In light of the takeover of Nexen by the China National Offshore Oil Corporation (CNOOC), as reported elsewhere on this portal, the Canadian Government has issued updated policy guidelines (guidelines) that relate to the administration of the Investment Canada Act (Act).The guidelines inform investors of certain procedures that will be followed in the administration of the review and monitoring provisions of the Act where the investors are state-owned enterprises (SOEs). The guidelines extend the definition of state-owned enterprises to include entities 'owned, controlled or influenced, directly or indirectly by a foreign government.' The onus is placed on the applicant to satisfy the Minister of Industry that the project is of commercially oriented and free from political influence.

The guidelines address head on the question of potential political interference. As the guidelines state, 'investors will be expected to address in their plans and undertakings, the inherent characteristics of SOEs, specifically that they are susceptible to state influence. Investors will also need to demonstrate their strong commitment to transparent and commercial operations.' The investor must uphold corporate governance practice (including, for example, commitments to transparency and disclosure, independent members of the board of directors, independent audit committees and equitable treatment of shareholders). Specific undertakings could help dispel fears that the entity is not operating commercially.  Examples provided include 'the appointment of Canadians as independent directors on the board of directors, the employment of Canadians in senior management positions, the incorporation of the business in Canada, and the listing of shares of the acquiring company or the Canadian business being acquired on a Canadian stock exchange.'