1E9Ct5D

With respect to cultural industries, such asthe creation or distribution of written, videoor audio works, the Minister of CanadianHeritage has authority for the review andapproval of foreign investments under theICA and related regulations and guidelines.Similar to undertakings required for nonculturalindustries, the Department ofCanadian Heritage may seek commitmentsfrom the foreign investor to report on anundertaking using both contextualinformation and statistics, includingbreakdowns which delineate Canadiancreatedproducts from foreign-createdproducts. In terms of operating in a culturalindustry, it is incumbent upon companies tocontribute to ongoing development ofCanadian cultural life, and commitments ofa behavioral nature will normally be of alengthy duration.Exemptions to the application of the ICA forcertain transactions are also specificallycarved out in the Bank Act (Canada).“NET BENEFIT TO CANADA”An application for approval may be filed atany time prior to the implementation of theinvestment or the acquisition. Generallyspeaking, the non-Canadian investor maynot implement an investment or acquisitionthat is reviewable under the ICA until theinvestment or acquisition has beenreviewed and the Minister responsibleconducts a review to determine the “netbenefit to Canada”. In conducting thereview, the ICA requires that the followingfactors be taken into account:on resource processing, on theutilization of parts, components andservices produced in Canada, andon exports from Canada;The degree and significance ofparticipation by Canadians in thebusiness;The effect on productivity, industrialefficiency, technologicaldevelopment, product innovation,and product variety in Canada;The effect on competition within anyindustry in Canada;Compatibility with national industrial,economic, and cultural policies; andThe contribution to Canada’s abilityto compete in world markets.Determination of the “net benefit toCanada” may be made based onundertakings made by the foreign investorin relation to the factors listed above.Undertakings are legally bindingcommitments made by the foreign investorthat usually remain in effect for three to fiveyears. The undertakings are also subject tocompliance reviews and audits during theperiod for which they are in force. Typicallyspeaking, the government is mostlyconcerned with maintaining specific levelsof Canadian employment, with particularattention to managerial positions, capitalinvestment in the Canadian business andfurther development of Canadian-sourcedtechnology. However, it should bementioned that the specific focus of theundertakings varies with the nature of thebusiness.The effect on the level and nature ofeconomic activity in Canada,including the effect on employment,Regulation of Foreign Investment 23