Investment Canada Regulations

3.5 (1) For the purposes of subsections 14.1(1) and 14.11(1) of the Act, if control of a Canadian business is acquired by a non-Canadian in the manner described in paragraph 28(1)(c) of the Act, the enterprise value of the assets of the Canadian business is equal to the total acquisition value, plus its liabilities, minus its cash and cash equivalents.

(2) For the purposes of subsection (1),

• (a) the total acquisition value is the total amount of the consideration payable for the acquisition of the Canadian business, as determined in accordance with the transaction documents that are used to implement the investment;

• (b) the liabilities are equal to the total liabilities, other than operating liabilities, that are assumed by the non-Canadian, as determined in accordance with the transaction documents that are used to implement the investment; and

• (c) the cash and cash equivalents are equal to the total cash and cash equivalents that are transferred to the non-Canadian, as determined in accordance with the transaction documents that are used to implement the investment.

(3) Despite subsection (2), if the parties to the investment are not acting at arm’s length or if no or only nominal consideration is payable for the acquisition of the Canadian business, the total consideration payable is the amount that the authorized body of the non-Canadian determines in good faith and represents to be the fair market value of the Canadian business.

(4) The enterprise value of the assets of the Canadian business as well as the total acquisition value, liabilities and cash and cash equivalents shall be expressed in Canadian dollars.

(5) Any conversion into Canadian dollars that is required to calculate the enterprise value of the assets under this section shall be based on the average of the noon exchange rates quoted by the Bank of Canada over the month that immediately precedes the month in which

• (a) the complete notice of investment or complete application for review of an investment is filed, in cases where the notice or application is filed before the implementation of the investment; or

• (b) the investment is implemented, in cases where the notice or application has not been filed.