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Air Canada, WestJet, Transat to implement CTA’s increased foreign ownership...

Air Canada, WestJet, Transat to implement CTA’s increased foreign ownership levels

Tuesday, February 19, 2019

MONTREAL — Air Canada, WestJet and Transat A.T. all say they will seek shareholder approval to update their articles of incorporation to reflect changes made to the Canada Transportation Act (CTA) in 2018 regarding foreign ownership. 

Prior to the CTA amendments, no more than 25% of the voting interests of a Canadian air carrier could be owned or controlled by non-Canadians.

The Government of Canada’s stated purpose in implementing the CTA amendments is to attract more foreign investment and encourage growth in the aviation sector by increasing, from 25% to 49%, the permitted level of foreign ownership of Canadian air carriers. 

At the same time, the CTA amendments introduced two new limitations on voting ownership and control, by capping the voting rights of single non-Canadians and of the aggregate of non-Canadian air carriers at 25%.

Would-be ultra low-cost carrier Canada Jetlines got the ball rolling with an exemption from the 25% foreign ownership limit and to maintain a level playing field the new policy applies to all carriers.

Air Canada, WestJet and Transat will seek shareholder approval at their 2019 annual and special meetings of shareholders to amend their articles of incorporation to increase the limits of foreign ownership and control of its voting shares to those permitted by amendments made to the (CTA).  The amendments to the articles will be undertaken by way of a court supervised and shareholder approved statutory plan of arrangement.

Completion of the plan of arrangement is subject to shareholder approval and approval of the applicable provincial Superior Courts. 

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