Key Points
- The Investment Canada Act may apply to a broad range of transactions involving foreign investors, whether through acquisition, the establishment of a business, or, in some cases, the acquisition of a minority interest.
- Depending on the type of transaction, government notification or assessment prior to or after closing may be required.
- Investments in certain sensitive industries may be subject to a national security assessment, regardless of their value.
- Quickly identifying the applicable requirements allows regulatory timelines to be factored into transaction planning and helps avoid disruptions to the transaction’s structure or timeline.
Against a backdrop of globalized trade and a surge in cross-border transactions, many Québec businesses are now drawing interest from foreign buyers (or are themselves seeking to attract international capital). These transactions raise issues far beyond commercial and tax considerations, as they are likely to be subject to the Investment Canada Act, more often than one might think.
Little known to many, this federal law governs all investments made in Canada by non-Canadians. The following article outlines the key aspects of the law, the applicable thresholds for 2026, and recent amendments that may affect the timeline and structure of your transactions involving a foreign investor.
To Whom Does the Investment Canada Act Apply?
The Investment Canada Act applies to all investments made in Canada by non-Canadians, including the setting up of any new facility, subsidiary, or business in Canada by a foreign investor.
In reality, non-Canadian investors will generally find themselves in one of the following four situations:
- their investment qualifies for a notification exemption and no action is required;
- they must file a notice of their investment after the transaction closes;
- their investment is required to undergo a pre-closing assessment due to the scale of the transaction;
- their investment requires pre-closing (or post-closing, as the case may be) assessment on national security grounds.
It should be noted that incorporations in Canada by foreign investors usually require notification, except for dormant companies (shell companies or “special purpose vehicles”).
In such cases, the underlying investment must be reported in the event of a takeover, but not if it involves a simple acquisition of a minority stake.
What review thresholds and notification requirements apply in 2026?
The Investment Canada Act outlines two main categories of review. One focuses on net benefit to Canada, which involves assessing the economic, cultural, and social impacts of the investment in the country, and the other focuses on national security.
For reviews based on net benefit (covering direct acquisitions of control), the 2026 thresholds are as follows:
- Investments by private investors members of the World Trade Organization (“WTO”) must undergo a pre-closing assessment when they exceed 1.452 billion dollars.
- This threshold rises to $2.179 billion for private investors from countries that are parties to a trade agreement with Canada, such as the Canada-United States-Mexico Agreement (CUSMA).
- WTO member government-owned companies have a significantly lower threshold, set at $578 million.
- Investors not members of the WTO or those operating in the cultural industries sector (such as video game developers, bookstores, publishing houses, or film production companies) have thresholds of $5 million for direct acquisitions and $50 million for indirect acquisitions.
For transactions (acquisitions of control) below these thresholds that do not raise national security concerns, a post-closing notification is often enough, provided it is filed within 30 days of the transaction’s closing. Your legal counsel can assist you in completing the required form.
National Security: An Assessment That Applies Regardless of Financial Thresholds
Perhaps one of the most important, and yet least understood, aspects of the system is that national security assessments can apply to any investment made by a non-Canadian, regardless of its value.
In recent years, between 20 and 30 national security assessments per year have been carried out by the Canadian government.
Amendments to the Investment Canada Act passed between 2024 and 2025 also brought in a significant change. They will now make pre-closing notification mandatory in some sensitive fields linked to national security.
Which Industries Could Be Affected?
These are the targeted industries, not all of which have yet been formally identified by regulation.
According to guidelines released by the government, they will likely include the following sectors:
- defence;
- critical minerals;
- personal data;
- critical infrastructure (energy, finance, food, transportation, government, healthcare, water, and manufacturing);
- sensitive technologies such as weapons, advanced surveillance systems, aerospace, artificial intelligence, life sciences, and robotics.
Why voluntary disclosure can be beneficial
Strategically, if an investor makes a voluntary disclosure for national security assessment purposes, the government must make a decision within 45 days.
Without such a disclosure, the government has oversight rights for a period of five years following the closing of the transaction.
Voluntary disclosure thus significantly increases predictability, which can prove crucial for establishing and managing a transaction’s timeline.
Choosing to make a voluntary disclosure is a highly strategic decision that should be discussed with your counsel.
Can Geopolitical Developments Influence the Enforcement of the Investment Canada Act?
The regulatory landscape cannot be assessed in a vacuum, and the Canadian political landscape in 2026 clearly illustrates this reality.
Earlier this year, the Canadian and Chinese governments announced several measures aimed to make foreign investment easier in both countries. Efforts were also made to expand trade and investment from the United Arab Emirates, Qatar, Australia, and India.
While these initiatives have not formally altered the provisions of the Investment Canada Act or the notification requirements, they suggest a potentially more flexible application of national security assessment measures in particular contexts.
Plan Ahead to Better Secure Your Transactions
The Investment Canada Act is often viewed as a mere administrative formality. However, it can have serious consequences for the timeline, structure, and even the viability of a transaction. A late notification, a sensitive field of activity, or an inappropriate structure can result in significant delays, conditions imposed by the government, or an outright prohibition to proceed with the transaction.
Therefore, early consultation with legal counsel is strongly recommended from the very beginning of any transaction involving a foreign investor, so that applicable obligations can be identified, factored into planning, and regulatory issues prevented from jeopardizing an otherwise well-prepared transaction at the last minute.
Plan Your Transaction with Confidence
Whether acquiring or selling a business, or bringing a foreign investor into your company’s capital, incorporating the requirements of the Investment Canada Act from the earliest stages of the transaction allows you to better manage risks, anticipate regulatory delays, and ensure the smooth completion of the transaction. Early legal guidance helps structure the transaction effectively and avoid surprises at closing.
Considering a transaction involving a foreign investor? Feel free to contact Marianne Richer-Laflèche to assess which requirements apply to your situation. To learn more about the support our teams provide, explore our services in mergers and acquisitions, business law, and corporate financing.
FAQ – Investment Canada Act
FAQ – Investment Canada Act
The Investment Canada Act applies to all investments made in Canada by non-Canadians. Depending on the nature of the investment, an exemption, notification, or government assessment may be required.
No. In many cases, a simple post-closing notification is enough. However, some acquisitions exceeding the thresholds set by law or some investments involving national security concerns may require a pre-closing assessment.
Yes. Since the amendments to the Investment Canada Act, some minority investments may also be subject to pre-closing notification, particularly when an investor gains rights of influence, such as the appointment of a director.
An early analysis helps identify applicable obligations, incorporate regulatory deadlines into the transaction timeline, and, if needed, adjust the transaction structure to minimize the risk of delays or government intervention.
