Most non-resident acquisitions of a Canadian business close without a discretionary federal review. The two questions that actually decide your timeline are notification versus review, and whether the deal is even large enough to be notifiable at all.
Key takeaways
STEP 01 OF 10
The Investment Canada Act applies a materially higher review threshold to acquirers from World Trade Organization member states — which covers most institutional acquirers — than to other non-Canadians. Confirm this classification first, because it decides which threshold test in the next step actually applies to your fund.
A state-owned enterprise that is also a WTO investor is measured differently again: on asset value, not enterprise value, per ICA s. 14.1(1.1). If any fund limited partner or co-investor is state-controlled, flag it before you scope the review question, not after.
STEP 02 OF 10
A WTO investor's direct acquisition of control is measured against an enterprise-value threshold set at $1,000,000,000 for the relevant period under ICA s. 14.1(1)(d), adjusted annually by the Minister against nominal GDP and republished in the Canada Gazette under s. 14.1(2)–(3). A non-WTO investor is instead tested on the older asset-value figures in s. 14(3)–(4) — $5,000,000 direct, $50,000,000 indirect.
Most independent-sponsor and lower-middle-market acquisitions by a WTO-country fund sit well under the enterprise-value figure and are never reviewable at all. That does not mean the Act stops applying — it means you move to the notification path instead.
STEP 03 OF 10
ICA s. 11 states plainly that an acquisition of control described in s. 28(1) is subject to notification “unless the investment is reviewable pursuant to section 14” — the two paths are structured as an either/or, not review-then-notify. A non-reviewable deal still has to be notified; it is simply not subject to a discretionary net-benefit-to-Canada decision before closing.
Build the notification filing into your closing checklist as its own line item, distinct from the merger-review filing in the next step. Missing it is a compliance gap even on a deal too small to ever have been reviewable.
STEP 04 OF 10
A lower, effectively size-independent threshold applies to the acquisition of a cultural business — book and periodical publishing and distribution, film and video, music recording and publishing, and broadcasting are named in ICA s. 14.1(6). This runs on its own track regardless of your answer in step two.
A target with a small in-house content or publishing arm can trip this even when the core business is nothing like a media company. Screen for it at first look, not at documentation stage.
STEP 05 OF 10
The Competition Act notification test is separate from the ICA and has to be cleared on its own facts. The first prong is party-size: the parties, together with their affiliates, must together exceed $400,000,000 in Canadian assets or Canadian-sourced revenue. The second prong is transaction-size, enacted at $70,000,000 and adjusted annually against nominal GDP under s. 110(7)–(9), published each January in the Canada Gazette. Both prongs have to be met for Part IX to apply at all — see clearing a deal under the Competition Act for the full mechanics.
STEP 06 OF 10
Where the target is privately held, s. 110(3)(b) sets the notifiable share threshold at more than 35% of voting shares — against just 20% where any of the target's voting shares are publicly traded, and 50% for a person already above the first threshold. Confirm which band your acquired stake actually falls into; a 30% stake in a private target is not notifiable on share count alone even where both size prongs are met.
An asset acquisition runs on a different test again — the assets in Canada of the business being acquired, or the Canadian revenue those assets generate, under s. 110(2) — so re-run this step from scratch if the deal is structured as an asset purchase rather than a share purchase.
STEP 07 OF 10
A notifiable transaction cannot close before the end of a 30-day waiting period that runs from the day the Commissioner receives your s. 114(1) filing, under s. 123. If the Commissioner instead issues a supplementary information request, a second 30-day clock starts fresh from the day that response is received — not from the original filing date.
Treat the second clock as the realistic case for any deal with genuine market overlap between the acquirer's existing Canadian holdings and the target. A fund that assumes the first 30-day window is the whole process is the one that misses its committed closing date.
STEP 08 OF 10
If the target is a Canadian-resident corporation and consideration includes shares of the acquirer, a rollover under ITA s. 85(1) is only available where the transferee is a taxable Canadian corporation — not a foreign holding entity directly. Most non-resident sponsors therefore incorporate a Canadian acquisition corporation to hold the target, which also puts a resident entity in front of the seller for closing mechanics.
A federal acquisition vehicle incorporated under the CBCA is subject to its own director-residency rule — at least 25% of directors must be resident Canadians, or at least one where the board has fewer than four members, under CBCA s. 105(3). Confirm this against your actual board composition before incorporation, not after the share purchase agreement is signed.
STEP 09 OF 10
The election that lets most of a Canadian business acquisition close without GST/HST payable — the ETA s. 167(1) sale-of-a-business election — is unavailable where the supplier is a registrant and the recipient is not. For a newly incorporated non-resident-owned Canadian buyer, GST/HST registration has to be a pre-closing task, not a post-closing administrative cleanup.
Goodwill itself falls outside GST/HST regardless of the election, under s. 167.1. But every other asset in the deal depends on your acquisition vehicle's registrant status being sorted before the closing date, which is why this belongs on the same checklist as the corporate-law steps above, not in a separate finance workstream.
STEP 10 OF 10
Where employees continue working for the business after a change of ownership, their tenure with the seller carries forward to the buyer under Ontario's ESA continuity rule — a terminated employee's notice entitlement is calculated on their full combined service, not their time with the new owner. British Columbia's rule is wider still: ESA s. 97 deems continuity automatically on disposition, and it survives a receivership.
This is a diligence line item for a non-resident acquirer specifically because it is easy to assume the acquisition itself resets the employment relationship. It does not, in either province, and the exposure attaches to whichever entity ends up as the employer of record after closing.
Assuming the ICA review threshold applies to every non-Canadian buyer equally. A WTO investor is tested against the much higher enterprise-value figure in ICA s. 14.1; a non-WTO investor is tested against the older, much lower asset-value figures in s. 14(3)–(4). Confirm which regime applies before estimating your review risk.
Treating 'not reviewable' as 'nothing to file'. ICA s. 11 makes a non-reviewable acquisition of control notifiable instead. It is a lighter obligation, not an absent one.
Sizing the Competition Act test on global figures. Both the $400,000,000 party-size prong and the enacted transaction-size prong are measured on Canadian assets and Canadian-sourced revenue, not worldwide totals. A large global fund with a small Canadian book can fall well under both prongs.
Building the closing timeline around the first 30-day window only. A supplementary information request restarts the Competition Act waiting period from the day the response is received. Model the longer path unless you have a specific reason to expect a clean first pass.
Leaving the acquisition vehicle's GST/HST registration to closing week. The s. 167 election that keeps most of the deal free of GST/HST is unavailable if the recipient is not yet a registrant. Registering the acquisition corporation is a pre-closing task.
Scenario A. A WTO-country fund with $600,000,000 in Canadian assets agrees to acquire 60% of the voting shares of a privately held Ontario manufacturer with $90,000,000 in Canadian assets. Party-size test: $600,000,000 + $90,000,000 = $690,000,000, well above the $400,000,000 threshold in s. 109(1). Transaction-size test: $90,000,000 exceeds the enacted $70,000,000 figure in s. 110(7). Share test: the target is privately held, so the applicable threshold is 35% under s. 110(3)(b)(ii) — the fund's 60% stake clears it. All three tests are met: the deal is notifiable under the Competition Act, and the s. 123 waiting period applies before closing.
Under the Investment Canada Act, the same deal reads differently. A $90,000,000 enterprise value sits far under the $1,000,000,000 WTO-investor threshold in s. 14.1(1)(d), so the acquisition is not reviewable. It is still notifiable under s. 11, which is a filing obligation, not a discretionary net-benefit review. Two federal regimes, two different outcomes, on the same facts.
Not as a legal precondition of the ICA or Competition Act filings themselves, but a share rollover under ITA s. 85 is only available to a taxable Canadian corporation, and GST/HST registration mechanics favour having a Canadian acquisition vehicle in place before closing. See holding company for the structuring mechanics.
Only if the stake also stays under the applicable share threshold — 35% for a private target, 20% for a public one — and both size prongs are also unmet. A 45% stake in a private target still clears the 35% line and is notifiable if the size tests are met.
The Act structures notification as a condition tied to the acquisition of control described in s. 11, not an optional post-closing courtesy filing. Treat it as a closing-mechanics item on the same checklist as the Competition Act filing, not a follow-up task.
$70,000,000 is the amount as enacted in s. 110(7); the Act requires the Minister to publish an updated figure in the Canada Gazette every January, adjusted against nominal GDP under s. 110(8). Confirm the current published figure before relying on a specific number.
A 30-minute call is enough to map ICA and Competition Act exposure against your actual deal size.
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