Marc Barbeau and Shawn Neylan discuss national security after COVID-19 with Canadian Lawyer magazine

May 8, 2020
Stikeman Elliott Firm Chair Marc Barbeau and partner Shawn Neylan discussed how businesses that are retooling their operations to supply healthcare equipment could face greater scrutiny under national security reviews with Canadian Lawyer magazine.

They note potential challenges for these businesses with respect to foreign investment limitations in future acquisitions.

“The government might say, we're not comfortable with the business being acquired by non-Canadians or by particular non-Canadians, from particular jurisdictions,” said Shawn. “In that way, the company may have less access to foreign capital than would otherwise be the case.”

The article highlights Marc and Shawn’s recent essay, “After COVID-19: How Will the Government’s New Focus on National Security Affect Canadian Business? In it, they write that an intensified Canadian government focus on national security is likely to involve a shift in industrial and economic policy to incentivize investment in critical sectors such as health, as well as placing renewed attention on the potential impact of foreign investment on Canada’s ability to respond to future crises.

They suggest that the implications for businesses involved in critical infrastructure sectors will be significant. While businesses will, both out of a sense of community leadership and revenue perspective, seek to provide goods to the health care sector and otherwise participate in critical infrastructure sectors, this may have the unintended effect of limiting the pool of buyers for those businesses if the acquisition of such businesses raises national security issues.

“It's important that [these businesses] understand they are entering into this new area of potential reviewability of what they might do in the future, if they respond to the government's call to help out,” said Marc.

In the essay, they also suggest that post-COVID-19, government policy will be directed toward food self-sufficiency, transportation infrastructure and a resurgence of domestic manufacturing.

“There will be a keen focus on supply of personal protective equipment,” adds Shawn. “The government is just not going to get caught out on that again.”

Marc Barbeau is Stikeman Elliott’s Chair and part of the Montréal office’s M&A Group. Shawn Neylan  is a partner in the firm’s Competition & Foreign Investment Group  working out of the Toronto and Vancouver offices.

Read the article here.