In brief

On 7 December 2022, Minister François-Philippe Champagne, Minister of Innovation, Science and Industry (Minister), announced the Canadian government introduced legislation to amend the Investment Canada Act (ICA), known as the National Security Review of Investments Modernization Act. While the proposed amendments at first appear to be a dramatic overhaul of the existing national security review framework for foreign investment in Canada, they are generally consistent with other recent legislative amendments and policy developments related to Canada’s national security, and with trends in other jurisdictions.  The proposed changes heighten the importance of proactive planning to address national security risks arising in commercial transactions and other forms of foreign investment.

In depth

Foreign investment review in Canada continues to evolve, with a number of significant legislative and policy developments related to Canada’s national security. In 2021, the Guidelines on the National Security Review of Investments were materially updated. In 2022, the ICA was amended to create a voluntary filing mechanism for minority investments that may raise national security concerns, and Minister Champagne announced major policy statements on both Russian foreign investment and foreign investment by state-owned or state-influenced enterprises (SOEs) in Canadian businesses or assets involving critical minerals

The most recent proposed amendments are the most extensive reforms to the ICA in more than ten years. They respond to calls for modernization of the ICA to respond to strategic and geopolitical concerns, and are intended to further support Canada’s ability to screen, review and impose conditions on foreign investments on national security grounds. 

The proposed amendments will have a significant impact on how foreign investors discharge their obligations under the ICA and in the national security review process. Key reforms included in the proposed amendments include: 

  • Mandatory Pre-implementation Filing Requirements. The legislative amendments would require all foreign investors to make pre-closing notifications for investments in prescribed business sectors, and foreign investors would be prohibited from completing their investments until the prescribed national screening periods have expired. The prescribed business sectors, which are expected to build upon existing national security guidance, and the prescribed timelines that will apply, have yet to be announced and will be set out in regulations. This amendment formalizes the practice of filing pre-closing notifications voluntarily (rather than post-closing as is legally permitted today) for any investment that could raise national security concerns to obtain certainty that the investment does not raise national security concerns that an investor will have to deal with post-closing. 
  • Flexibility and Efficiency in the National Security Review Process. The legislative amendments introduce new powers for the Minister to, among other things, take interim measures to protect Canada’s national security during the course of a national security review, and accept undertakings to mitigate an investment’s potential risk to Canada’s national security. These new powers are intended to introduce flexibility and create efficiencies within the existing national security review framework, particularly where foreign investors are motivated to work with the Canadian government to mitigate any national security concerns. 
  • Sharing Investor-Specific Information with Allies. The legislative amendments introduce new powers for the Minister to share information with Canada’s allies, on any terms and conditions that the Minister deems appropriate, to support foreign investment reviews and national security assessments. These changes are similar to amendments made to facilitate coordination with allies that were made to the US regime in 2018. Under existing provisions, information about specific investors is generally considered protected and the Canadian government is not officially permitted to disclose such information, including to foreign states. Legislative announcements indicate that information that raises confidentiality or other concerns will not necessarily be shared, and that information will only be shared in the context of a national security review. The proposed information sharing could nevertheless raise concerns as the information foreign investors are required to provide in notifications and other filings often contain highly confidential commercial and personal data.   
  • Significant Increases to Financial Penalties for Non-Compliance and New Financial Penalties for Missed Filings. The legislative amendments update and introduce new financial penalties, and create a formula to adjust financial penalties in the future. In particular, non-compliance may result in a fine of CAD 25,000 for each day that the contravention continues, and failure to file a required pre-implementation notification or application for net benefit review may result in a fine of CAD 500,000. Previously, the financial penalties were capped at CAD 10,000 per day that the contravention continued. The Canadian government will be required to seek a court order to impose any penalties; however, the reasonable size of the penalties suggests a heightened likelihood that they may be imposed in practice. 
  • New Protections for Sensitive Information in Judicial Review. The proposed amendments will introduce new provisions allowing for “closed material” proceedings, which will improve transparency for foreign investors seeking to overturn national security decisions and permit the foreign investor to participate in the judicial review. The proposed amendments will permit the use of sensitive information during the course of judicial review of decisions under the ICA, while protecting the sensitive information from third party and public disclosure. 

Taken together, the amendments are likely to increase scrutiny and lengthen the ICA regulatory process in identified sectors, make certain investments no longer viable absent mitigation conditions that may be commercially unacceptable, and increase the risks and consequences generally for non-compliance. Investors will want to begin factoring the possibility of more significant regulatory hurdles into commercial timelines, and consider even more carefully their approach to future foreign investment. 

As the proposed amendments are subject to Canada’s legislative process, and may be revised as they undergo public consultation and parliamentary debate, investors should monitor for further updates as the proposed amendments are developed and refined over the course of 2023. In addition, the Canadian government has signalled that many details will not become known until the adoption of implementing regulations after the legislation has been finalized.1 

While the proposed amendments are not retroactive and will apply only to future foreign investments in Canada once the amended legislation comes into effect, it is not too early to begin factoring the commercial implications into transaction planning and to evaluate the impact on future regulatory processes and timing, and in some sectors the viability of certain investments. 

Summary of Proposed ICA Amendments 

  1. Introduce mandatory suspensory pre-implementation filing requirements for foreign investments in business sectors to be prescribed in regulations
  2. Authorize the Minister, in consultation with the Minister of Public Safety, to extend the national security review of investments
  3. Update penalties for non-compliance and introduce a new financial penalty for failing to comply with pre-implementation filing requirements
  4. Authorize the Minister to impose interim conditions during a national security review to reduce the risk of national security injury taking place during the course of the review itself
  5. Authorize the Minister to accept undertakings to mitigate national security risk that would result from the investment, including for example governmental approval for proposed business locations to avoid proximity to sensitive Canadian assets, creating approved corporate security protocols to safeguard information and access to a site, or granting facility access for compliance inspection
  6. Permit the Minister to disclose information about an investor to Canada’s allies in order to support their foreign investment review and national security assessments on terms and conditions that the Minister deems appropriate
  7. Introduce new rules to protect sensitive information from disclosure during the course of judicial review


1 As Canada currently has a minority government, there is also the possibility that the government could fall before the legislation is finally adopted, though we expect that amendments focused on strengthening national security are likely to attract broad parliamentary support for adoption.


Arlan Gates practices commercial and regulatory law as a member of Baker McKenzie's Global International Commercial & Trade and Antitrust & Competition groups. He leads the Canadian Antitrust, Competition and Foreign Investment Practice, which has been ranked by The Legal 500 and Chambers Canada. He is also ranked by Chambers Canada and by Best Lawyers in the area of advertising, marketing and data protection law and leads the Canadian Advertising, Marketing and Regulatory Practice, providing support to domestic and international businesses on regulatory aspects of market entry and ongoing commercial operations in Canada and abroad. Arlan joined Baker McKenzie as a summer associate in 1999 and has also worked in the Firm's Sydney office. Arlan regularly advises on Canadian and international merger control, foreign investment and national security in corporate and commercial transactions, including under the Canadian Competition Act and the Investment Canada Act. He also advises on competition investigations and inquiries by the Canadian Competition Bureau, and provides competition law advice on pricing policies, distribution arrangements, joint ventures and other competitor collaborations, cartels, abuse of dominance, and the implementation of industry-tailored compliance programs.


Justine Johnston practices commercial and regulatory law as a member of Baker McKenzie’s International Commercial Practice Group and the Global Antitrust & Competition Group focusing on competition/antitrust law, foreign investment review, and marketing/advertising. Justine advises clients on all aspects of Canadian competition law and foreign investment review, with a particular focus on obtaining competition clearance in domestic and multi-jurisdictional mergers and joint ventures. She also provides strategic advice to clients regarding criminal and civil investigations, including allegations of conspiracy and abuse of dominance, pricing and distribution practices, and other compliance matters. Justine regularly advises clients on the application of the Investment Canada Act, and has recent experience guiding clients through industrial, cultural and national security processes and reviews. In addition, she has significant experience working with government and public relations advisors in connection with securing regulatory approvals for high-profile transactions.


Nancy Hamzo is a partner in the Corporate and Securities Practice Group in Toronto. Nancy has been recognized as a Lexpert Rising Star: Leading Lawyer Under 40 and as a key lawyer in Legal 500 Canada 2020 for M&A. Nancy has practiced in the Firm's Chicago office working on cross border transactions. She advises clients on a wide range of complex corporate transactional matters and Canadian antitrust and foreign investment matters. Nancy advises clients on a broad range of corporate transactions, particularly on cross-border mergers, acquisitions and multi-jurisdictional reorganizations, including pre-transaction restructurings, post-acquisition integrations and spin-offs. She also routinely advises on antitrust/competition and foreign investment requirements in Canada.


Sarah Mavula is a senior associate in Baker McKenzie's International Commercial Practice Group and the Global Antitrust & Competition Group in Toronto. Recognized as a 2022 Precedent Setter in Precedent Magazine's Precedent Setter Awards and a Vice-Chair of the Canadian Bar Association (CBA) Competition Section’s Young Lawyers Committee, Sarah practices competition/antitrust and foreign investment law. Sarah also regularly advises clients on product regulatory compliance. Sarah regularly advises clients in a variety of industries on Canadian and international merger control, foreign investment and national security in corporate and commercial transactions. As part of her competition practice, Sarah routinely secures merger control clearances, and advises on pricing policies, competitor collaborations, abuse of dominance, and compliance programs. Her extensive experience in foreign investment matters under the Investment Canada Act includes assisting clients with the preparation of review applications and notifications (including under new COVID-19 policies), drafting and negotiating undertakings, and securing national security clearance for her clients.


Jacqueline Rotondi is an associate in Baker McKenzie's International Commercial Practice Group in Toronto. Jacqueline has a broad regulatory practice. She advises Canadian and international clients in the areas of competition and antitrust, foreign investment, marketing, advertising, and other areas of regulatory compliance.


Jing is an associate in Baker McKenzie's International Commercial Practice Group and the Global Antitrust & Competition Group in Toronto. Prior to joining the Firm, Jing was an associate in the Toronto office of a leading Canadian law firm where she practiced competition and foreign investment law. Jing advises clients on all aspects of competition law, including merger review, cartel investigations and regulatory compliance. Jing has experience working on complex and high profile cross-border merger transactions, securing merger control clearance, as well as civil class action arising from alleged infringements of the Competition Act. As part of her practice, Jing has advised clients across various industries including pharmaceuticals, energy, retail, private equity, hospitality and manufacturing. Jing also has experience with the Investment Canada Act and has assisted foreign investors seeking regulatory approval for their investments.