Government of Canada Issues Updated Guidance on National Security Review of Investments

On March 24, 2021 the Government of Canada released updated Guidelines on the National Security Review of Investments under the Investment Canada Act. The Guidelines provide a non-exhaustive list of factors the government will consider in assessing the national security risk posed by a foreign investment. While most of the factors in the list are not new, the updated Guidelines list several new factors that were not previously on the list, but which have long been understood by foreign investment lawyers as being risk factors that may trigger a national security review under the Investment Canada Act.

In particular, the Guidelines now set out that investments involving certain sensitive technology areas, critical minerals or sensitive personal data could present national security concerns.


The Investment Canada Act provides the Canadian government with the jurisdiction to review, prohibit, or impose conditions on any investment by foreign or foreign-controlled investors on the basis of national security concerns. Any investment, regardless of the size of the target or of the investment, can be reviewed to determine if it could be “injurious to national security”. The Canadian government released the Guidelines on December 19, 2016, as part of a transparency initiative intended to encourage foreign investment by providing investors with more information about the types of transactions that may require a national security review and the factors considered by the government when assessing national security risk.

With the latest update of the Guidelines, the factors considered by the government when assessing national security risk now include:

  • The effect on Canada’s defence capabilities and interests;
  • Transfers of sensitive technology or know-how outside of Canada;
  • The impact on the supply of critical goods and services to Canadians;
  • The effect on critical minerals and critical mineral supply chains;
  • Critical infrastructure;
  • The enablement of foreign surveillance or espionage;
  • The hindering of law enforcement operations and the potential involvement of illicit actors, such as terrorists or organized crime syndicates;
  • The impact on Canada’s international interests, such as diplomatic relationships; and
  • The access to sensitive personal data.

The Updated Guidelines

The Government’s inclusion of the impact that an investment will have on critical minerals and critical minerals’ supply chains to the list of factors it considers in assessing national security risk follows the Canadian government’s unveiling of the list of 31 minerals it considers critical, based on their necessity for Canada’s economic security, earlier this month. For further information on the Critical Minerals List, refer to the Bennett Jones article Canada Announces the Critical Minerals List. While transfers of sensitive technology or know-how were already listed in the Guidelines as a factor considered by the government when assessing national security risk, the Guidelines now provide a non-exhaustive list of technology areas that may be considered sensitive for the purposes of review under the national security provisions of the Investment Canada Act.

The list includes, but is not limited to: advanced materials and manufacturing; advanced ocean technologies; advanced sensing and surveillance; advanced weapons; aerospace; artificial technology; biotechnology; energy generation, storage and transmission; medical technology; next generation computing and digital infrastructure; position, navigation and timing; quantum science; robotics and autonomous systems, and space technology. In addition to now including access to sensitive personal data of Canadians as a factor considered by the government in assessing national security risk, the updated Guidelines also provide examples of the type of “sensitive personal data” that would increase the risk of a national security review. The examples include, but are not limited to: personally identifiable health or genetic information; biometric information (e.g., fingerprints); financial information (e.g., confidential account information); private communications; geolocation; or personal data concerning government officials such as members of the military or the intelligence community.

The Guidelines also contain new language clarifying that investments by “state-influenced investors” are also subject to the heightened scrutiny experienced by investments from state-owned enterprise investors.

The Guidelines state “the Government will subject all foreign investments by state-owned investors, or private investors assessed as being closely tied to or subject to direction from foreign governments to enhanced scrutiny under Part IV.1, regardless of the value of the investment.”

Key Takeaways

Foreign investors are strongly encouraged, particularly where they are state-owned or subject to state-influence, or in cases where the factors listed in the Guidelines may be present, to seek legal advice on the appropriate filing and communications strategy.

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