If you're a non-Canadian looking to establish or acquire a business in Canada, it's essential to be aware of the legal requirements.
While certain requirements, like filing a declaration of the business with the Registre des Entreprises is well-known, non-Canadians have an additional legal obligation to fulfill: providing notice to the Canadian government. The Investment Canada Act (the “Act”) requires non-Canadians who establish or acquire a business in Canada to provide notice [1].
The purpose of the Act is to encourage investment, economic growth, and employment opportunities while reviewing those that could be injurious to national security [2].
The notice must be given in writing [3] and cover details about the investor, the investment, the Canadian business, and, in the case of an acquisition of an existing business, its details [4]. If establishing a new business, projections regarding the number of employees, investment amounts, and sales or revenues must be included [5]. Additionally, if the commercial activities are related to cultural heritage or national identity, details about that must also be provided in the notice [6].
To ensure a well-drafted notice, it's crucial to consult with a business lawyer who can help navigate the complexities of doing business in Canada. The notice must be given before investing or within 30 days thereafter [7]. In certain circumstances, the investment will be reviewed by the Director of Investments. Failure to comply with the notice requirement can result in significant penalties, including fines and even the forced divestiture of the investment.
In conclusion, it's important for non-Canadians looking to establish or acquire a business in Canada to be aware of the legal requirements under the Investment Canada Act. By working with our business law firm, non-Canadians can ensure that they provide the necessary notice and comply with the Act's requirements.
This blog post is not legal advice and is for general informational purposes only. Always speak with a lawyer before acting on any of the information contained herein.
[1] s 11 of the Act
[2] s 2 of the Act
[3] s 5 of the Investment Canada Regulations, SOR/85-611
[4] Schedule 1 of the Investment Canada Regulations, SOR/85-611
[5] Ibid.
[6] Ibid.
[7] S 12 of the Act