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Cabinet Decision Leads to Blocking of Chinese O-Net’s Acquisition of Montreal’s ITF

According to a publicly released announcement by the Shenzhen, China-based O-Net Communications Group Ltd., the company was blocked from purchasing the Montreal-based ITF Technologies Inc. by a Canadian federal government order in council on national security grounds. The investment, which was completed on January 30, 2015, was blocked by an Order of the Governor in Council in Canada received by O-Net Communications on July 9, 2015.

Parliament has to approve many cabinet decisions, but orders in council are those cabinet decisions which are not required to go before Parliament for the decision to go into effect. National security issues may be covered by orders in council, as can weapons sales, but orders in council can also be used for administrative decisions and minor appointments, freeing up Parliament from having to deal with the smaller decisions made in Cabinet. For an order in council to be put into effect, the convention is to have four ministers and the governor general sign the documents.

It is possible that the perception of a national security risk may have been due to ITF Technologies’ activities in the military market. According to the Investment Canada Act, the Minister of Industry is allowed to review investments into Canada if “there are reasonable grounds to believe that an investment by a non-Canadian could be injurious to national security.” 

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