Government sets new rules for foreign state-owned enterprises

Approval given on ‘exceptional basis’

OTTAWA — The federal government released tough new rules Friday that will apply to foreign state-owned enterprises that want to invest in Canadian companies in the future.

Under the new plan, the government will only approve such transactions for the oilsands on an “exceptional basis,” and proposed takeovers by state-owned enterprises, known as SOEs, for all industries will be judged using strict criteria.

Prime Minister Stephen Harper made the announcement Friday on Parliament Hill, at the same time as his government announced it was approving the takeover of two Canadian energy firms by state-owned firms — one from China, the other from Malaysia.

Harper said purchases of Canadian assets by foreign governments through stateowned enterprises are not the same as other transactions.

“The larger purposes of state-owned enterprises may go well beyond the commercial objectives of privately owned companies,” he said.

“This raises the question of when, and to what degree, foreign state control of Canadian business can be of net benefit to Canada.”

Harper said it is in Canada’s interest to be clear on how its investment rules will apply to state-owned firms.

To that end, his government released a statement with details. It said each application for approval will be examined “on its own merits.”

“However, given the inherent risks posed by foreign SOE acquisitions in the Canadian oilsands, the minister of industry will find the acquisition of control of a Canadian oilsands business by a foreign SOE to be of net benefit to Canada on an exceptional basis only.”

Furthermore, the government said that for future applications, it will:

closely examine the degree of control or influence an SOE would likely exert on the Canadian business that is being acquired;

examine the degree of control or influence an SOE would likely exert on the industry in which the Canadian business operates; and

examine the extent to which a foreign state is likely to exercise control or influence over the SOE acquiring the Canadian business.