canadians, investing in critical minerals or critical mineral supply chains, or accessing sensitive personal data.

  • The immediate impact of the Report is unclear, given the governing Liberal party’s dissenting opinion. Some recommendations, such as those reflecting enhanced scrutiny of SOE investments, are already practiced by the Government within the context of its pandemic-related measures.


COVID-19 Measures

The Guidelines adopt several national security-related measures the Government put in place at the start of COVID-19, as described in a previous bulletin. In particular, all SOE investments and investments by private investors closely tied to foreign governments will be subject to enhanced scrutiny under the ICA, regardless of the investment’s value. Additionally, the impact an investment may have on the potential supply of (1) critical goods and services to Canadians and (2) goods and services to the Government is a relevant factor in a national security determination.

Sensitive Technologies Further Defined

The Guidelines explain what may constitute a “sensitive technology”. An investment’s impact on the transfer of sensitive technology or know-how outside of Canada is a relevant consideration when determining whether an investment should be blocked on national security grounds. The Guidelines clarify that these potential technology transfers include access to information not publicly available on the research, design, or manufacture of sensitive technologies. Sensitive technology areas include those relating to military, intelligence or dual military/civilian applications in such fields as artificial intelligence, advanced materials and digital infrastructure, among others.

New Areas

The Guidelines add two new relevant factors for national security reviews: critical minerals (including their supply chains) and personal data. Critical minerals refer to the 31 minerals on the Government’s Critical Minerals List, which are considered critical for Canada and its allies’ sustainable economic success and Canada’s position as a leading mining nation. Additionally, a national security screen or review may be required where the investment potentially enables access to sensitive personal data that could be leveraged or exploited to harm Canada’s national security. These types of personal data include personally identifiable health or genetic data (e.g., genetic test results); biometrics (e.g., fingerprints); and geolocation data, amongst others.


The Report makes a number of recommendations for proposed legislative amendments or changes regarding both the ICA’s net benefit review and national security review processes.

State-Owned Enterprises

The Report recommends that every investment by an SOE or state-controlled entity be subject to an ICA review by setting the current valuation threshold for these investments to zero.

Net Benefit Review

The Report recommends enacting legislation requiring the net benefit thresholds to be reviewed annually. It also suggests requiring the Minister of Innovation, Science and Economic Development (Minister) to explain why an investment is of net benefit to Canada and to publicly disclose the investor’s undertakings to the Government. Further, the Report calls for protecting the health, pharmaceutical, agri-food, manufacturing and natural resources sectors, as well as intangibles related to innovation, intellectual property, data and enterprise. On intangible assets, the report calls on the Government to determine how to improve the treatment of these assets under the net benefit review process and recommends putting in place measures to encourage Canadian ownership.

National Security Reviews

The INDU recommended that the Government take steps to block the transfer of national security sensitive assets to a non-Canadian entity, including being notified when such an asset is transferred. The Report also called for immediately amending the ICA to compel the Minister to consult with Canada’s intelligence services in national security reviews.

The Liberal Party’s Dissenting Opinion

The governing Liberal Party dissented from the main report, arguing that several recommendations were redundant and/or unnecessary given existing measures under the ICA or actions taken by the Government. These recommendations include those on the net benefit threshold for SOEs, annual adjustments to the net benefit review thresholds, sensitive assets, subsequent take-overs by SOEs and consultations with Canada’s intelligence services. Additionally, the dissenting opinion argued that requiring the Minister to disclose the investor’s undertakings would impair international commercial undertakings, norms and best practices, and undermine Canada’s strategic and competitive interests.

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