Anonymised, illustrative composite. A non-Canadian fund bought a small Canadian manufacturer for $12,000,000, well under every review threshold anyone checked. Nobody checked the separate, size-blind obligation that applied anyway.
At a glance
A non-Canadian private equity fund acquired 100% of the shares of a small Canadian precision-manufacturing business for $12,000,000. The fund's standard acquisition questionnaire asked one Investment Canada Act question: is this deal above the review threshold? On the numbers, the answer was clearly no — the deal sat far below the net-benefit-review threshold for a non-WTO or WTO investor either way, and nothing about the target's sector suggested a national-security concern under the kind of no-threshold review discussed in the national security review that has no threshold.
Concluding “not reviewable,” the deal team closed the acquisition without making any filing under the Act at all.
Four years later, new counsel engaged for an unrelated financing round ran a routine ICA compliance check and found no notice had ever been filed for the original acquisition. See when a foreign buyer needs government approval for the general shape of the distinction that had been missed: reviewability and notifiability are separate questions, and the deal team had only ever asked one of them.
s.11: “The following investments by non-Canadians are subject to notification under this Part: (a) an investment to establish a new Canadian business; and (b) an investment to acquire control of a Canadian business in any manner described in subsection 28(1), unless the investment is reviewable pursuant to section 14.” Notification is not threshold-gated. It applies to every acquisition of control by a non-Canadian that is not instead caught by the review track — a $12,000,000 deal is notifiable exactly as automatically as a $1,200,000,000 one.
Deal size $12,000,000. Years between closing and discovery: four. No demand had been sent by the Minister under s.39 by the time the gap was caught, and no explicit outer deadline for giving the s.12 notice appears in either s.12 or the enforcement provisions reviewed for this file.
s.12: “Where an investment is subject to notification under this Part, the non-Canadian making the investment shall, at any time prior to the implementation of the investment or within thirty days thereafter, in the manner prescribed, give notice of the investment to the Director providing such information as is prescribed.” The thirty-day window describes the ordinary case; the section does not say notice becomes impossible or void after that window closes — which is exactly what let the fund cure the omission four years late rather than being locked out of compliance entirely.
What changes with delay is exposure, not eligibility to file. s.39(1)(a) gives the Minister power to act where a non-Canadian “has failed to give a notice under section 12 or file an application under section 17”: the Minister “may send a demand to the non-Canadian, requiring the non-Canadian, forthwith or within such period as is specified in the demand, to cease the contravention, to remedy the default, to show cause why there is no contravention of the Act or regulations.” Neither s.39 nor s.40 states a limitation period on when that demand power may be exercised — the exposure for a years-old, unremedied failure to notify does not appear to expire on its own.
Read the unit. Behind the demand sits a court order power. s.40(1): if a party “fails to comply with a demand under section 39, an application on behalf of the Minister may be made to a superior court for an order”, and s.40(2)(a) lets the court order the non-Canadian to “divest themselves of control of the Canadian business, or to divest themselves of their investment in the entity, on any terms and conditions that the court considers just and reasonable.” The realistic exposure for a small, unremarkable deal like this one was never divestiture — it was the standing, uncapped-in-time possibility of a demand landing at any point until notice was finally given.
The fund filed a notice under s.12 covering the original acquisition, four years late, before the Minister had sent any demand. The filing was accepted as a late notification rather than treated as void; no demand under s.39 issued in response. The historical four-year gap remained a disclosed, resolved item in the fund's own subsequent financing diligence rather than an open enforcement matter.
Left uncorrected, the exposure was not that the $12,000,000 deal would ever be unwound — the demand-and-court-order machinery exists for genuine contraventions the Minister chooses to pursue, and nothing in these facts suggested that outcome was likely. The real cost was that the gap sat as an open, undated liability the fund could not represent as resolved to any later counterparty, lender, or co-investor who asked the routine question the original deal team never had.
The tell was the acquisition questionnaire's single question. A questionnaire that asks “is this reviewable” and stops there has, without saying so, assumed that notification and review are the same gate. They are not: review is threshold-gated, and notification is not.
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