The collapse of RIM’s stock price during the last year has made it the subject of takeover talks from a variety of market players — though some such as Samsung deny the charges – during the past few months. While rumours hold that the company’s CEOs are aggressivley pursuing potential suitors, and rejecting some, for a takeover deal there is another angle that needs to be considered: would Ottawa allow such a deal to go through?

Foreign takeovers of a Canadian firm are regulated by the Investment Canada Act. Under the Investment Canada Act, there are a number of thresholds that trigger a mandatory review by the Industry Minister

When the buyer is from the 153-member countries of the World Trade Organization the value of the target company’s assets must be over $600 million (this will rise to $1 billion in 2014). In cases where the potention buyer is from outside the WTO, the threshold is lowered to $5 million for a direct acquisition and $50 million for an indirect acquisition.

In addition, the act states that foreign takeovers of Canadian firms must have a “net benefit” to Canada. This “net benefit” is not clearly defined though it is widely understood to fall into these categories: the effect of the takeover on employment, technology development, productivity, competition, and the effect on national policies.

Though the Harper government will quickly claim that Canada is “open for business”, this act has been used twice in the last five years to nix potential deals: in 2008 when an American firm attempted to purchase business units of Vancouver based military contractor MacDonald Dettwiler and Associates; in November 2010 to block the takeover of PotashCorp by Australian firm BHP Billiton.

While Prime Minister Harper said recently, “We all know [RIM] is an important Canadian company,” there isn’t a complete consensus on whether Ottawa would block a potential RIM takeover deal.

Terry Beech, an Adjunct Professor at Simon Fraser University’s Faculty of Business, and CEO of HiretheWorld.com, believes that there is no way RIM could be considered a strategic asset to Canada in the same fashion as PotashCorp.

“The value of RIM is highly intellectual, which means you’re only really as good as the quality of your patents and the quality of your people,”  Mr. Beech told Hardware Canucks. “RIM stock is falling for a reason, and there isn’t much the government will be able to do about it.”

“Unlike Potash, Oil or Gold, the Government of Canada has no mechanisms to control the underlying value of RIM.”

“This kind of government interference in the market could actually hurt Canada’s tech sector overall given the uncertainty it would raise in the international business community,” concluded Mr. Beech.