Voluntary Filing for National Security Reviews

Summary#

These are proposed changes to the National Security Review of Investments Regulations under the Investment Canada Act. Published February 12, 2022, the proposal would let some foreign investors file voluntarily for a national security check before they complete certain investments, and it would give the government a longer window—up to 5 years—to act when no voluntary filing is made. This is a proposal (Part I); it is not law yet and there was a 30 days comment period after publication.

What it does#

• Creates a voluntary pre-implementation filing option for investments that normally do not require a filing under the Investment Canada Act (mainly minority or non-controlling investments).
• If an investor provides the required information (listed in a new Schedule) and the Minister certifies it as complete, the government would have 45 calendar days to take the first step in a national security review.
• If no voluntary filing is provided, the government would have up to 5 years after the investment is implemented to issue a notice or order to start a national security review (instead of the current 45 calendar days limit for detection after implementation).
• The new Schedule lists the specific information a voluntary filer must give, such as investor ownership and control details, board and senior officers, vendor and investment descriptions, funding sources, implementation date, and basic details about the Canadian entity and its activities (including NAICS codes).
• The proposal says the amendments would come into force on the day they are registered if finalized.

Who's affected#

• Non-Canadian investors making investments in Canada that do not require a mandatory filing (for example, minority stakes or other non-controlling investments). These investors can choose to file voluntarily to get earlier certainty.
• Canadian businesses that would receive such investments. They may gain faster certainty about whether an investment will face conditions or orders.
• Innovation, Science and Economic Development Canada (ISED) and the Minister of Industry, who would process voluntary filings and certify completeness.
• The federal government’s national security review teams and, indirectly, small businesses that might benefit from increased clarity about incoming investment.
• The proposal estimates voluntary filings could add up to 200 filings per year, with an overall administrative cost of less than $1 million annually. It also notes historically fewer than 1% of mandatory filings triggered a formal national security review.

Why it matters#

• For foreign investors: it offers a way to learn before they complete a deal whether the government will raise national security concerns. That can save money and avoid the risk of being ordered to divest later.
• For Canadian companies: faster clarity can make it easier to plan and accept foreign investment, or to walk away sooner if an investment will be blocked or conditioned.
• For the public and security agencies: extending the post-implementation review window to 5 years gives officials more time to detect and assess investments that were not voluntarily flagged.
• The change brings Canada closer to systems used by other countries (the proposal notes the United Kingdom also has a 5 years window and Australia 10 years, while the United States allows voluntary filings with no fixed time limit).