Foreign investors in Canada now face increased regulatory risk and uncertainty, as recent and forthcoming changes to Canada’s Investment Canada Act (“ICA”) and foreign investment rules raise the likelihood of reviews, delays, or blocked transactions. In addition to amendments to the ICA, political and trade-related tensions have resulted in updates to certain foreign investment guidelines and the tabling of legislation by provincial governments to protect their economic interests.

Under the ICA, the Canadian Government has the discretion to initiate a national security review of any foreign investments if it believes that the foreign investment “could be injurious to national security.” The Guidelines on the National Security Review of Investments (the “Guidelines”), which are issued by the Minister of Innovation, Science and Industry (‘the Minister’) and provide a list of factors that the government may consider when assessing national security matters, were revised in March 2025 to formally recognize the importance of economic security as a part of Canada’s national security. The revised Guidelines, along with the government’s newly published Sensitive Technology List, heighten the regulatory risks for foreign investors, particularly those with operations in technology sectors or connected to foreign governments.

Background: Amendments to the ICA

The revised Guidelines build upon the September 2024 amendments to the ICA, which came into effect following the passage of Bill C-34, the National Security Review of Investments Modernization Act. These amendments strengthen the Minister’s national security review powers. Further, additional amendments are pending, including, most significantly, a new mandatory pre-closing filing regime for all investments in certain prescribed sectors. These amendments are expected to come into force in 2026.

The following new ministerial powers are now in force:

  • Enhanced ministerial authority: A national security review can now be initiated directly by the Minister, following consultation with the Minister of Public Safety Canada.[1] The review previously required an order from the Federal Cabinet.
  • Interim conditions: Where a national security review has been ordered, the Minister can now impose interim conditions on investors during the course of the review. These interim conditions may restrict access to or the transfer of assets, intellectual property, or trade secrets while the review is ongoing. Further, at the conclusion of the review, an interim condition may be converted into an undertaking or a condition imposed by the government or, if appropriate, be removed. Previously, conditions could only be applied through a final order at the conclusion of the review.
  • Binding undertakings and investor participation: Investors may now submit representations and binding undertakings directly to the Minister during a national security review. The Minister can now determine that an investment is not injurious to national security based on these undertakings, revise or release them as needed, and require compliance information.
  • Information sharing: The Minister can now share information about an investment with foreign investment review agencies when there is a shared national security concern.
  • Increased penalties: The penalty for non-compliance with the Minister’s demand to comply with the ICA has been increased from $10,000 to $25,000 per day of contravention.

Forthcoming ICA amendments in 2025 or 2026, as mentioned, will include the introduction of a mandatory pre-implementation filing requirement for investments in certain sensitive sectors where prescribed criteria are met. Additionally, the government will have a new “call-in” power to review investments by entities owned or influenced by foreign states under the net benefit review regime.

Economic security

The updated Guidelines introduce a new consideration in assessing national security:

The potential of the investment to undermine Canada’s “economic security” through the enhanced integration of the Canadian business with the economy, or any sector of it, of a foreign state…

The concept of “economic security” is intentionally broad, providing the government with the flexibility needed to address emerging geopolitical trends. In evaluating a foreign investment’s impact on Canada’s “economic security”, the government will assess the size of the Canadian business, its role in the innovation ecosystem and its effect on Canadian supply chains. Further to the amendments, the Minister warned against “opportunistic or predatory” foreign investment behavior, signaling increased regulatory oversight.

The new factor appears to address vulnerabilities where Canadian businesses — especially those weakened by tariff-driven economic pressures — may be at risk of foreign acquisitions that could erode domestic assets, intellectual property, and capital. This approach echoes measures taken during the COVID-19 pandemic in 2020, when the Canadian Government increased scrutiny over foreign investments as valuations of Canadian businesses declined, leading to a sharp rise in national security reviews.

New sensitive technology list

The new Sensitive Technology List, released by the Canadian Government on February 6, 2025, has been integrated into the Guidelines by replacing Annex A. The non-exhaustive list identifies technology of strategic importance to national security, including the following:

  • advanced digital infrastructure technology;
  • advanced energy technology;
  • advanced materials and manufacturing;
  • advanced sensing and surveillance;
  • advanced weapons;
  • aerospace, space and satellite technology;
  • artificial intelligence and big data technology;
  • human-machine integration;
  • life science technology;
  • quantum science and technology; and
  • robotics and autonomous systems.

The list now serves as a key reference for the government when assessing the potential impact of foreign investments involving a transfer of intellectual property or sensitive technology. Investors in sectors linked to critical infrastructure, national defense and innovation should anticipate increased scrutiny.

Provincial oversight of foreign acquisitions

In light of trade tensions with the U.S., provincial governments are considering strategies to protect economic security. Most notably, the Ontario Government passed the Protect Ontario by Unleashing our Economy Act, 2025 (“Bill 5”), enacted on June 5, 2025, which includes key changes to Ontario’s Mining Act and the granting of broad discretionary powers to the Minister of Mines to safeguard “the strategic national mineral supply chain” from foreign participation.

One of the key changes to the Mining Act is the revision of its core purpose in section 2, which now prioritizes mineral development “consistent with the protection of Ontario’s economy.” This shift in language suggests the emphasis on economic interests, potentially in opposition to the previous balance of environmental or Indigenous rights.

Note that the updated ICA Guidelines do not formally exempt particular sectors or companies from foreign investment; instead, each transaction is assessed individually based on its specific merits and potential national security risks. By contrast, Bill 5 relies on Ontario’s jurisdiction over the ownership and operation of mining assets in the province. Some of the measures introduced by Bill 5 include the ability for the Minister of Mines to, without prior notice or hearing:

  • suspend or remove a party from, or deny access to or status on, the Mining Lands Administration System;
  • prohibit a party (without compensation) from obtaining a prospector’s license or order the termination of an existing license;
  • deny the issuance of or terminate a mining lease; and
  • revoke an unpatented mining claim.

Going forward

The updated Guidelines reflect the Canadian Government’s efforts to bolster the country’s foreign investment regime amid uncertain trade relations with the U.S. It is currently unclear whether economic security considerations will be weighed more heavily by the Canadian Government for investments by U.S. investors. That said, foreign investors seeking to acquire or establish a business in Canada should be mindful of these legislative changes and assess whether their investments could trigger a national security review.

Specifically, businesses and foreign investors should consider the following practical tips:

  • Early engagement: Plan for potential national security review timelines and a heightened level of scrutiny by building in flexibility in transaction planning. Consider engaging legal counsel early to assist with evaluating the filing requirements and potential regulatory risks.
  • Due diligence: Evaluate whether the investment directly or indirectly involves sensitive technologies, critical minerals, infrastructure, or sectors linked to economic or national security.
  • Map foreign state affiliations: Identify any ties, direct or indirect, to foreign governments, particularly in jurisdictions flagged by Canadian regulators. Investors should also consider adopting a coordinated government relations strategy across jurisdictions when pursuing investments in sensitive sectors.
  • Proper valuation of Canadian assets: Note that “predatory acquisitions” of distressed Canadian firms may attract heightened scrutiny, especially during periods of economic uncertainty. Valuations of Canadian assets should be comprehensive.
  • Transparency and documentation: Ensure full disclosure of ownership structure, control rights, and any state affiliations in filings under the ICA. Prepare documentation demonstrating the investment’s net benefit to Canada, especially if the investment might otherwise raise national security concerns.
  • Stay updated: Monitor regulatory amendments in the Canadian foreign direct investment landscape, particularly given the rapidly evolving trade environment. 

Should you have any questions regarding the updated Guidelines and ICA matters, please reach out to any member of Miller Thomson’s Competition/Antitrust & Foreign Investment Group.

[1] Public Safety Canada is the department of the Government of Canada responsible for matters of public safety, emergency management, national security, and emergency preparedness.