Clarification regarding the application of the Related Business Guidelines to foreign investments in Canada’s cultural sector

Date: December 28, 2023

Subject:

Clarification regarding the application of the Related Business Guidelines to foreign investments in Canada’s cultural sector.

References:

Sections 11, 15, and 38 of the Investment Canada Act, and Schedule IV of the Investment Canada Regulations (SOR/85-611).

Application:

With immediate effect.

Summary:

This Interpretation Note, which is made pursuant to section 38 of the Investment Canada Act, is meant to provide guidance and clarification to investors on Cultural Sector Investment Review’s (“CSIR”) current application of the Related Business Guidelines (the “Guidelines”).

Specifically, CSIR requires Investors to file a notification pursuant to section 11 whenever it seeks to establish a new Canadian Business whose activities have been prescribed by regulation as being related to Canada’s cultural heritage or national identity, even if that business is related to an existing business or the business of an investor that was previously notified to or reviewed by the Minister of Canadian Heritage.

Discussion:

Historically, CSIR has applied the Guidelines in the following manner:

Once CSIR reviews and has approved an Investor’s initial investment in the Canadian cultural sector, whether it is the acquisition of control of an existing Canadian business or the establishment of a new Canadian Business, subsequent establishments directly related to the initial Canadian Business did not require a CSIR notification (pursuant to section 11 of the ICA).

Moving forward, CSIR will correctly apply the Guidelines as written:

Establishments of Canadian Businesses related to an existing Canadian Business controlled by a foreign investor are subject to notification under section 11 of the Act. This aligns with the Minister of Canadian Heritage’s mandate under section 15, which enables them to review any type of business activities prescribed by regulation related to Canada’s cultural heritage or national identity.

Clarification – Continuity of an existing Business:

Notwithstanding the foregoing, CSIR’s position with respect to the continuity of existing business, namely that expansion or reorganizations of an existing business, merely because of new premises, new personnel, or internal reorganization will continue to not be regarded as the establishment of a new business.

Clarification – application of the Guidelines to the Publication, Distribution or Sale of Magazines or Periodicals sector:

CSIR notes that the Guidelines as drafted include, under a separate heading, a statement regarding the application of those guidelines to the Publication, Distribution or Sale of Magazines or Periodicals sector. It is CSIR’s position that this paragraph merely restates the general rule and interpretation articulated above, albeit specific to the Publication, Distribution or Sale of Magazines or Periodicals sector.