OTTAWA A proposed Canadian national securities test on takeovers of strategic domestic companies by foreign state-owned enterprises, could be introduced sometime after June, depending on the recommendations of a government-appointed panel.
The idea of a test is winning increasing support in the investment community.
The Competition Policy Review Panel, headed by Lynton Wilson, a former chairman of Nortel Networks and BCE Corp., is designed to look broadly at the issue of foreign ownership of Canadian companies. The panel is scheduled to release its findings June 30.
We'll wait and see what the panel will recommend and there will be a decision made after that, said Deidra McCracken, a spokeswoman with the office of Jim Prentice, minister of industry.
We need to deal with how best to protect national security while promoting foreign investment in Canada, Mr. Prentice told the Calgary Chamber of Commerce last December. Findings from a recent survey of the Canadian Council of Chief Executives shows that four out of five CEOs support new rules for foreign takeovers by state-owned enterprises. And this is partly why we are seeing a small but growing number of foreign wealth funds providing information to the general public and market on their objectives, investment strategies and results.
Unlike most of its trading partners, and unlike virtually every other G8 nation, Canada does not have a way to review investments to ensure they do not threaten national security.
Late last fall, a Harris-Decima poll conducted for The Canadian Press found that a large majority of Canadians support government intervention to limit foreign acquisitions, especially by sovereign wealth funds and state-owned enterprises. The poll found support especially unwavering in regard to natural resource companies.
There's merit in the test that the government is proposing to place on foreign investment, said Ian C.W. Russell, president and chief executive officer of the Investment Industry Association of Canada, Toronto. It's important to be assured that the acquisitions are not, in any way, detrimental or a threat to our national security. (The proposal) is saying, between the lines, for the most part acquisitions by state-owned funds or state-owned enterprises are appropriate and should be accepted, and aren't a problem, and are quite consistent with business practice in Canada and abroad. But there could be exceptions to that. And the government certainly has the responsibility to deal with those exceptions.
Mr. Russell maintained Canada has benefited enormously from foreign investment and open borders.
A recent paper by the Ottawa-based Conference Board of Canada concluded Canada need not fear a hollowing out of corporate Canada and should, in fact, ease restrictions on foreign ownership.