Industry Canada announced that the Investment Canada Act threshold for the review of direct acquisitions of Canadian businesses by World Trade Organization (WTO) investors is expected to increase to $312 million for 2011.1 This threshold is measured on the basis of current book value of the target's gross assets. Indirect acquisitions by WTO investors are not reviewable but are nonetheless subject to notification. Investors should note that the lower thresholds of $5 million and $50 million for direct and indirect acquisitions, respectively, remain in effect for investments in the cultural sector and by non-WTO investors.
The investment threshold is indexed annually according to Canadian Gross Domestic Product (GDP). In 2010, the threshold was reduced for the first time as Canada's GDP contracted.
The 2009 amendments to the Investment Canada Act included a gradual increase of the current investment threshold to $1 billion in enterprise value, a term yet to be officially defined, over a period of four years. These higher thresholds will be phased in once the regulations implementing them come into force.
Footnote
1. Industry Canada, "Investment Canada Act - Threshold" (last updated January 6, 2011), online: Industry Canada (http://www.ic.gc.ca/eic/site/ica-lic.nsf/eng/h_lk00050.html).
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.