The issue is purely about access to foreign capital. This is the impact section 116 currently has on foreign venture capital funds. If a company has raised early-stage investment, or A round, perhaps within Canada, and it wants to do the next round of financing, the section 116 requirement gets in the way of the U.S. venture capitalists being able to come in with Canadian VCs to invest in the companies. The companies can't continue to grow because they don't have access to venture capital the way their U.S. counterparts do.
On October 28th, 2009. See this statement in context.