Who this is for: CEOs, CFOs, General Counsel, private equity sponsors and M&A advisors evaluating an acquisition of, or investment in, a Canadian business.
The assumption that creates avoidable risk: Many foreign investors focus on whether a proposed transaction requires an ICA filing. That is often the wrong starting point. The more important question is whether the transaction could attract heightened scrutiny under Canada’s foreign investment review regime and, if so, how that might affect transaction structure, timing and execution risk.
Recent amendments to the Investment Canada Act (“ICA”) have expanded the government’s national security review powers and reinforced its focus on investments involving sensitive sectors and technologies. Investors should therefore incorporate ICA analysis into their initial transaction planning and due diligence process rather than treating it as a matter to address immediately before or after closing.
In this article:
What the ICA actually requires, and when
The ICA governs investments in Canadian businesses by non-Canadians. Depending on the nature and size of the investment, a foreign investor may be required to file a post-closing notification or, in certain circumstances, obtain pre-closing approval.
For most investors, only larger acquisitions of control are subject to a pre-closing “net benefit to Canada” review. In 2026, the review threshold is generally CAD $2.179 billion in enterprise value for “trade agreement investors”, CAD $1.452 billion for other WTO investors, and CAD $578 million in book value of assets for state-owned enterprises.
However, investors should not focus exclusively on these thresholds. The Canadian government may also review investments on national security grounds regardless of transaction value, and national security reviews may apply to minority investments and other transactions that do not involve an acquisition of control.
Sensitive sectors and heightened scrutiny
While every transaction is assessed on its specific facts, investors should expect greater scrutiny where a transaction involves critical minerals, critical infrastructure, artificial intelligence, advanced technologies, defence-related activities, sensitive personal data or other assets that may raise national security concerns.
Recent amendments have strengthened the government’s ability to review and address transactions that raise national security issues and have increased the importance of early risk assessment for foreign investors.
What this means for transaction planning
Investors should treat ICA analysis as an early-stage diligence issue rather than a regulatory step to address shortly before closing. Before signing a transaction, investors should:
- determine whether an ICA notification or approval requirement applies;
- assess whether the target operates in a sector that may attract heightened scrutiny;
- evaluate ownership and governance structures, including any state-owned enterprise or government connections;
- identify sensitive technology, data or infrastructure assets that may be of interest to regulators; and
- ensure transaction timelines, commitments, and obligations account for potential regulatory reviews.
Addressing these issues early can help reduce execution risk, avoid unexpected delays and improve deal certainty.
Key takeaways
- ICA analysis should begin at the outset of any Canadian transaction.
- Transactions below the net benefit review thresholds may still be subject to national security review.
- Investments involving sensitive sectors, technologies, infrastructure or data may attract increased scrutiny.
- Regulatory timing considerations should be reflected in transaction planning and transaction documents.
- Early risk assessment can help identify concerns before they become material obstacles to closing.
How Miller Thomson can help
Miller Thomson’s Competition, Antitrust & Foreign Investment lawyers advise foreign investors, private equity funds and multinational businesses on all aspects of the Investment Canada Act, including filing requirements, net benefit reviews, national security risk assessments, transaction structuring and engagement with government officials throughout the review process.
