Winnipeg Free Press - PRINT EDITION

Foreign takeover review trigger set

Will rise to $1B over four years

  • Print

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 follows a decision in 2010 by then-industry minister Tony Clement to veto the takeover of Potash Corp. by Anglo-Australian mining firm BHP Billiton. It was deemed 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 the government did not clarify what a net benefit would be in the regulatory changes. "That's the one that brings a lot of upheaval and a lack a stability into communities and into labour and industry. That's what really needs to be defined," NDP deputy industry critic Dan Harris said.

Liberal industry critic Geoff Regan said what Canadians and investors really want is to know what constitutes a net benefit to Canada.

"It is very disappointing that the Conservatives have again refused to clarify the net-benefit test and continue to block all attempts to have the industry committee study the Investment Canada Act," Regan said.

The changes to the Investment Canada Act to increase the review thresholds were passed several years ago, but the government did not make the needed regulatory change until Friday.

Under the changes, the investment-review threshold will immediately rise from $330 million in asset value to $600 million in enterprise value for two years, then to $800 million for two years, then to $1 billion.

The government noted the change from book value to enterprise value will better reflect the worth of a business. The change is key when it comes to knowledge-based industries where businesses have few hard assets and instead rely on intellectual horsepower such as the tech industry.

The proposed mediation process comes in the wake of an acrimonious fight between Ottawa and U.S. Steel over broken promises the company made to secure approval of its purchase of Stelco in 2007.

In an agreement late last year, the company promised to keep producing steel in Canada for at least another four years and make major investments in its Canadian mills.

-- The Canadian Press

Republished from the Winnipeg Free Press print edition May 26, 2012 B10

Fact Check

Fact Check

Have you found an error, or know of something we’ve missed in one of our stories?
Please use the form below and let us know.

* Required
  • Please post the headline of the story or the title of the video with the error.

  • Please post exactly what was wrong with the story.

  • Please indicate your source for the correct information.

  • Yes

    No

  • This will only be used to contact you if we have a question about your submission, it will not be used to identify you or be published.

  • Cancel

Having problems with the form?

Contact Us Directly
  • Print

You can comment on most stories on winnipegfreepress.com. You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

You can comment on most stories on winnipegfreepress.com. You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

Have Your Say

New to commenting? Check out our Frequently Asked Questions.

Have Your Say

Comments are open to Winnipeg Free Press print or e-edition subscribers only. why?

Have Your Say

Comments are open to Winnipeg Free Press Subscribers only. why?

The Winnipeg Free Press does not necessarily endorse any of the views posted. By submitting your comment, you agree to our Terms and Conditions. These terms were revised effective April 16, 2010.

letters

Make text: Larger | Smaller

LATEST VIDEO

Vendors say ugly Christmas sweaters create brisk business

View more like this

Photo Store Gallery

  • A  young goose stuffed with bread from  St Vital park passers-by takes a nap in the shade Thursday near lunch  –see Bryksa’s 30 day goose challenge Day 29-June 28, 2012   (JOE BRYKSA / WINNIPEG FREE PRESS)
  • JOE.BRYKSA@FREEPRESS.MB.CA Local-(  Standup photo)-    A butterfly looks for nector on a lily Tuesday afternoon in Wolseley-JOE BRYKSA/WINNIPEG FREE PRESS- June 22, 2010

View More Gallery Photos

Poll

Will you watch The Interview?

View Results

View Related Story

Ads by Google