The financing would have expired before the review finished, and the Act has a door for exactly that

The situation

A WTO investor agreed to acquire a Nova Scotia seafood-processing and export business at a value well above the review threshold. The acquisition facility backing the deal was a syndicated term loan with a commitment letter that expired on a fixed date — a date the parties had picked before anyone had confirmed how long Investment Canada Act review would actually take, and one that fell squarely inside the ordinary 45-day review period.

The general rule offered no way around this. Section 16(1) bars implementation of a reviewable investment until the Minister is satisfied or deemed satisfied — there is no general exception for a buyer whose financing is about to lapse.

The problem

Renegotiating the commitment letter was possible but expensive: the syndicate's price for an extension rose sharply once the original expiry date was inside sixty days, and the buyer's treasury team preferred not to pay for optionality it might not need. Counsel turned instead to the one statutory door out of the standstill.

The numbers

The financing commitment carried a facility fee of 0.85% of the committed amount, payable again in full on any extension past the original expiry — a seven-figure cost on a facility of this size, against which even an expedited application was inexpensive.

The rule that decided it

Section 16(2) lists exactly three circumstances in which the s.16(1) standstill “does not apply”. Paragraph (a) is the one available to an ordinary commercial buyer: the standstill does not bind where “the Minister has sent a notice to a non-Canadian… to the effect that the Minister is satisfied that a delay in implementing the investment would result in undue hardship to the non-Canadian or would jeopardize the operations of the Canadian business that is the subject of the investment”. Paragraphs (b) and (c) are narrow carve-outs for a different manner of acquisition and for section 15 investments; neither touched this deal.

Getting there required a written request. Section 16(3) then puts a clock on the Minister's answer: “If a non-Canadian makes a written request to the Minister for a notice referred to in paragraph (2)(a), the Minister shall, within 30 days after receiving all the information required for the Minister to decide whether the conditions described in that paragraph exist, advise the non-Canadian whether he or she will issue the notice or not.” The clock does not start on the date of the request — it starts once the Minister has everything needed to decide, which puts the pace of the answer partly in the applicant's own hands.

Read the unit. The test is hardship or jeopardy to the parties in front of the Minister — the investor or the Canadian business — not a general commercial-convenience standard and not a test about whether the deal is a good one. The buyer's submission accordingly focused narrowly on the financing commitment's hard expiry and the operational disruption to the target's seasonal processing schedule if the acquisition slipped past a fixed calendar milestone, not on the merits of the transaction, which remained under separate review.

The outcome

The Minister issued the s.16(2)(a) notice twenty-two days after the request, inside the s.16(3) window measured from the date the file was complete. The deal implemented on its original commercial timeline, ahead of the underlying net-benefit determination, which continued to run under the ordinary s.20–23 process over what was now a completed acquisition.

What it would have cost otherwise

Without the notice, the buyer's choice was to let the financing lapse and re-price it, or to close in contravention of s.16(1) and accept the enforcement exposure that follows — a Ministerial demand under s.39(1)(b) for having “implemented an investment the implementation of which is prohibited by section 16”. Neither was acceptable next to the cost of a single application.

The tell

The tell was procedural discipline, not legal argument: the buyer's package answered every question the Minister's office raised on the first pass, because the s.16(3) clock only starts once the file is complete. A hardship notice sought with an incomplete record does not save time — it just moves the delay from the standstill to the information-gathering stage before the clock even begins.

Takeaways

• • s.16(2)(a) is the only general-purpose exception to the s.16(1) standstill, and it requires the Minister's own satisfaction of undue hardship or jeopardy — not merely the applicant's inconvenience.
• • The s.16(3) thirty-day clock runs from a complete file, not from the date of the request — build the hardship submission to be complete on first delivery.
• • An early-implementation notice changes the sequencing, not the substance: the net-benefit review under s.20–23 continues after closing, over a completed transaction.
• • Closing in contravention of s.16(1) without the notice is a distinct enforcement trigger under s.39(1)(b), independent of how the underlying review would have come out.

Sources

• • Investment Canada Act s.16 — s.16(1) marginal note Prohibition; s.16(2) marginal note Exceptions (the undue-hardship notice at (a)); s.16(3) marginal note Request for notice (the 30-day answer clock).
• • s.39(1)(b) — marginal note Ministerial demand: enforcement against implementing a s.16-prohibited investment.
• • Treadstone Law — when a financing condition falls through on an Ontario business purchase — background on financing-timeline risk in a deal. It addresses the buyer's own conventional financing condition, not a federal regulatory standstill; the ICA provisions above are the operative rule for this mechanic.