Thank you, Mr. Chair.
Hello.
I am the Director General of the Investment Review Division at Industry Canada.
I am here to speak to division 9 which contains amendments to the Investment Canada Act. These changes are found at clauses 186 to 190.
The first amendment in clause 186 removes an exemption from the notification requirements under the Act. It amends paragraph 10(1)(c) of the Investment Canada Act so that foreign investors will be required to file a notification under the act when they acquire a Canadian business through the realization of security on a loan.
This requirement applies where the acquisition is not subject to another federal approval. Other approvals could arise under the Bank Act, the Cooperative Credit Associations Act, the Insurance Companies Act, or the Trust and Loan Companies Act.
Proposed subsection 186(2) provides that part IV of the Investment Canada Act continues not to apply to this type of acquisition. Part IV is the part of the Investment Canada Act that governs reviews of foreign investments on the basis of their likely net benefit to Canada. The effect of these two subclauses, 186(1) and 186(2), is that this type of transaction will now be subject to notification under the act, but will continue to be exempt from net benefit review. This is a long-standing exemption from net benefit review, and is in place so as not to closely affect credit markets.
A notification is a form specified in regulations calling for information about the parties and the transactions. This means that through the administration of the Investment Canada Act, the government will now receive information about transactions in which a foreign investor has granted a loan to a Canadian business, the business has defaulted, and the lender acquires the business by realizing on security. This additional information will contribute to the data about foreign investment that is collected by Industry Canada.
The next amendments are provided under clause 187, which contains amendments to the confidentiality provisions in section 36 of the act. Section 36 contains strict confidentiality provisions with certain exemptions that permit limited disclosure of information, for instance in the context of a net benefit review. These amendments in subsections 187(1) and 187(2) will permit disclosure of the notices that are issued at each stage of the national security review process in the act.
Proposed subsection 187(1) lists the notices that can be sent during a national security review process, and permits disclosure of information in these notices. Proposed subsection 187(2) permits disclosure of the effect of a Governor in Council order at the end of a review. Subsection 187(3) provides for protection of information in a Governor in Council order if the disclosure of information would prejudice the investor or the Canadian business.
The effect of these amendments will be to provide discretion for more information to be disclosed about the process of national security reviews, while continuing to protect confidentiality of investors' information or national security information. For example, the government will be able to disclose that a notice has been sent to an investor that an order for review may be made, that no order has been made, or a notice that an order for review has been made, or that an order has been made after a review. These provisions create a discretion, but not an obligation, to make such information public.
Finally, there are some amendments to the Economic Action Plan 2013 Act. These amendments provide authority for amendments to the regulations under the Investment Canada Act to allow flexibility to extend timelines for national security reviews under the act. One of these amendments is being repealed, but the others will remain in place and will be used when the regulations are amended. This is a housekeeping change that is required for the national security review regulations. The authorities remain in the act and the Economic Action Plan 2013 Act, to provide for extensions to the national security review process time periods that were announced in 2013. These will provide the government with additional flexibility in the time taken to conduct careful and thorough national security reviews.
Thank you.