Canada Gazette, Part I, Volume 146, Number 22: Regulations Amending the Investment Canada Regulations

June 2, 2012

Statutory authority

Investment Canada Act

Sponsoring departments

Department of Industry and Department of Canadian Heritage

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Issue and objectives

The proposed amendments to the Investment Canada Regulations will implement amendments to the Investment Canada Act (ICA) that were passed on March 12, 2009, through the Budget Implementation Act, 2009. These amendments raised the threshold for investment reviews to $1 billion over a four-year period and changed the basis of the threshold from asset value to enterprise value.

The changes to the ICA responded to the core recommendations of the June 2008 Compete to Win report of the Competition Policy Review Panel (the Panel). Recognizing that foreign investment is beneficial to Canada, the Panel recommended that the scope of the ICA be narrowed by focussing the net benefit review process on only the most significant transactions. To this end, the Panel recommended that the investment review threshold be raised to $1 billion, and that the standard for determining the value of the Canadian business being acquired should be changed to enterprise value. The current standard is based on the value of the assets according to the business’ financial statements (book value). The concept of enterprise value better reflects the value of a business as a going concern, and the increasing importance of service and knowledge-based industries in which much of the value of a business may reside in intangible assets that are typically not recognized on a balance sheet. The Panel also recommended that the dollar amount of the review threshold should continue to be indexed for inflation in accordance with the current formula contained in the ICA.

In order to implement the changes to the ICA, certain amendments to the Investment Canada Regulations are required. Specifically, amendments to the Investment Canada Regulations are required to

• — enable the raising of the review threshold to $1 billion in enterprise value over four years; and
• — establish the methodology for calculating the enterprise value of a Canadian business.

The Investment Canada Regulations will also be amended to

• — remove references to the transportation, financial services and uranium production sectors because lower thresholds for these sectors have been eliminated; and
• — formalize the process for collecting information relevant to the net benefit and national security foreign investment review processes.

Proposed amendments to the Investment Canada Regulations were first prepublished in the Canada Gazette, Part Ⅰ, for a 30-day comment period on July 11, 2009, which can be found at www.gazette.gc.ca/rp-pr/p1/2009/2009-07-11/pdf/g1-14328.pdf. Stakeholders submitted comments in 2009 that primarily focused on the methodology proposed for calculating the enterprise value of Canadian businesses. Consideration of these comments is reflected in the current proposal, which is described below.

In the 2011 Speech from the Throne, the Government of Canada highlighted the importance of attracting foreign investment that helps Canadian companies grow, innovate and connect with the rest of the world. The following proposed Regulations would amend the Investment Canada Regulations to improve Canada’s foreign investment review framework, while maintaining the Government of Canada’s commitment to examine significant foreign investment transactions to determine whether they are likely to be of net benefit to Canada.

Description and rationale

The 2009 amendments to section 14.1 of the ICA raised the general review threshold for transactions involving a proposed investment by a World Trade Organization (WTO) investor or by a non-Canadian, other than a WTO investor, where the Canadian business is, immediately prior to the implementation of the investment, controlled by a WTO investor. Once the new section 14.1 and the Regulations come into force, the review threshold would be raised to $600 million in enterprise value for two years, followed by an increase to $800 million for the next two years, reaching $1 billion after four years, and subsequently annually indexed to changes in Canada’s nominal gross domestic product (GDP).

The proposed Regulations would define the concept of enterprise value for the purposes of determining whether an investment is subject to a net benefit review; modify the information requirements for non-Canadian investors; and remove existing references to the transportation, uranium, and financial services sectors. They would also specify who holds signing authority in respect of applications for review and notifications for various types of investors, and require the individual who signs the notification or application for review to certify that it is complete and correct to the best of their knowledge and belief. Finally, the proposed Regulations would correct an outdated reference to the President of the Investment Canada Agency, who is now known as the Director of Investments at Industry Canada, or the Director of Investments at the Department of Canadian Heritage for transactions involving the cultural sector.

Specifically, with respect to the existing Investment Canada Regulations, the proposed Regulations would implement the following measures.

Amendment of definitions in section 2

The first amendment to section 2 would remove the definitions “controlled by a WTO investor” and “WTO investor” from the Investment Canada Regulations. This addresses a housekeeping issue raised by the Standing Joint Committee for the Scrutiny of Regulations, as these terms are already defined in the ICA.

The second amendment to section 2 would add and define the following new terms: “class,” “equity security,” “fair market value,” “governing body,” “publicly traded entity,” “published market,” and “trading period.” These terms are used in calculating the enterprise value of an entity to determine whether an investment meets the threshold for a net benefit review.

Repeal of the section concerning transportation services

The repeal of section 2.2 is required as a consequence of the changes to section 14.1 of the ICA, and would delete the definition of “transportation service.” Under the ICA, as amended in 2009, investments in transportation services as well as in the uranium production and financial services sectors are no longer subject to separate, lower review thresholds. Investments in these sectors involving WTO investors are now subject to the general review threshold. Once the Investment Canada Regulations and relevant provisions in the ICA related to enterprise value come into force, the review threshold would be raised to $600 million in enterprise value for two years, followed by an increase to $800 million for the next two years, reaching $1 billion after four years, and subsequently annually indexed to changes in Canada’s nominal gross domestic product (GDP).

Limitation of application of section 3.1

Amendments to section 3.1 are required as a consequence of changes to subsection 14.1(1) of the ICA, which changed the basis for calculating the review threshold to enterprise value for investments involving the acquisition of control of a Canadian business by a non-Canadian WTO investor, as defined by the ICA, or by a non-Canadian, other than a WTO investor, where the Canadian business is, immediately prior to the implementation of the investment, controlled by a WTO investor. Specifically, this section would be modified to remove references to section 14.1 of the ICA so that it only applies to acquisitions of control by non-WTO investors of Canadian businesses which are not controlled by a WTO investor immediately prior to the implementation of the investment, and investments involving the acquisition of a Canadian business that is a cultural business. Section 3.1 would retain its references to section 14 of the ICA, and thereby maintain the existing book value method for determining the value of the Canadian business for investments involving acquisitions of control by non-WTO investors and acquisitions of control of cultural businesses.

In addition, subsection 3.1(8) is added to provide the methodology for currency conversion to Canadian dollars for investments subject to section 3.1 of the Investment Canada Regulations. Any currency conversion that may be required is to be based on the Bank of Canada’s noon exchange rate on the date the annual financial statements are released.

As a matter of housekeeping, the language of section 3.1 would also be updated to reflect current regulatory drafting practices.

Addition of new sections to define how enterprise value is calculated

Sections 3.2 and 3.3 would be added to enable the application of the new subsection 14.1(1) of the ICA. The sections specify the manner in which the enterprise value of assets would be calculated for acquisitions of control of a Canadian business by a non-Canadian WTO investor, or by a non-Canadian other than a WTO investor, where the Canadian business is, immediately prior to the implementation of the investment, controlled by a WTO investor.

Section 3.2 would apply to acquisitions of control of a publicly traded entity carrying on a Canadian business. In such instances, the enterprise value of the assets would be calculated as the market capitalization of the entity, plus its liabilities, minus the entity’s cash and cash equivalents.

The market capitalization of a publicly traded entity would be calculated by adding together, for each class of its equity securities listed on a published market, the average daily number of its equity securities that are outstanding during the trading period multiplied by the average daily closing price in Canadian currency of its equity securities during the trading period. If a publicly traded entity also has unlisted equity securities, the amount determined in good faith and certified by the governing body of the non-Canadian investor to represent the fair market value of the outstanding securities of each class of unlisted equity securities would be added to the market capitalization of the entity. As outlined in the definition of trading period in the proposed Regulations, the start of the 20-day trading period used to calculate the market capitalization of a publicly traded entity would depend on the date a notification or application for review is filed in cases where the notification or the application for review is filed before the implementation of the investment or on the date on which the investment was implemented in all other cases.

The entity’s liabilities, cash and cash equivalents would be determined using the most recently available quarterly financial statements of the entity before the filing of a notification or an application for review of an investment, in cases where the notice or application was filed before the implementation of the investment or before the implementation of the investment in all other cases. Where the most recent quarterly financial statements are contained within an entity’s annual financial statements, the latter would be used.

Section 3.3 would apply to acquisitions of control of a Canadian business which is not a publicly traded entity, or where there is an acquisition of all or substantially all of the assets used in carrying on a Canadian business. In such instances, the enterprise value of the assets of the Canadian business would be calculated as the total acquisition value of the Canadian business, plus its total liabilities, minus its cash and cash equivalents.

If the investor is acquiring 100% of the voting interests in the Canadian business, or if the investor is acquiring all, or substantially all, of the assets used in carrying on a Canadian business, the total acquisition value would be the amount of consideration for the acquisition as set out in the transaction documents that are used to implement the investment.

If the investor is acquiring less than 100% of the voting interests in a Canadian business, the total acquisition value would be the amount of consideration as set out in the transaction documents that are used to implement the investment and the amount that the governing body of the investor determines in good faith, and certifies to be the fair market value of the portion of the entity that is not included in the total consideration (i.e. the portion of the entity that is not acquired by the non-Canadian).

In circumstances where any portion of the total consideration to be paid by the investor is not known at the time the investment is implemented, the value of this unknown portion is the amount that the governing body of the investor determines in good faith, and certifies to be the fair market value. The purpose of this is to account for any events, such as potential earn-outs, which may not be known at the time of the closing of the transaction.

The entity’s liabilities, cash and cash equivalents would be determined using the most recently available quarterly financial statements of the entity before the filing of a notification or an application for review of an investment, in cases where the notice or application was filed before the implementation of the investment or before the implementation of the investment in all other cases. Where the most recent quarterly financial statements are contained within an entity’s annual financial statements, the latter would be used.

Any calculation involving currency under sections 3.2 and 3.3 shall be expressed in Canadian dollars. Any currency conversion to Canadian dollars that may be required is to be based on the Bank of Canada’s noon exchange rate, on the dates, or over the periods, described in the amended sections.

Amendment to the signing authority requirements

This proposed amendment to section 4 would provide that the signing authority in respect of applications for review and notifications must be the investor, if the investor is an individual; a director or officer of the investor if the investor is a corporation; or an individual who exercises the powers of a director or officer if the investor is an entity other than a corporation. This would ensure that individuals connected to the investment attest to the information provided as opposed to any person authorized by the investors, as is now the case. In addition, a new subsection would be added to require the individual who signs the notification or application for review to certify that it is complete and correct to the best of their knowledge and belief.

Update of the entities identified in sections 5 and 6

These amendments would update existing references that require information associated with notifications and applications for review to be sent to the Investment Canada Agency at the office of the President of the Agency. The ICA was amended in 1995 to repeal the definition and the provisions establishing the Agency. The amendments would replace existing references to the Agency and the office of the President of the Agency with references to the Director of Investments, which is the Director of Investments at Industry Canada or the Director of Investments at the Department of Canadian Heritage for transactions involving the cultural sector.

Amendment to information requirements set out in Schedules I and II

These amendments would formalize the information requirements from non-Canadians in the application for review and notification forms for net benefit and for national security review purposes. In addition to having to provide their name, mailing address and telephone number, investors would now also be required to provide their fax number, email address, and where the investor is an individual, their date of birth. Investors would also be required to provide this information for the members of the non-Canadian’s governing body, the five highest-paid officers of the investor and any individual or entity that owns 10% or more of the equity or voting rights of the investor. They would also be asked to disclose any ownership interest by a foreign government as well as the nature and level of this interest, the sources of funding for the investment, and the 2007 North American Industry Classifications System codes for products and services that are or will be manufactured, sold or exported by the Canadian business. Where a notification is required to be given, the investor would have to provide a copy of the purchase and sale agreement, or, if not available, a description of the principal terms and conditions, including the estimated total purchase price of the investment, as is the current requirement with respect to an application for review. These amendments would also add information requirements so that enterprise value information can be collected (e.g. market capitalization or total acquisition value, as the case may be, and the liabilities and cash and cash equivalents as well as copies of the transaction documents that are used to implement the investment).

The requirements for information on whether the investment was in the transportation, financial services or uranium production sectors would be removed because, as explained in relation to the repeal of section 2.2, these are no longer required.

Consultation

As indicated above, the amendments to the ICA and the proposed amendments to the Investment Canada Regulations stem from recommendations of the Competition Policy Review Panel, which was mandated in July 2007 to review Canada’s competition and investment laws with a view to boosting Canada’s competitiveness. The Panel consulted widely, hearing from dozens of stakeholders, reviewing over 155 written submissions, and holding 13 formal cross-country roundtables. Core stakeholder recommendations focused on becoming more open to investment, increasing transparency, streamlining processes, and protecting Canadian interests.

The proposed amendments to the Investment Canada Regulations also reflect input received following the earlier pre-publication of amendments to the Investment Canada Regulations in the Canada Gazette, Part Ⅰ, in July 2009. The comments primarily focused on the methodology proposed for calculating the enterprise value of a Canadian business. With regard to publicly traded entities, stakeholders were mainly concerned that the methodology for calculating enterprise value be determinable far enough in advance of the closing of the proposed investment to provide investors with certainty as to whether they should file for the review of their investment. With regard to entities that are not publicly traded, stakeholders criticized the proposed approach of retaining the current methodology (i.e. the book value of the assets) to determine an entity’s enterprise value, stating that it did not adequately reflect the Panel’s recommendation and that it may impact the structure of investments. Consideration of these comments is reflected in the current proposal.

Implementation, enforcement and service standards

The amended Investment Canada Regulations will come into force on the day on which subsections 448(1) and (2) of the Budget Implementation Act, 2009 come into force by order of the Governor in Council, or, if it is later, on the day on which the amended Investment Canada Regulations are registered.

Investors will be able to visit the Industry Canada and Canadian Heritage Web sites (www.ic.gc.ca/eic/site/ica-lic.nsf/eng/Home and www.canadianheritage.gc.ca/invest/index-eng.cfm, respectively) for information on the new Regulations. New forms, reflecting the new information requirements, for notifications and applications for review would also be available on these Web sites.

Industry Canada and Canadian Heritage do not anticipate the requirement for any significant increases to human or financial resources in order to implement these Regulations. The existing compliance and enforcement mechanisms are sufficient and would be applied as necessary.

Contact

Colette Downie
Director General
Marketplace Framework Policy Branch
Industry Canada
C.D. Howe Building, East Tower, Room 1046A
235 Queen Street
Ottawa, Ontario
K1A 0H5
Telephone: 613-952-0211
Fax: 613-948-6393

PROPOSED REGULATORY TEXT

Notice is hereby given that the Governor in Council, pursuant to sections 14.2 (see footnote a) and 35 (see footnote b) of the Investment Canada Act (see footnote c), proposes to make the annexed Regulations Amending the Investment Canada Regulations.

Interested persons may make representations concerning the proposed Regulations within 30 days after the date of publication of this notice. All such representations must cite the Canada Gazette, Part Ⅰ, and the date of publication of this notice, and be addressed to Colette Downie, Director General, Marketplace Framework Policy Branch, Industry Canada, C.D. Howe Building, 235 Queen Street, Floor 10E, Room 1046A, Ottawa, Ontario K1A 0H5 (tel.: 613-952-0211; fax: 613-948-6393; email: Colette.Downie@ic.gc.ca).

Ottawa, May 24, 2012

JURICA ČAPKUN
Assistant Clerk of the Privy Council

REGULATIONS AMENDING THE INVESTMENT CANADA REGULATIONS

AMENDMENTS

1. (1) The definitions “controlled by a WTO investor” and “WTO investor” in section 2 of the Investment Canada Regulations (see footnote 1) are repealed.

(2) Section 2 of the Regulations is amended by adding the following in alphabetical order:

“class” means any class of securities and includes a series of a class; (catégorie)

“equity security” means a security of an entity that carries a right to vote in all or certain circumstances, a residual right to participate in the earnings of the entity or a right to receive the remaining property of the entity on its dissolution or liquidation, but does not include a right, warrant or option to acquire such a security or a privilege to convert to such a security; (titre de participation)

“fair market value” means the monetary consideration that, in an open and unrestricted market, a reasonably prudent and informed buyer would pay to a reasonably prudent and informed seller, when acting at arm’s length from one another; (juste valeur marchande)

“governing body” means the board of directors of an entity or, if there is no board of directors, the person or group of persons that performs the functions of a board of directors; (organe directeur)

“publicly traded entity” means an entity whose equity securities are listed on a published market; (unité ouverte)

“published market” means, in relation to a class of equity securities, a market inside or outside Canada on which the securities are traded, if the prices at which the securities are traded are regularly published either electronically or in a newspaper or financial or business publication of general circulation; (marché publié)

“trading period” means, in relation to an equity security of an entity,

• (a) the most recent 20 days of trading before the first day of the month that immediately precedes the month in which the notice of investment or application for review of an investment is filed, in cases where the notice or application is filed before the implementation of the investment, or
• (b) the most recent 20 days of trading before the first day of the month that immediately precedes the month in which the investment was implemented, in all other cases; (période d’opération)

2. Section 2.2 of the Regulations is repealed.

3. The heading before section 3.1 of the Regulations is replaced by the following:

ACQUISITION OF CONTROL OF CANADIAN BUSINESS BY NON-CANADIAN OTHER THAN WTO INVESTOR AND ACQUISITION OF CONTROL OF CULTURAL BUSINESS

4. (1) Subsections 3.1(1) to (3) of the Regulations are replaced by the following:

3.1 (1) For the purposes of section 14 of the Act, if a non-Canadian acquires control of a Canadian business by acquiring only assets that are used in carrying on the Canadian business or by acquiring control only of an entity that is carrying on the Canadian business, the value of the assets is the aggregate of all assets acquired or of all assets of the entity, as shown in the audited financial statements of the entity carrying on the business for its fiscal year immediately preceding the implementation of the investment.

(2) For the purposes of section 14 of the Act, if a non-Canadian acquires control of a Canadian business by acquiring control of an entity carrying on the Canadian business and also acquires control of one or more other entities in Canada, directly or indirectly, the value of the assets is the aggregate of all assets shown in the audited financial statements consolidated for all the entities for their fiscal year immediately preceding the implementation of the investment.

(3) For the purposes of section 14 of the Act, if a non-Canadian acquires control of a Canadian business by acquiring control, directly or indirectly, of a corporation incorporated outside Canada that controls, directly or indirectly, an entity in Canada that is carrying on a Canadian business, the value of the assets of all entities, both inside and outside Canada, whose control is acquired, directly or indirectly, is the aggregate of all assets shown in the audited financial statements consolidated for all the entities for their fiscal year immediately preceding the implementation of the investment.

(2) The portion of subsection 3.1(4) of the Regulations before paragraph (a) is replaced by the following:

(4) If the consolidated financial statements of the entities referred to in subsection (2) or (3) are not available, the value of the assets for the purposes of section 14 of the Act is the aggregate of the assets of all the entities as shown in the audited financial statements of each entity for its fiscal year immediately preceding the implementation of the investment, excluding

(3) Section 3.1 of the Regulations is amended by adding the following after subsection (7):

(8) Any conversion into Canadian dollars that is required to calculate the value of the assets under this section shall be based on the noon exchange rate quoted by the Bank of Canada on the day on which the financial statements of the entity are released.

5. The Regulations are amended by adding the following after section 3.1:

ACQUISITION OF CONTROL BY WTO INVESTOR OF PUBLICLY
TRADED ENTITY CARRYING ON CANADIAN BUSINESS

3.2 (1) For the purposes of subsection 14.1(1) of the Act, if control of a publicly traded entity that is carrying on a Canadian business is acquired in the manner described in paragraph 28(1)(a) or (b) or subparagraph 28(1)(d)(i) of the Act, the enterprise value of the assets of the Canadian business is the market capitalization of the entity, plus its total liabilities, minus its cash and cash equivalents.

(2) For the purposes of subsection (1),

• (a) an entity’s market capitalization is calculated by adding,
  
  • (i) for each class of its equity securities listed on a published market, the average daily number of its equity securities of that class that are outstanding during the trading period multiplied by the average daily closing price of its equity securities of that class during the trading period, and
  • (ii) for each class of its equity securities that is not listed on a published market, the amount that the governing body of the non-Canadian determines in good faith and certifies to be the fair market value of the outstanding securities of that class;
    
• (b) an entity’s liabilities are equal to the total liabilities that are listed in its most recent quarterly financial statements released
  • (i) before the filing of the notice of investment or application for review of an investment, in cases where the notice or application was filed before the implementation of the investment, or
  • (ii) before the implementation of the investment, in all other cases; and
    
• (c) an entity’s cash and cash equivalents are equal to the total cash and cash equivalents that are listed in its most recent quarterly financial statements released
  
  • (i) before the filing of the notice of investment or application for review of an investment, in cases where the notice or application was filed before the implementation of the investment, or
  • (ii) before the implementation of the investment, in all other cases.

(3) The enterprise value of the assets of the Canadian business as well as the entity’s market capitalization and its total liabilities and cash and cash equivalents shall be expressed in Canadian dollars.

(4) Any conversion into Canadian dollars that is required to calculate the value of the assets under this section shall be based on

• (a) the average of the noon exchange rates quoted by the Bank of Canada during the trading period, in determining market capitalization of the entity; and
• (b) the noon exchange rate quoted by the Bank of Canada on the day on which the financial statements referred to in paragraphs (2)(b) and (c) are released, in determining liabilities and cash and cash equivalents of the entity.

ACQUISITION OF CONTROL BY WTO INVESTOR OF CANADIAN BUSINESS OTHER THAN PUBLICLY TRADED ENTITY

3.3 (1) For the purposes of subsection 14.1(1) of the Act, if control of a Canadian business is acquired in the manner described in paragraph 28(1)(c) of the Act or if the Canadian business is not a publicly traded entity, the enterprise value of the assets of the Canadian business is the total acquisition value of the entity, plus its total liabilities, minus its cash and cash equivalents.

(2) For the purposes of subsection (1), an entity’s total acquisition value is,

• (a) if the non-Canadian is acquiring 100% of the voting interests in the entity or is acquiring control of a Canadian business in the manner described in paragraph 28(1)(c) of the Act, the total amount of the consideration payable for the acquisition of the Canadian business, as set out in the transaction documents that are used to implement the investment; or
• (b) if the non-Canadian is acquiring less than 100% of the voting interests in the entity, the total of
  
  • (i) the total amount of the consideration payable for the acquisition of the Canadian business, as set out in the transaction documents that are used to implement the investment, and
  • (ii) the amount that the governing body of the non-Canadian determines in good faith and certifies to be the fair market value of the portion of the entity that is not included in the total consideration payable.

(3) If a portion of the total consideration payable for the acquisition of the Canadian business is not quantified at the time that the investment is implemented, the entity’s total acquisition value is the total of

• (a) the amount determined under subsection (2); and
• (b) the amount that the governing body of the non-Canadian determines in good faith and certifies to be the fair market value of that portion.

(4) An entity’s liabilities are equal to the total liabilities that are listed in its most recent quarterly financial statements released

• (a) before the filing of the notice of investment or application for review of an investment, in cases where the notice or application was filed before the implementation of the investment; or
• (b) before the implementation of the investment, in all other cases.

(5) An entity’s cash and cash equivalents are equal to the total cash and cash equivalents that are listed in its most recent quarterly financial statements released

• (a) before the filing of the notice of investment or application for review of an investment, in cases where the notice or application was filed before the implementation of the investment; or
• (b) before the implementation of the investment, in all other cases.

(6) The enterprise value of the assets of the Canadian business as well as the entity’s total acquisition value and its total liabilities and cash and cash equivalents shall be expressed in Canadian dollars.

(7) Any conversion into Canadian dollars that is required to calculate the value of the assets under this section shall be based on

• (a) the noon exchange rate quoted by the Bank of Canada on the day on which the investment is implemented, in determining the total acquisition value; and
• (b) the noon exchange rate quoted by the Bank of Canada on the day on which the financial statements referred to in subsections (4) and (5) are released, in determining liabilities and cash and cash equivalents.

6. Sections 4 to 6 of the Regulations are replaced by the following:

4. (1) When a notice or application is required by section 12 or 17 of the Act, it shall be signed by

• (a) the investor, if the investor is an individual;
• (b) a director or officer of the investor, if the investor is a corporation; or
• (c) an individual who exercises the powers of a director or officer, if the investor is an entity other than a corporation.

(2) The person who signs the notice or application shall certify that it is complete and correct to the best of their knowledge and belief.

NOTICE

5. A notice required to be given by an investor under section 12 of the Act shall be in writing, shall contain the information prescribed in Schedule I and shall be sent to the Director.

APPLICATION FOR REVIEW

6. An application required to be filed by an investor under subsection 17(1) of the Act shall be in writing, shall be sent to the Director and shall contain

• (a) the information prescribed in Schedule II, if the application relates to an investment that is reviewable under section 14 of the Act; or
• (b) the information prescribed in Schedule III, if the application relates to an investment that is reviewable under section 15 of the Act.

7. Schedules I and II to the Regulations are replaced by the Schedules I and II set out in the schedule to these Regulations.

COMING INTO FORCE

8. These Regulations come into force on the day on which subsections 448(1) and (2) of the Budget Implementation Act, 2009, chapter 2 of the Statutes of Canada, 2009, come into force, or if it is later, on the day on which they are registered.

SCHEDULE
(Section 7)

SCHEDULE I
(Section 5)

Investor

1. Name of the investor.

2. Names of the members of the investor’s board of directors, the investor’s five highest-paid officers and any person or entity that owns 10% or more of the investor’s equity or voting rights.

3. Mailing address, telephone number, fax number and email address of the investor and of any person or entity mentioned in item 2 and, in the case of an individual, their date of birth.

4. Whether the investor is a WTO investor or a NAFTA investor.

5. Name and address of the ultimate controller of the investor, if any.

6. Whether a foreign state has a direct or indirect ownership interest in the investor and, if so, the name of the state and the nature and extent of its interest in the investor.

Investment

7. Country of origin of the ultimate controller of the investor.

8. Whether the investment represents an acquisition of control of a Canadian business or the establishment of a new Canadian business.

9. Copy of the purchase and sale agreement or, if not available, a description of the principal terms and conditions, including the estimated total purchase price for the Canadian business and, if applicable, the estimated purchase price for all entities acquired.

10. Sources of funding for the investment.

11. Date of implementation of the investment.

Canadian business

12. Name of the Canadian business.

13. Business address of the Canadian business.

14. Brief description of the business activities that are or will be carried on by the Canadian business, including a description of the products that are or will be manufactured, sold or exported by the Canadian business, the services that are or will be provided and the codes assigned to the products and services by the North American Industry Classification System (NAICS) — Canada, 2007, published by authority of the Minister responsible for Statistics Canada.

Acquisition of control of Canadian business

15. In the case of an acquisition of control of a Canadian business, the number of persons employed in connection with the Canadian business.

16. If the investor is not a WTO investor or a NAFTA investor, whether immediately before the implementation of the investment the Canadian business is controlled by a WTO investor or a NAFTA investor.

17. If the investor is a WTO investor or a NAFTA investor or if immediately before the implementation of the investment the Canadian business is controlled by a WTO investor or by a NAFTA investor, whether the Canadian business is a cultural business as defined in subsection 14.1(6) of the Act.

18. If the Canadian business is, immediately before the implementation of the investment, controlled outside of Canada, the country of the ultimate controller.

19. In the case of an investment that is referred to in section 11 of the Act and section 3.1 of these Regulations and that is an investment in a cultural business or an investment by a non-Canadian other than a WTO investor,

• (a) if only the assets used in carrying on a Canadian business are acquired or only control of an entity that carries on a Canadian business is acquired, the value of the aggregate of all assets acquired or of all assets of the entity that carries on the Canadian business, calculated in the manner described in section 3.1 of these Regulations; and
• (b) if control of an entity that carries on a Canadian business and control of one or more other entities is acquired, directly or indirectly, the value — calculated in the manner described in section 3.1 of these Regulations — of the aggregate of
  • (i) all assets of the entity carrying on the Canadian business and of all other entities in Canada whose control is acquired, directly or indirectly, and
  • (ii) if control of a corporation incorporated outside Canada is acquired, directly or indirectly, all assets of all entities, both inside Canada and outside Canada, whose control is acquired in the same transaction.

20. In the case of an investment referred to in section 11 of the Act and section 3.2 of these Regulations, the market capitalization of the acquired entity calculated in the manner described in paragraph 3.2(2)(a) of these Regulations, its liabilities calculated in the manner described in paragraph 3.2(2)(b) of these Regulations and its cash and cash equivalents calculated in the manner described in paragraph 3.2(2)(c) of these Regulations.

21. In the case of an investment referred to in section 11 of the Act and section 3.3 of these Regulations, the total acquisition value of the acquired entity calculated in the manner described in subsections 3.3(2) and (3) of these Regulations, its liabilities calculated in the manner described in subsection 3.3(4) of these Regulations and its cash and cash equivalents calculated in the manner described in subsection 3.3(5) of these Regulations.

Establishment of a new Canadian business

22. In the case of the establishment of a new Canadian business,

• (a) the projected number of persons to be employed in connection with the new Canadian business at the end of the second full year of operation;
• (b) the projected total amount to be invested in the new Canadian business during the first full two years of operation; and
• (c) the projected level of sales or revenues of the new Canadian business during the second full year of operation.

Cultural heritage or national identity

23. If the investment falls within any type of business activity set out in Schedule IV,

• (a) the type of activity;
• (b) a description of the business activities carried on by the investor;
• (c) a description of any business activity carried on by the investor’s ultimate controller, if any, that is similar to any type of activity listed under paragraph (a);
• (d) a description of any products that are or will be manufactured or sold and of any services that are or will be provided by the Canadian business; and
• (e) in the case of an acquisition of control of a Canadian business, the vendor’s name and the name of the vendor’s ultimate controller, if any.

SCHEDULE II
(Paragraph 6(a))

Investor

1. Name of the investor.

2. Names of the members of the investor’s board of directors, the investor’s five highest-paid officers and any person or entity that owns 10% or more of the investor’s equity or voting rights.

3. Mailing address, telephone number, fax number and email address of the investor and any person or entity mentioned in item 2 and, in the case of an individual, their date of birth.

4. Whether the investor is a WTO investor or a NAFTA investor.

5. Name and address of the ultimate controller of the investor, if any, and the manner in which control is exercised.

6. Whether a foreign state has a direct or indirect ownership interest in the investor and, if so, the name of the state and the nature and extent of its interest in the investor.

7. Annual reports or, if not available, financial statements of the investor for the three fiscal years immediately preceding the implementation of the investment.

8. Description of the business activities carried on by the investor and by its ultimate controller, if any.

Investment

9. Name of the vendor and name of its ultimate controller, if any.

10. Copy of the purchase and sale agreement or, if not available, a description of the principal terms and conditions, including the estimated total purchase price for the Canadian business and, if applicable, the estimated purchase price for all entities acquired.

11. Sources of funding for the investment.

12. Date of implementation of investment.

Canadian Business

13. Name of the Canadian business.

14. Business or mailing address of the Canadian business.

15. Annual reports or, if not available, financial statements of the Canadian business for the three fiscal years immediately preceding the implementation of the investment.

16. Description of the business activities that are carried on by the Canadian business, including

• (a) the locations in Canada where the business is being carried on;
• (b) the business activities carried on at each location;
• (c) the number of employees at each location; and
• (d) the products that are or will be manufactured, sold or exported by the Canadian business, the services that are or will be provided and the codes assigned to the products and services by the North American Industry Classification System (NAICS) — Canada, 2007, published by authority of the Minister responsible for Statistics Canada.

17. If the investor is not a WTO investor or a NAFTA investor, whether immediately before the implementation of the investment the Canadian business is controlled by a WTO investor or a NAFTA investor.

Assets

18. In the case of an investment that is referred to in section 14 of the Act and section 3.1 of these Regulations and that is an investment in a cultural business or an investment by a nonCanadian other than a WTO investor,

• (a) if only the assets used in carrying on a Canadian business are acquired or only control of an entity that carries on a Canadian business is acquired, the value of the aggregate of all assets acquired or of all assets of the entity that carries on the Canadian business, calculated in the manner described in section 3.1 of these Regulations; and
• (b) if control of an entity that carries on a Canadian business and control of one or more other entities is acquired, directly or indirectly, the value — calculated in the manner described in section 3.1 of these Regulations — of the aggregate of
  
  • (i) all assets of the entity carrying on the Canadian business and of all other entities in Canada whose control is acquired, directly or indirectly, and
  • (ii) if control of a corporation incorporated outside Canada is acquired, directly or indirectly, all assets of all entities, both inside Canada and outside Canada, whose control is acquired in the same transaction.

19. In the case of an investment referred to in section 14.1 of the Act and section 3.2 of these Regulations, the market capitalization of the acquired entity calculated in the manner described in paragraph 3.2(2)(a) of these Regulations, its liabilities calculated in the manner described in paragraph 3.2(2)(b) of these Regulations and its cash and cash equivalents calculated in the manner described in paragraph 3.2(2)(c) of these Regulations.

20. In the case of an investment referred to in section 14.1 of the Act and section 3.3 of these Regulations, the total acquisition value of the acquired entity calculated in the manner described in subsections 3.3(2) and (3) of these Regulations, its liabilities calculated in the manner described in subsection 3.3(4) of these Regulations and its cash and cash equivalents calculated in the manner described in subsection 3.3(5) of these Regulations.

Plans

21. Detailed description of the investor’s plans for the Canadian business with specific reference to

• (a) the relevant factors set out in section 20 of the Act; and
• (b) the current operations of the Canadian business.

[22-1-o]