Canada Gazette, Part I, Volume 156, Number 40: Regulations Amending the Notifiable Transactions Regulations (Miscellaneous Program)

October 1, 2022

Statutory authority
Competition Act

Sponsoring department
Department of Industry

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Issues

As a result of amendments to the Competition Act (“the Act”) by Bill C-25 (An Act to amend the Canadian Business Corporations Act, the Canada Cooperatives Act, the Canada Not-for-profit Corporations Act, and the Competition Act), the concept of affiliation under the Act was broadened to include new business structures. Bill C-25 also aligned the treatment of these new business structures with the treatment of corporations under the Act. Similar technical amendments must be made to the Notifiable Transactions Regulations (“NTR”) in order to reflect the changes implemented by Bill C-25.

Minor technical amendments to the NTR are also needed to harmonize the regulation with the Bank of Canada’s (BoC) current procedure for posting exchange rates.

Objective

The amendments have the following objectives:

• to harmonize the concepts used in the NTR with its enabling statute; and
• to update the NTR to be consistent with the BoC’s exchange rate practices.

Description and rationale

The following amendments are proposed to bring the NTR in line with the changes made by Bill C-25:

1. Repeal the definition of “equity security” in section 2 of the NTR and replace it with the term “equity interest”;
   • Bill C-25 broadened the Act by introducing the definition of “equity interest” to align the treatment of corporate shares and non-corporate interests for certain parts of the Act. The NTR currently include the definition “equity security,” and though the definition is similar to that of “equity interest,” it does not accurately capture the intentionally broad scope of “equity interest.” The proposed amendment updates the NTR to better align with the terminology and concepts used in the Act.
2. Replace “voting share of a corporation or an interest in a combination” with “equity interest” in section 2;
   • This amendment would remove redundant language that is now captured by the definition of “equity interest”
3. Replace “corporation” with “entity” in a portion of section 2, sections 9.1 and 9.2 and paragraphs 10(c)and 11(c);
4. Add the concept “entity” to the paragraphs 10(b) and 11(b)
   • Bill C-25 expanded the concept of affiliation under the Act by introducing the new definition of “entity,” which encompasses corporations, partnerships, sole proprietorships, trusts, and unincorporated entities. Proposed amendments 3 and 4 would incorporate the “entity” concept into the NTR and are necessary to align the regulation with the Act.
5. Replace “unincorporated entity” with “entity other than a corporation” in paragraph 16(1)(d)
   • The existing wording is potentially inconsistent with the definition of “entity” that was introduced to the Act by Bill C-25. The new wording reflects the fact that the definition of “entity” includes corporations.

Aligning the NTR with the current BoC policy

As part of the threshold calculation to determine whether a transaction is notifiable, the NTR requires foreign sales or asset values be converted into Canadian dollars using the BoC’s “noon exchange rate.” As of April 28, 2017, the BoC has replaced the “noon exchange rate” with the “daily exchange rate.” Instead of publishing the exchange rate at a single point in time, this new calculation is meant to broadly reflect the average exchange rate observed throughout the business day. The proposed amendments modernize the NTR by removing the outdated “noon exchange rate” concept and replacing it with a requirement to use the exchange rate published by the BoC for that foreign currency or, where no exchange rate is published, the exchange rate that would be used in the ordinary course of business.

One-for-one rule and small business lens

The one-for-one rule does not apply to these amendments, as there is no change in administrative costs or burden to business.

Analysis under the small business lens determined that the proposal will not impact small businesses in Canada.

Contact

Anthony Durocher
Deputy Commissioner
Competition Promotion Branch
Email: ic.competitionpromotion-lapromotiondelaconcurrence.ic@canada.ca

PROPOSED REGULATORY TEXT

Notice is given, under subsection 124(2)^{footnote a} of the Competition Act ^{footnote b}, that the Governor in Council, under subsection 124(1)^{footnote a} of that Act, proposes to make the annexed Regulations Amending the Notifiable Transactions Regulations (Miscellaneous Program).

Interested persons may make representations concerning the proposed Regulations within 60 days after the date of publication of this notice. All representations must cite the Canada Gazette, Part I, and the date of publication of this notice, and be addressed to Anthony Durocher, Deputy Commissioner, Competition Promotion Branch, Competition Bureau, 50 Victoria St., Gatineau, Quebec K1A 0C9.

Ottawa, September 22, 2022

Wendy Nixon
Assistant Clerk of the Privy Council

Regulations Amending the Notifiable Transactions Regulations (Miscellaneous Program)

Amendments

1 (1) The definition equity security in section 2 of the Notifiable Transactions Regulations ^{footnote 1} is repealed.

(2) The definition états financiers vérifiés in section 2 of the French version of the Regulations is replaced by the following:

états financiers vérifiés

États financiers faisant l’objet d’un rapport rédigé par un vérificateur agréé externe qui est un membre en règle d’un ordre professionnel, d’une association ou d’un institut de comptables professionnels. (audited financial statements)

(3) Subclause (b)(iii)(D)(II) of the definition asset securitization transaction in section 2 of the Regulations is replaced by the following:

• (II) more than 10 per cent of the outstanding equity interests of a person described in clause (C), or

(4) Subclause (b)(iii)(E)(II) of the definition asset securitization transaction in section 2 of the Regulations is replaced by the following:

• (II) more than 10 per cent of the entity’s outstanding equity interests; (transaction de titralisation d’éléments d’actif)

(5) Paragraph (c) of the definition financial asset in section 2 of the Regulations is replaced by the following:

• (c) security (other than an equity interest) backed or secured by, or representing an interest in, a thing referred to in paragraph (a) or (b); (actif financier)

(6) Subclause (b)(iii)(D)(I) of the definition asset securitization transaction in section 2 of the English version of the Regulations is replaced by the following:

• (I) securities carrying more than 10 per cent of the voting rights attached to all of the outstanding voting securities of a person described in clause (C), or

(7) Subclause (b)(iii)(E)(I) of the definition asset securitization transaction in section 2 of the English version of the Regulations is replaced by the following:

• (I) securities carrying more than 10 per cent of the voting rights attached to all of the entity’s outstanding voting securities, or

2 Subsection 4(4) of the Regulations is replaced by the following:

(4) The conversion into Canadian dollars of the aggregate value of assets reported in foreign currency shall be based on

• (a) the exchange rate that is published by the Bank of Canada for that foreign currency and that is in effect on the date that the aggregate value of assets is determined in accordance with these Regulations; or
• (b) if no exchange rate is published by the Bank of Canada for that foreign currency, the exchange rate that the person would use in the ordinary course of business on that date.

3 Subsection 5(4) of the Regulations is replaced by the following:

(4) The conversion into Canadian dollars of the gross revenues from sales reported in foreign currency shall be based on

• (a) the exchange rate that is published by the Bank of Canada for that foreign currency and that is in effect on the last day of the annual period for which the gross revenues from sales are determined in accordance with these Regulations; or
• (b) if no exchange rate is published by the Bank of Canada for that foreign currency, the exchange rate that the person would use in the ordinary course of business on that day.

4 Paragraph 10(b) of the Regulations is replaced by the following:

• (b) that are owned by a corporation or entity referred to in paragraph 110(3)(a) of the Act,

5 Paragraph 11(b) of the Regulations is replaced by the following:

• (b) that are owned by a corporation or entity referred to in paragraph 110(3)(a) of the Act,

6 Paragraph 16(1)(d) of the Regulations is replaced by the following:

• (d) in respect of each party, and each of its affiliates referred to in subparagraph (c)(iii), all studies, surveys, analyses and reports that were prepared or received by any of its officers or directors — or in the case of an entity other than a corporation, by any individual who serves in a similar capacity — for the purpose of evaluating or analyzing the proposed transaction with respect to market shares, competition, competitors, markets, potential for sales growth or expansion into new products or geographic regions and, if not otherwise set out in that document, the names and titles of the individuals who prepared the document and the date on which it was prepared.

7 The Regulations are amended by replacing “corporation” with “entity”, with any necessary modifications, in the following provisions:

• (a) the portion of clause (b)(iii)(E) of the definition asset securitization transaction in section 2 before subclause (I);
• (b) sections 9.1 and 9.2;
• (c) paragraph 10(c); and
• (d) paragraph 11(c).
  

Coming into Force

8 These Regulations come into force on the day on which they are registered.

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