Net benefit review is the Investment Canada Act test a non-Canadian’s acquisition of control of a Canadian business must pass once the deal is large enough to be reviewable, judged against six factors set out in the Act itself.
Under Investment Canada Act s.20, a reviewable investment is assessed against six factors: the effect on “the level and nature of economic activity in Canada” (including employment and exports); “the degree and significance of participation by Canadians” in the business and its industry; the effect on “productivity, industrial efficiency, technological development, product innovation and product variety in Canada”; the effect on competition within the relevant Canadian industry; compatibility with “national industrial, economic and cultural policies”; and the investment’s “contribution to Canada’s ability to compete in world markets.”
Whether a deal reaches review at all turns on size. A direct acquisition of control is reviewable where the value of the assets acquired is “five million dollars or more” (s.14(3)), an indirect acquisition at “fifty million dollars or more” (s.14(4)). For a WTO investor, s.14.1(1)(d) sets the enterprise-value threshold at “$1,000,000,000” as enacted for the investment’s initial period; later years’ amounts are determined by the Minister every January against nominal GDP and published in the Canada Gazette, so a current-year figure should always be confirmed there rather than assumed. Net benefit review is separate from — and does not replace — the Act’s national security review powers, which can apply regardless of a deal’s size.
Suppose a WTO investor agrees to acquire 100% of the shares of a Canadian manufacturer at an enterprise value below the s.14.1(1)(d) threshold for the current period. The deal is not reviewable for net benefit on that basis, though it may still require a notification filing, and remains subject to the Act’s national security provisions regardless of size. Now suppose the same investor instead acquires a Canadian business with an enterprise value above that threshold: the transaction triggers a full net-benefit review against s.20’s six factors before closing can proceed.
See also: Pre-merger notification, Search fund
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