November 5, 2015 / 5:18 PM / 3 years ago

Pacific trade pact to ease foreign takeover scrutiny in Canada

Trade ministers from a dozen Pacific nations in Trans-Pacific Partnership Ministers meeting post in TPP Ministers "Family Photo" in Atlanta, Georgia October 1, 2015. REUTERS/USTR Press Office/Handout

TORONTO (Reuters) - Regulatory scrutiny of foreign takeovers of Canadian companies would ease once the Trans-Pacific Partnership trade deal takes effect, according to terms of the deal released on Thursday.

Those details showed investments of less than C$1.5 billion ($1.14 billion) in Canadian businesses would not be subject to a review under the Investment Canada Act if the investing company is based in one of the 12 original signatory countries that are part of the trade deal.

Currently any deal over the C$600 million mark is subject to a review by the Canadian government. That review threshold is set to rise gradually to C$1 billion by 2019.

The TPP is set to reduce tariffs and trade barriers among the United States, Canada, Mexico, Chile, Australia, New Zealand, Japan and five other countries. It does, however, place some limitations on the types and specific areas of investment.

The deal states that the higher threshold would not apply in the case of a direct acquisition of control by a state-owned entity in a Canadian business. Any such deal would trigger a review if it is worth more than C$369 million.

The higher review thresholds also will not apply to acquisitions of cultural businesses, such as publishers, audio and video production companies.

The document also indicates that the Canadian government has the right to cap foreign ownership in certain companies, namely the country’s largest airline Air Canada, uranium miner Cameco Ltd and a few others.

($1 = 1.3164 Canadian dollars)

Reporting by Euan Rocha; Editing by Lisa Von Ahn

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