July 4, 1972 (28th Parliament, 4th Session)


Jean-Luc Pepin (Minister of Industry, Trade and Commerce)


Hon. Jean-Luc Pepin (Minister of Industry, Trade and Commerce):

Mr. Speaker, to use the words of the hon.
July 4, 1972

member for Halifax-East Hants (Mr. McCleave), with the help of people much more learned than I am I have tried to analyse the meaning of motions Nos. 10 and 11. In general I think I can summarize it by saying that in the case of motion No. 10 it requests exemptions to allow a non-eligible leasing company to acquire property for leasing, and in the case of motion No. 11 to allow a non-eligible company to lease from a leasing company.
I contend that to cover these two situations his amendments are not needed. That which he is attempting to exempt is already actually exempt, but it is only exempt inasmuch as it does not involve the actual acquisition of a business, which is the point that I think the hon. member for Waterloo (Mr. Saltsman) was making, situations which involve the acquisition of a full business, or for that matter the leasing of a whole business, which would have to be screened.
May I put this in more specific terms, reading from the notes that I have here, Mr. Speaker. There appear to be some observers who believe that the bill will adversely affect people who are in the leasing business. I want to try to clear up this matter. According to the bill, a person who acquires a leasehold interest in a property used in carrying on a business is deemed to have acquired that property. Does this mean that a non-eligible person who leases or rents a computer, a fleet of trucks, an aircraft or a ship will have to go through the screening process? The answer is no in almost all cases, because that person has not acquired "all or substantially all of the property used in carrying on a business" as stipulated in clause 3(3)(a)(i)(B), or indeed has not acquired "a part of a business that is capable of being carried on as a separate business" as stipulated in clause 3(5)(g).
This person has simply acquired "hardware." A business is more than hardware. A business involves at least some of the following: inventory, good will, a name, customers, suppliers, accounts receivable, accounts payable, and so on.
The government cannot, however, exempt leasehold interests for two reasons. First, a company could go into the business of acquiring businesses and leasing them to non-eligible persons. This would be a clear circumvention of the act. Secondly, circumvention would be possible in another way. Company A buys good will, inventory, etc. from Company B. Company B sells its buildings and machinery to a leasing company. Company A then leases this plant and equipment back from the dealer. He could avoid the act by saying that he has not acquired all or substantially all of the property used in a business. The act must cover the potential splitting of a business.
The conclusion is that taking a leasehold interest in a certain property, a piece of equipment, for example, would in itself rarely constitute taking a leasehold interest in a business. It would be an interest in part of the property used in carrying on a business, and consequently it would not be screened. But if leasing means de facto acquisition of a business, then it would be screened. I put that on the record hopefully for the benefit of those people who have been writing to the hon. member for Halifax-East Hants.
Foreign Takeovers Review Act

Full View