Yes, and passing the headline 51% Canadian-ownership threshold is not enough on its own — the Canada Transportation Act also caps any single non-Canadian investor at 25% of voting interests, and a cap table can clear the first test comfortably while failing the second.
Short answer
Yes, and passing the headline 51% Canadian-ownership threshold is not enough on its own — the Canada Transportation Act also caps any single non-Canadian investor at 25% of voting interests, and a cap table can clear the first test comfortably while failing the second.
Section 55(1) of the Canada Transportation Act defines “Canadian”, for a corporation, as one “incorporated or formed under the laws of Canada or a province, that is controlled in fact by Canadians and of which at least 51% of the voting interests are owned and controlled by Canadians and where (i) no more than 25% of the voting interests are owned directly or indirectly by any single non-Canadian, either individually or in affiliation with another person, and (ii) no more than 25% of the voting interests are owned directly or indirectly by one or more non-Canadians authorized to provide an air service in any jurisdiction”. That is at least three separate conditions, and all of them have to hold at once: control in fact by Canadians, the 51% aggregate floor, and a 25% ceiling on any single non-Canadian holder — with a further, separate 25% ceiling on non-Canadian airline holders specifically.
A cap table can be 60% Canadian in aggregate, comfortably past the 51% floor, and still fail if one non-Canadian investor alone holds more than 25% of voting interests — the aggregate test and the single-holder test are independent conditions in the same definition, not the same test expressed two ways. Model every non-Canadian participant individually, not just the aggregate non-Canadian percentage.
Canadian status is not a disclosure item; it is a condition of holding the licence at all. Section 61 provides that the Agency shall issue a domestic licence only if the applicant establishes “is a Canadian”. A change of ownership that leaves the licensee failing s.55(1)’s definition is not a paperwork issue for the Agency to wave through — it is the applicant no longer meeting the threshold condition the licence depends on.
Because the statute tests voting interests, not economic interests, restructuring part of an over-25% investor’s position into non-voting preferred shares can bring its voting interest below the cap without reducing that investor’s overall economic participation in the deal — a securities-level fix rather than a renegotiation of price.
The full cap table and the fix that cured it are in Treadstone Academy’s Case Files: a raise that was 60% Canadian in aggregate and still failed, because one American fund alone held 27%.
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