Harper: Never let a good crisis go to waste

Tories proposing to relax foreign-investment rules


By Andrew Mayeda,
Canwest News Service
March 10, 2009

OTTAWA — The Harper government is proposing to relax its oversight of foreign takeovers, even as it cranks up the political pressure on foreign companies that acquire Canadian firms to ensure such deals benefit Canada.

Under amendments to the Investment Canada Act contained in the budget bill, the Conservatives have proposed raising the threshold under which foreign takeovers by companies from WTO-member countries come under review to $1 billion in enterprise value. The current threshold is $312 million in asset value. Except when companies' stocks are severely undervalued, their enterprise values generally exceed their asset values, which partially reduces the impact of the change.

The increase, to be phased in over four years, means that deals worth more than $1 billion will not be vetted by the government under the act, which requires that foreign takeovers represent a "net benefit" to Canada.

Industry Canada officials say the relaxed review rules will help Canada adapt to rapidly changing global markets, enabling the country to emerge stronger from the recession.