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Highlights From The Foreign Investment Review Committee's Town Hall With The Investment Review Division And Cultural Sector Investment Review – Government, Public Sector – Canada – Mondaq News Alerts



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On Friday, the Foreign Investment Review Committee
(“FIRC”) of the Canadian Bar
Association’s (“CBA”)
Competition Law Section met with representatives from the
Investment Review Division (“IRD”),
Innovation, Science and Economic Development Canada
(“ISED”) and the Cultural Sector
Investment Review (“CSIR”), Canadian
Heritage. The meeting featured interesting and informative
presentations from representatives from both the IRD and CSIR,
followed by a Q&A. Outlined below are some of the

  1. Highlights from the IRD’s

(a) Net Benefit to Canada Review Threshold for UK

The United Kingdom (“UK”), which
has left the European Union (“EU”),
and by extension the Canada-European Union Comprehensive Economic
and Trade Agreement (“CETA”), is
currently in a transition period which is set to end on December
31, 2020. During the transition period, UK investors have benefited
from the net benefit to Canada review threshold available to trade
agreement investors. As of January 1, 2021, investments into Canada
by UK investors will be subject to the lower threshold for World
Trade Organisation  (“WTO”)

On November 21, 2020, Canada’s Minister of Small Business,
Export Promotion and International Trade, along with the UK’s
Secretary of State for International Trade, 
 the successful conclusion of talks for the
Canada-United Kingdom Trade Continuity Agreement – an interim
deal that will be in place as Canada and the UK work towards
negotiating a comprehensive free trade agreement. When that
agreement comes into force, it will provide UK investors with the
benefits of CETA and UK investors will again benefit from the trade
agreement investor threshold.

(b) Impact of COVID-19 on National Security

As discussed in our 
previous post
, the Minister of Innovation, Science and Industry
released a policy
 on April 18, 2020, which provides that, in light
of the COVID-19 pandemic, certain foreign investments into Canada
will be subject to enhanced scrutiny. The policy statement,
summarized below, is expected to be in effect until Canada recovers
from the COVID-19 pandemic.

Under the extraordinary circumstances of the global pandemic,
the Government announced that it will subject foreign investments
of any value into Canada to enhanced scrutiny under the ICA:

  • in Canadian businesses that are related to public health or
    involved in the supply of critical goods and services to Canadians
    or to the Government, whether those foreign investments are
    controlling or not, and
  • by state-owned investors or private investors assessed as being
    closely tied or subject to direction from foreign governments.

As a consequence of this new policy, the IRD has more closely
scrutinized a number of transactions involving investments from
state owned enterprises and investments into health and health
related services or goods.

Despite the enhanced scrutiny of some acquisitions and the
extension of national security review timelines, Canada remains
open to investment and is still a foreign investment destination of

The IRD encourages investors into Canada reach out to the IRD
early in the lifecycle of a deal, including by proactively sharing
information, a practice which is becoming more common. The
following is a list of information that is commonly provided to the
IRD, and which the IRD encourages parties to provide:

  • third party relationships
  • details of source of funds
  • upstream ownership details, including ultimate controllers
  • contacts or other relationships with Canadian governments
  1. Highlights from CSIR’s Presentation

As outlined in last year’s 
Annual Report
, most cultural sector investment filings arise
from the film and video industries, with a significant increase
coming from video games and post-production activities.

Representatives from CSIR outlined how Canadian Heritage’s
interpretation of what is a cultural product or business activity
has evolved over time, particularly in regards to video games.

Canadian Heritage has typically considered a business activity
to be “culturally significant” where, among other
considerations, it:

  • (i) is a professional activity (typically by one who assumes
    risks), as opposed to amateur content;
  • (ii) involves the creation, selection of original content,
    contractual agreements with creators, authors, or copyright
  • includes the development, production/creation/publishing,
    marketing and/or exploitation of a cultural product,
    copyright/ownership/rights, contractual relationship with content
  • (iv) is capable of generating revenue, solicits advertising,
    and earns a percentage of revenues/profits from the sale of
    physical cultural products; or
  • (v) is eligible for funding from Canadian Heritage or one of
    its portfolio agencies.

Canadian Heritage typically does not consider a business
activity to be “culturally significant” where it is
ultimately not commercially available to Canadians. When in doubt,
Canadian Heritage assumes that a business is culturally
significant. Further, Canadian Heritage takes the view that as
industry models change and adapt, its interpretation of what is a
cultural product or business needs to evolve as well.

Returning to the topic of video games, it bears noting that they
were not always considered cultural, and the definition of
“cultural business” in the Investment Canada
 does not expressly reference video games. Canadian
Heritage relies on the words “film or video products”
and “audio or video music recordings” as encompassing
video games. While the inclusion of video games may not quite fit
into a strict reading of the definition of “cultural
business”, Canadian Heritage has taken the view that video
games generally are cultural, absent compelling reasons to the
contrary (e.g.  lack of a video component), due to
the reliance on creative talent, among other reasons.

It is possible that Canadian Heritage may consider updating its
foreign investment policies for cultural industries
book publishing, distribution and retail

magazine publishing
, and 
film and video distribution
) in the near future.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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Securities Commission shares investment red flags for 2021 – St. Albert TODAY



The Alberta Securities Commission (ASC) has released a list of top investment risks in hopes of helping Albertans avoid falling victim to scams in 2021.

“We want to protect people from the scammers and fraudsters that unfortunately exist out there,” said Hilary McMeekin, director of communications and investor education with ASC.

McMeekin said fraudsters capitalize on people in any way they can, even if that means committing scams during the pandemic.

“They prey on our vulnerabilities,” she said. “We have seen an increase in activity when it comes to fraud services or products around the pandemic.”

In early January, the ASC released a list of six tips that McMeekin said will “arm Albertans with timely information to stay vigilant and protect their finances as we enter 2021.” 

The first red flag on the ASC’s list involves investments related to COVID-19. According to an ASC press release, a common way fraudsters take advantage of global events is through “pump-and-dump schemes,” which promise an opportunity to invest in new products or services that will prevent, detect or cure COVID-19 – or otherwise aid in the fight against the virus. 

These pump and dump schemes usually involve artificially inflating the price of a penny stock shell company through issuing false and misleading positive statements, according to the release. The price of the stock rises as people invest. However, the wrongdoers cash out their stock at a high price before the truth is revealed, and the price of the stock then falls dramatically, leaving investors with nothing.

Another scam ASC warns about is any investment that promises great expectations. According to McMeekin, the ASC has seen an increase in situations where investment is encouraged with the promise of high returns resulting from a proposed deal involving a letter of intent.

“Proposed deals can fall through, so if it’s being promoted as a sure thing, investors should be wary,” she said.

Affinity fraud, according to McMeekin, is another scam people should be on the lookout for this year. McMeekin said affinity fraud happens when victims are introduced to scams by someone they know, such as family members, friends or co-workers.

“Fraudsters will often target ethnic communities, religious organizations, social clubs or professional groups, taking advantage of the trust and relationships that exist within,” she said. “The fraudster becomes part of – or pretends to be part of – the community, flaunting their success or wealth and often enlisting unsuspecting ambassadors to spread the scheme to make it seem credible. Friends and family may unknowingly fall victim and encourage others to invest, too.”

Also on ASC’s list is a scam that promises quick profits by trading stocks at home. McMeekin said a lot of trouble can be avoided by just properly researching these promises.

“Research the company, research whatever the investment is for,” she said. “Really look into and understand what that product or service is all about. Learn as much as you possibly can.”

Particularly during a recession or pandemic, people can be interested in earning additional income. According to McMeekin, taking the time to research the validity of various money-making opportunities can save people a lot of hardship down the road.

“Take that time,” she said. “Our hard-earned money is worth taking the time to do the research.”

Quite often, McMeekin said, when scams are reported, the companies or persons involved have not been registered with ASC.

“The first question isn’t ‘are you registered?’ but it should be,” she said. “If they are not registered, that is a red flag.”

The ASC has a website,, which McMeekin said can help people find out if companies they plan on dealing or investing with have taken necessary steps to register with the commission.

“It’s a website that is full of unbiased and free resources for investors,” she said. “No matter what stage of investing someone is in, it can be helpful.”

Jordan Stricker,
Follow me on Twitter @Jay_Strickz

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FCA tackles flurry of investment scams – Investment Executive



The report indicated that the FCA received more than 24,000 reports of unauthorized activity during the 10-month period, up from 20,300 in all of 2019.

The regulator also opened 1,542 supervisory cases involving suspected scams or risky investments.

“New cases have remained high throughout the year,” the FCA said, with peaks in February, June and July.

The regulator also rejected applications for authorization from 343 firms or individuals during the 10-month period, amid concerns about possible investor harm. That represented about 10% of the applications received during the period.

The incidence of financial scams being promoted through online has also been a key focus for the regulator.

“We think online platform operators, like Google, should bear clear legal liability for the financial promotions advertised on their platforms,” the FCA said, adding that it’s considering extending rules regarding financial promotions to these kinds of companies. It’s also considering whether it needs any new powers over those firms.

“This work is relevant not just to the promotion of higher risk investments but to our work to address online harms — including scams — more generally,” the report said.

“The UK has one of the world’s leading financial services industries, offering consumers access to a wide range of investment products. In some areas however, the consumer investment market is not working as well as it should and too often consumers are offered unsuitable products or advice,” said Sheldon Mills, executive director, consumers and competition at the FCA, in a release.

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Upbeat entrepreneurs signal improved investment intentions for 2021: Survey – CTV News



A growing number of Canadian entrepreneurs say they plan to invest more in 2021 than they did last year as the vaccine rollout, improving cash flow and a quick rebound in some sectors buoys optimism for the year ahead.

The findings of the Business Development Bank of Canada’s quarterly survey of 1,000 entrepreneurs released in a new report today are the most upbeat since the pandemic began.

Pierre Cleroux, chief economist of the Montreal-based bank, says the more positive results bode well for the country’s economic recovery.

He says investment intentions are improving, with technology emerging as the biggest focus of spending.

The bank’s survey found that the key reasons for investing in technology included improving processes to reduce costs, boosting a company’s online presence and investing in remote working.

Cleroux says while many entrepreneurs were wary about allowing employees to work from home before the pandemic, he says the last 10 months have shown it can benefit a business.

“The pandemic has changed the game,” he said. “It changed the perception of working from home.”

Cleroux said remote work can improve productivity, increase worker motivation and spur innovation.

“It can also reduce costs,” he said, noting that 18 per cent of business owners surveyed by the bank said they plan to reduce their office space.

Despite an increase in COVID-19 cases across much of the country, Cleroux said the optimism uncovered by the survey is unlikely to change.

Businesses understand that once restrictions are lifted, the economy will rebound much faster than with other recessions, he said.

“This optimism we’re seeing will likely survive the second wave of the virus because we all believe the vaccine is going to improve drastically the situation of the economy,” Cleroux said.

Still, while business confidence has improved for the first time since the pandemic began, the study found that investment intentions compared to previous years are still relatively weak.

Across Canada, business investment intentions for the next 12 months are down three per cent compared with last winter, for example, but have improved significantly from last spring’s rock bottom decrease of 32 per cent, according to the bank’s report.

Investment intentions is the difference between negative and positive business sentiment.

Of note are the investment intentions of small- and medium-sized enterprises in Atlantic Canada and Quebec, which at one per cent and four per cent, respectively, are the only positive results on investment intentions in the survey.

Meanwhile, investment intentions in B.C. are down three per cent, Ontario came in at four per cent lower, while the Prairie provinces were the lowest at a 13 per cent decline.

The online survey of business owners was completed between Dec. 3 and Dec. 18, 2020. The poll measures the confidence of entrepreneurs in the economy, business and hiring outlooks, as well as investment plans over the next 12 months.

According to the polling industry’s generally accepted standards, online surveys cannot be assigned a margin of error because they do not randomly sample the population.

This report by The Canadian Press was first published Jan. 18, 2021

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