:
Madam LeBlanc, I need to rule against the admissibility of the motion. I can outline the reasons for that. It goes outside of the mandate of the committee and there are two specific reasons why it does.
First, Bill was not referred to this committee and certain issues raised in the motion fall outside the committee's mandate as provided by Standing Order 108(2).
As well, the motion suggests the committee call on the House to delegate a power to the Standing Committee on Finance. Committees are creatures of the House and may not go beyond the powers given to them by the House. Only the House has the ability to delegate certain powers to the committees, and refer to them in any other issue for review. That's according to O'Brien and Bosc, pages 962 and 973. Therefore, it's not admissible for a committee to make recommendations regarding the powers of another committee.
Second, it's also suggested the committee recommend to the House that the finance committee be given the power to divide Bill into several bills. It also recommends that these various bills be referred to various committees. Once again, such recommendation goes well beyond the mandate of this committee. It is up to the House to decide which committee a bill will be referred to.
The House already decided to refer Bill to the finance committee. Even if the House agreed to give the finance committee the authority to divide the bill, and the committee exercised the authority, the resulting bills would remain before the finance committee. Therefore, this is clearly not an issue that our committee is able to decide on.
For all these reasons, I have to rule against the admissibility of the motion.
:
Thank you, Mr. Chair, and members of the committee.
My name is Paul Halucha, and I'm the director general of the marketplace framework policy branch at Industry Canada. I'm here with Matthew Dooley, who is the acting director of the investment, insolvency, competition and corporate policy directorate at Industry Canada.
[Translation]
We are here to speak to Division 6 of Bill , which would amend the Investment Canada Act, or ICA, for two reasons. The first is to clarify how proposed investments in Canada by foreign state-owned enterprises, or SOEs, and World Trade Organization, or WTO, investors will be assessed. The second is to allow for the extension, when necessary, of timelines associated with national security reviews.
[English]
The proposed amendments to the ICA are being advanced within the broader context of Canada's commitment to an open foreign investment and trade environment. Canada welcomes foreign investment and is an important contributor to economic growth that brings new ideas, capital, and jobs, as well as access to new markets and global supply chains. At the same time, Canada is committed to maintaining marketplace framework laws that are up to date and effective.
Since 2006, in response to the changing economic and global circumstances, the government has advanced several changes to Canada's foreign investment review framework. In 2007 the government introduced guidelines to clarify the application of the net benefit factors in the review of proposed SOE, state-owned enterprise, investments.
[Translation]
In 2009, the government introduced amendments to the ICA. They included a commitment to incrementally increase the net benefit review threshold to $1 billion in enterprise value for WTO investors, transparency provisions and a national security review process.
[English]
In 2012 the government introduced additional transparency amendments to the ICA. The government also introduced new enforcement provisions to promote investor compliance with undertakings. Finally, the government published information on the administration of the Investment Canada Act.
These recent changes to the ICA framework have updated Canada's foreign investment review process, the purpose of which is to review significant investments in Canada by non-Canadians to determine whether they are likely to be of net benefit to Canada, and to provide for the review of investments that could be injurious to national security.
[Translation]
Each investment is examined on a case-by-case basis. An investment is either notifiable or reviewable, depending on what size it is, whether it involves a WTO investor, whether it is direct or indirect and whether it could pose a national security threat.
[English]
Where an investment is subject to a net benefit review, the Minister of Industry considers the plans, undertakings, and other information submitted by the investor in light of the six net benefit factors listed in section 20 of the Investment Canada Act.
[Translation]
On December 7, 2012, following the approval of two significant foreign investment transactions—CNOOC's acquisition of Nexen and Petronas’ acquisition of Progress Energy—the government provided clarification. The Prime Minister and the Minister of Industry issued statements clarifying the foreign investment review process, with a particular focus on SOEs and potential concerns about their non-commercial objectives.
[English]
Statements stress that while foreign investment is crucial to Canada's economic growth and prosperity, the government clarified that going forward, investments by foreign state-owned enterprises resulting in the acquisition of a Canadian oil sands business would be found to be of net benefit only on an exceptional basis, and that SOE transactions will be carefully monitored throughout the Canadian economy.
[Translation]
The government also updated the SOE guidelines to emphasize the importance of good corporate governance, free enterprise principles and industrial efficiency. Another reason for that update was to address concerns surrounding the potential influence of foreign states on commercial activities in Canada.
In addition, the government announced plans to retain the current net benefit review threshold for WTO SOE investors. Meanwhile, the government continued with its plans to progressively increase the net benefit review threshold for private sector WTO investors to $1 billion in enterprise value.
Lastly, the government announced its intention to allow for the extension of the timelines associated with the national security review process. These extensions will provide the government with additional time, if needed, to thoroughly review transactions that are potentially injurious to the security of Canadians.
[English]
Division 6 of Bill C-60 includes amendments to the Investment Canada Act needed to implement key components of the government's December 7 announcement. The amendments can be grouped into three principal areas.
First, section 137 establishes distinct net benefit review thresholds for WTO private sector and SOE investors, apart from those in the cultural sector.
With direct reference to the amendments passed by Parliament in 2009, the thresholds for WTO private sector investors will incrementally increase to $1 billion in enterprise value over four years. Related regulatory amendments that define the methodology for enterprise value will be required to bring these changes into force.
The current asset value threshold of $344 million will be maintained for WTO SOE investors. As is currently the case, the threshold will be annually indexed to account for inflation, i.e., changes in nominal GDP.
Second, provisions in clauses 138 to 142 concern timelines associated with national security reviews. Clauses 138 and 139 increase the amount of time the minister has to deliver a final net benefit decision once a national security review process has been concluded from five days to 30 days. Clauses 140 to 142 support the extension of related timelines under the national security review process. The government intends to prescribe the length of some of the related timelines through subsequent amendments to the national security review of investments regulations. The Minister of Industry intends to use these extensions when addressing complex national security issues, which can involve multiple jurisdictions.
Third, provisions in clauses 143 to 145 permit the Minister of Industry to determine or declare that an entity is controlled in fact by a state-owned enterprise. These provisions support the government's commitment to carefully scrutinize SOE activity across the Canadian economy. The control in fact provisions mirror those powers already contained in the cultural and national security sections of the Investment Canada Act. Following parliamentary approval, the government intends to publish the necessary related regulatory amendments required to bring certain changes into force.
[Translation]
We are happy to answer any questions you may have on the proposed amendments.
I would argue that the definition is actually not unclear. The government announced and published, as part of the state-owned enterprise guidelines in the fall, an updated definition of what a state-owned enterprise is. It's contained in the bill and is spelled out very clearly. It reads:
“state-owned enterprise” means
(a) the government of a foreign state, whether federal, state or local, or an agency of such a government;
(b) an entity that is controlled or influenced, directly or indirectly, by a government or agency referred to in paragraph (a); or
(c) an individual who is acting under the direction of a government or agency referred to in paragraph (a) or who is acting under the influence, directly or indirectly, of such a government or agency;
I would conjecture, and this is consistent with some of the other arguments brought forward by the legal community, their concern is that the concept of influence is not as precise as the concept of direct or indirect control. We can talk a bit about influence in the discussion today.
I would argue, first, it's clear that influence is not as certain as direct control or indirect control. There's a level of ministerial discretion.
I would also note that the act provides principally for ministerial discretion in making evaluations. You could argue that the net benefit factors similarly provide the minister with discretion. They're not as clear as many in the investment community would like.
I would argue as well that at the time when a new public policy is put in place, when powers have not been tried, have not been used, this is the time when you have maximum uncertainty. As cases are reviewed, as the minister makes determinations, there will be a body of evidence that will build up. This is the same practice, the same body of evidence that has built up around other unclear concepts that lawyers have identified in the past.
For example, in 2007, when the SOE guidelines came in, they indicated they were unclear, that there would be a lack of clarity. With time it became evident how the government was implementing them and uncertainty declined. The legal community doesn't have concerns about SOE guidelines anymore.
In 2009, when the national security provisions were brought into force, it was the same thing. There were concerns that with this increased uncertainty, we wouldn't know how the minister would apply the power. Now, after a number of years, the uncertainty is down quite a bit. In fact, you'll notice that in none of the legal briefs that have been written since the budget implementation bill was tabled do they raise any concern around national security provisions, even though there are changes in the budget implementation bill related to those.
With time, I think the clarity will be there.
Finally, I would note that we have an investment review group within Industry Canada. The investment review division engages often with lawyers, engages often with foreign investors. To the extent that they can help to provide certainty, that group can be called upon to consult with foreign investors.
:
SOE investors could fall below the review threshold in the asset value of a private sector trust.
Effectively the de facto power provides the minister with the authority when he has evidence, or reason to believe, that a transaction that has, in appearances, been effectively billed as a minority stake in fact provides control to a foreign entity, a foreign state-owned enterprise. It only applies in the case of state-owned enterprises so there is no authority with this power to look at regular private commercial transactions. It's only for state-owned enterprises.
That, by definition, significantly limits the types of transactions that we're talking about. I would note as well that there are instances where transactions are structured precisely to get around the review process in the act. The act has an anti-avoidance provision in it, but it's quite a blunt measure. It doesn't provide an exploratory power. The de facto power provides the minister with an exploratory power. If he has concerns, if he has reason to believe that a transaction is in fact giving control to a state-owned enterprise, he can undertake a de facto control test with the purposes of giving himself clarity. That's what the power does. Then there's ultimately a review on the other side of that.
If he determines that a company, a state-owned enterprise, in fact has acquired control, not legal control but de facto control, of a Canadian business, then he has the authority to order a review under the act.
It's not as though he says no at that point. It's not as though the determination that it's a state-owned enterprise ends the process. There's still the full review process to go through.
In terms of the question they raised at the end about the lack of limitation around the power, the challenge would be that if you were to delimit the power and, say, arbitrarily pick a period of 180 days, effectively you would be telling foreign state-owned enterprises they had 180 days to structure a deal in a way that the government doesn't notice and so the minister wouldn't do a de facto control test. After that the minister has absolutely no ability to look back. It would be like working around the avoidance provision. The anti-avoidance provision is similarly an arbitrary power within the act, and it similarly is not time delimited. If you avoided the act five years ago and the minister finds out about it today, he's permitted to act.
I'd make another point around the de facto control power in that under the Investment Canada Act, it already applies in the realm of culture and in national security, and it is broadly used in many other acts and legislation. It's not a power that's been developed from the ground up. It does have a precedent and it exists.
Thank you.
:
Thank you very much for the question.
Before we turn to the enterprise value, I want to be clear that for national security there is no threshold, so at no point does anything change around the requirement that all transactions be considered from a national security perspective. The liberalization is only in the context of the net benefit review.
As I indicated, it's a regulatory proposal that's been published two times. It was published two years ago and then last spring, and we are right now finishing analysis of the comments we've received from stakeholders. The proposal will only come into effect, obviously, once the changes in the budget implementation bill are approved by Parliament, and then also once the regulatory approvals are approved. So the five-year clock has not started yet.
In terms of analysis, forecasting is very difficult to do because you cannot be sure what types of investment and what sectors are going to be impacted. You can't look forward with a crystal ball and make any kind of prediction, even if we look—
:
Yes, that's exactly what we did.
[English]
We did an analysis based on past reviews. The threshold increase to $600 million in enterprise value would reduce the number of reviews, by our estimate. This is looking back. We looked back over about four years of reviews. We manually, ourselves, went to look at what their trading value was. For some things like liability, for some parts of the formula, there is often proprietary information behind it so we couldn't perfectly replicate it. But based on assumption, once we go to about $600 million liberalization, then the number of transactions reviewed decreases by 30%. At $1 billion, the enterprise value reduction is about 50%.
Another factor was that at the time we did this analysis the government hadn't yet made the determination to maintain the threshold where it was for state-owned enterprises, so to the extent that in that four years of data we have state-owned enterprises that made acquisitions in Canada, they would not be counted. So it could be slightly different from that, but I think that's a fair assumption.
I think that's about it. That was the analysis we undertook.
:
Certainly. What they're describing is a situation where, in an SOE, because the valuation of the company is based on asset value, the asset value could in some circumstances be higher than the enterprise value. Perhaps the stock of the publicly traded company has been depressed for some reason. Therefore, its book value or asset value is higher.
Our response would be that this is a theoretical concern. We can't say in every particular case that, yes, the enterprise value is higher than the asset value. What we have found through our analysis, as we've just discussed, is that in the majority of cases, because as well as going to enterprise value we're also increasing the threshold, there are going to be fewer cases that will run into this wall of having to have a review. As the threshold continues to increase—it starts at $600 million and goes to $800 million and then $1 billion and then is indexed to inflation thereafter—the chance of this happening will fall significantly as we go up each level.
As well, one of the reasons we looked at this is that Canada has trade obligations. We've taken reservations for the application of the Investment Canada Act, and one of the implications is that we can't make the act more restrictive than it currently is. The idea of an SOE staying at asset value and staying at its current threshold means we haven't made the act more restrictive. We're staying where we are. Switching to enterprise value, where we assume from the analysis we've done that enterprise value is usually higher than asset value, and yet staying at the same threshold of $344 million for state-owned enterprises puts us at a risk of going offside of that obligation not to make the Investment Canada Act more restrictive.
We're at a situation where we've maintained the SOE threshold for reviews where it was as per our trade agreements. At the same time, for private sector agreements, we are going to increase the threshold so that only the more significant transactions will be captured.
:
Sure. First, I'll go through some of the factors. We do have a list. The analysis would resemble an undertaking in support of other federal legislation. I just want to underline that this isn't a type of analysis that's done in support of other pieces of legislation, including the Insurance Companies Act, the Bank Act, the Canada Transportation Act, or the Income Tax Act. We have the Telecommunications Act and Broadcasting Act as well.
De facto control can be determined through analysis of a variety of factors—this is a non-exhaustive list—including: the number, type, and distribution of securities; the rights and privileges or features attached to the securities; shareholders' agreements, including the holding of a casting vote and veto powers; commercial or contractual relations of the corporation; and the use of proxies.
For example, one scenario that we thought of in the context of de facto control is that you could have a situation where a foreign state-owned enterprise acquires just beneath the level of legal control and then works through an alliance with another investor that has the shares that together effectively give them acting control of the company.
Then there are factors related to the membership structure, processes of the board of directors and senior management to the extent that you have a non-legal controlling share of the company, but you have three members on the board of directors; you have members who go between a foreign state and the board of directors of a company. These would all be factors, and the minister could say that, while it's not legal control, consideration of all of these others or a subset of them gives reason to believe that there is control. I think that would be the list.
One more I would mention as well is situations of companies already having a history in another jurisdiction. States often own companies that are active in many jurisdictions. If it were to come to the minister's attention that a state had influenced, in a non-commercial way, a company in another jurisdiction outside of Canada, we would want him to be able to consider that in the context of looking at whether this is legal or non-legal control of the Canadian company.
:
Absolutely. I'll walk through the review process.
The review process has three distinct stages. There's a 45-day pre-review stage, in which the , in consultation with the , determines whether an investment could be injurious to national security, and the GIC can order a review of the investment. During this time the minister may send a notice indicating that he has reasonable grounds to believe that the foreign investment could be injurious. The first 45-day period coincides with the first 45-day period of the net benefit test. The two review processes are going on simultaneously at that point.
The second review stage is for the , in consultation with the , to complete a review and report findings and recommendations to the GIC.
The first period he undertakes a review to determine if there is a national security concern. The operative words are "could be injurious". The provides him with a recommendation. If he's going forward and he's making a recommendation that the transaction could be injurious, the Minister of Industry concurs or doesn't concur. If he concurs, then he makes that similar recommendation to the GIC, an order comes out from the cabinet, and a review process is launched. That's a 45-day review process.
The , working closely with the , completes a review and reports the findings and recommendations to the GIC. During this period, government officials conduct further analysis, incorporating any additional intelligence and information received from allies, the non-Canadian investor, and the Canadian business. The Minister of Industry refers an investment to the GIC if he is satisfied that an investment would be injurious to national security.
He's out of cabinet, the first period, at the end of the first 45 days. He's answered the question that it could be injurious and a review is ordered. The purpose of the review is to determine if there is an evidence base that moves it from "could be" to "will be injurious". If the minister believes that the transaction would still be injurious—and this is again, the working in concert with the —then it would return to the GIC for a decision. The GIC would make a ruling in terms of whether or not there are national security considerations.
We're speaking hypothetically here. Typically at that point, there is a possibility that the GIC could approve the transaction subject to conditions. For example, a condition could be that the Canadian business is required to divest itself of certain assets, a certain business line, or certain technologies. Any of that could come out of the cabinet decision as a condition of it returning to the net benefit review for final approval from the .
Even after the national security process is done, if there are no national security issues or if the national security issues have been addressed, at that point we have the minister complete the net benefit review, as per the act, around the net benefit test.
:
Absolutely. There are two provisions in the budget implementation bill dealing with the timelines.
The first one deals with more or less a technical fix. As I noted, the national security provisions are quite new. One of the issues around the original drafting of it is that it said that basically, once the minister completes the national security review, he would only have five days to complete the net benefit evaluation, and if he doesn't complete it within five days, it's deemed to be approved. So it put the minister in a very tight situation.
Effectively, the purpose of this provision is to change that, to move it from 5 to 30 days, so the minister has sufficient time to complete the net benefit review, sufficient time to implement any provisions coming out of the national security review. For example, as I mentioned, if there was a requirement for a divestiture or a sell-off of an asset, it would provide additional time for the minister to feel comfortable that the Canadian business and the foreign investor had a way to implement that condition.
The second one is dealing with the actual national security timelines. As I mentioned, there are three phases. There's the pre-review, the review, and then the GIC review process. Right now, the minister does not have the authority to extend any of those periods, except for the first one. For the first one, he has the power in the act and under regulation to take a 25-day extension when he issues an order, in that first phase only. He can't take additional time in the second one, and he can't take additional time in the third phase. The proposal would provide him with the authority in regulations to prescribe extension periods for the second and the third review periods.
:
Yes, that's interesting because I actually remember we had about 15 hours of study, I believe, on the census up to that point. In fact, we came back for two full days during the summer to study that issue.
When it came time to cast his vote, Mr. Masse decided to cast it with the Bloc and the Liberals and against studying the Investment Canada Act as fully as we would have liked to study it. Of course, subsequently the NDP cast their vote to have an election right around that same time.
There's a little bit of a history lesson there, so it's interesting. I'm hearing a little bit of revisionist history from the NDP today as it relates to this. I just find that history interesting.
Also, there's the fact that we have taken steps to strengthen the Investment Canada Act. We've taken steps to address the national security issues. We've taken steps to strengthen transparency and accountability. We've taken steps to address issues around state-owned enterprises. For the most part the opposition parties have opposed those steps and measures as we've taken them.
So again, it's interesting to listen to the dialogue from the other side.
To Mr. Harris's point on terminology, it's ridiculous to put forward the idea that any time a commentator...and you were referring to commentators. The statements you were referring to were statements that were made by commentators, even if they're made by MPs from whatever party.
The fact of the matter is that sometimes when we're talking about legislation, we might use words that are not necessarily contained in the legislation. That doesn't mean you have to go back and actually introduce new legislation every time that happens. Quite frankly, if we actually did amend the legislation, you wouldn't vote for it anyway.
What I do want to refer to is section 20 of the Investment Canada Act. Actually, I'm going to go to section 20 because when we're having these discussions, and oftentimes when I'm on panels—because I've been on many panels with different members from the opposition parties—they create this idea that there's absolutely no criteria, or very vague criteria, for evaluating net benefit.
Paul or Matthew, I don't know which one of you wants to walk through the criteria. There are six criteria in section 20, and of course within each of those paragraphs of section 20 there are multiple criteria listed, I believe.
Perhaps you could walk us through the net benefit criteria in section 20.
:
Sure, I'd be happy to do so.
As mentioned, there are six net benefit criteria set out specifically in the act.
The first is the effect of the investment on the level and nature of economic activity in Canada, including the effect on employment, on resource processing, and on the utilization of parts, components, and services produced in Canada. An example of that would be an investment that may result in increased production and investments at Canadian facilities, and result in opportunities for Canadian suppliers.
The second factor that the is to consider is the degree and significance of participation by Canadians in the Canadian business. An example of this would be the number of Canadians who would occupy senior management positions following the investment.
The third factor is the effect of the investment on productivity, industrial efficiency, technological development, product innovation, and product variety in Canada. An example there would be an investment that brings new technologies or expertise to Canada resulting in increased productivity, or new goods onto the Canadian markets.
The fourth is the effect of the investment on competition within any industry or industries in Canada. Here, consideration can be given to the impact on concentration within an industry, and it can involve consultations with the Competition Bureau.
The fifth is the compatibility of the investment with national and provincial industrial, economic, and cultural policies. An example here would be consideration given to an investor's track record in upholding such industrial policies, such as employee health and safety standards.
The sixth is the contribution of the investment to Canada's ability to compete in world markets. Here, the minister would be considering how the investment could create operating synergies resulting in greater international presence.
:
What I will do then is stick to the substantive amendments. If I don't mention a clause or a subclause, it's because there were a number of changes that were simply technical changes, French-English concordance, that sort of thing.
The definition of “state-owned enterprise” was added in subclause 136(2). I think Mr. Halucha mentioned it earlier, that this captures foreign governments or agencies, entities controlled or influenced by foreign governments, and individuals acting on behalf of or influenced by a foreign government.
Subclauses 137(1) and (2) create the new threshold that we're talking about. In 2009 there was a commitment to increase the threshold from the current $344 million up to $1 billion.
These subclauses do two things. One, they reintroduce that increase in threshold, but they separate out the private sector investors from WTO countries and the SOE investors from WTO countries. Essentially there will be two separate thresholds for private sector companies under subclause 137(1). It will eventually increase to $1 billion before transactions are reviewed. For SOEs from WTO countries, it will maintain its current level at $344 million of asset value, indexed to inflation going forward.
Clause 138 is quite long. I believe it's two or three pages. It's essentially a technical amendment. It was discussed earlier. After a national security review has been completed, the minister has only five days to finish the net benefit review. We're increasing that to 30 days to ensure they have time to solve any problems that may have arisen, or finalize any undertakings, etc.
The reason it is such a long clause is simply that it captures the various scenarios in which a national security review can go forward, from the initial stage, where there's a pre-review and a notice is sent to the investor, all the way through the multiple stages, where finally a Governor in Council order is given demanding that certain actions be taken by the investor. As I say, there are a number of stages that happen through there, and each one had to be covered off to ensure that this 5-day to 30-day period will occur in each one of those scenarios.
Clause 139 is similar. Simply, it's the case where the net benefit review has been extended from 45 days to 75 days, so it captures that period as well.
Subclauses 141(1) and (2) as well as clause 142 create the authority for the to prescribe the periods upon which the national security review process can be extended. It gives legislative authority for regulations to be created to prescribe periods to extend the national security review period and the Governor in Council decision period.
Clauses 143 and 144 deal with the de facto control provisions we were speaking about. Clause 143 deals with the Canadian status of an entity. In this case it is a matter of whether a company that appears to be Canadian controlled is in fact de facto controlled by a state-owned enterprise.
Clause 144 permits the minister to review whether an acquisition by a clearly state-owned enterprise of a Canadian business—although it doesn't mean the de jure or legal control as set out in the act, the thresholds—is still in fact an acquisition for control based on the de facto factors we discussed earlier.
Clause 145 goes to the Canadian status we spoke about earlier. Currently the and the must provide a written opinion as to whether a company is Canadian controlled or not.
This is important in the cultural sector, we understand from our colleagues at Heritage Canada, because whether a company is Canadian or not will provide it with access to different government programs at the federal level. It's important to them to have the ability to receive a written opinion from the government that they are in fact Canadian. This will be maintained, so they will still have the right to go to the Minister of Canadian Heritage and get that legal written opinion.
On the other hand, for the Minister of Industry, it simply gives him the flexibility to decide on the facts, on the case, whether it's appropriate for him to provide a written opinion as to whether a company is Canadian controlled or not.
Finally, skipping a few sections here, the transitionals, etc., this is important because it seems to have been missed by some of the legal community commentary. We talked about de facto control. The minister will be able to go back to the date that the bill was tabled in the House, which I believe was April 29. From April 29 to the day the bill receives royal assent, for any transaction or investment that has occurred, the minister will have the right to reach back and check those transactions for whether there was de facto control transferred or acquired at that time, but this reach-back ability is limited. The minister must send a notice within 60 days of royal assent.
The purpose here is simply to ensure that there's no gaming of the system. They rush a transaction through knowing that they are acquiring de facto control simply to avoid the application of the new provisions before the government can bring them into force.
:
Influence is determined, as we noted earlier, on a case-by-case basis. It only presents an issue where there is indirect or direct control.
In a case where a state-owned enterprise has direct or indirect control influence it becomes a tertiary concept because you already have damage-rated control in the first two points.
They review the process. Investors are expected to address in their plans and undertakings the inherent characteristics of SOEs, specifically whether they are susceptible to state influence. Investors also have to demonstrate their strong commitment to transparent and commercial operations. In terms of some of the types of factors that we talked about that could be influenced but don't get caught by direct or indirect control, I would note the following examples.
There's the ownership of special shares of a corporation, often called golden shares. If a foreign state has 5% golden share, that carries with it certain negative covenants, which they often do. That would be considered in an evaluation of influence.
There's the track record of the company, for example, the evidence of other SOEs from the same state and how they've operated and how they've conducted themselves in other jurisdictions. That would be considered.
There's the state's ability to nominate or replace board members, appoint senior management.
There's any authority under foreign law or corporations governing documents permitting the foreign state to direct the affairs of a business.
Those are some examples, and we talked earlier about some of the de facto control ones as well.
:
Thank you. I'm glad to have another round.
I just have to follow up on what Mr. Lake said. It's bizarre to me to characterize the and the industry minister as “commentators”. They are decision-makers: people who are supposed to be crafting the direction of government and policy.
On the case of the Investment Canada Act reviews and what happened in the past in previous Parliaments, I do believe that a study actually had been started but then got cut short when the broke his own fixed election date legislation to call an election in 2008.
Moving to the present, we have had in Parliament a motion that was passed by all parties to engage in a thorough study of the Investment Canada Act, as well as a motion passed by this committee itself. As the Conservatives are in the majority position, they're the ones who dictate when, where, and what we are going to study as a committee.
The fact that the Investment Canada Act, despite there being large cases with Petronas and CNOOC-Nexen next year.... This government has decided in fact to not engage in a thorough review and study of the act. Instead, all we have are two meetings to deal with rather large and substantive changes to the act.
Earlier in Mr. Regan's questions, you mentioned capital confidences and the issue of not being able to say who with or where consultations have been done. The Minister of Industry, when he was here a couple of weeks ago, spoke of round tables that have been done. How many round tables have actually been done in consultations with stakeholders in regard to these changes that have been brought forward in the budget implementation bill?