Feds block board appointment to Quebec laser firm bought by Chinese company

A Quebec-based laser firm that was bought by a Chinese company says the federal government has wrongfully refused to allow an American executive onto its board over concerns that its technology could be used to “benefit foreign militaries.”

CorActive High Tech Inc. was acquired in 2017 by Han’s Laser Technology Group, and CorActive wants to appoint Xiaokai “Denver” Zeng, who heads Han’s U.S. subsidiary, to its board.

The company says in an application filed in Federal Court last month that Industry Minister Melanie Joly refused to approve U.S.-based Zeng’s appointment in June, a decision CorActive, Han’s and Zeng allege was “substantively unreasonable.”

It says the companies had to agree to undertakings at the time of the acquisition deal to protect CorActive’s technology related to the production of “specialty fibres,” including requiring background checks on prospective employees.

The court application says the undertaking was imposed due to the alleged potential for unauthorized transfers of sensitive technology that could benefit foreign forces.

Neither the companies’ lawyer nor the federal government would comment on the case.

The companies and Zeng want the decision denying his appointment quashed, claiming attempts to appoint him in 2024 and 2025 “were also rejected without reasons.”

The application says the undertaking required approval of any non-Canadians to the board, and that Zeng is an experienced executive who has been a U.S. citizen since 2024, passing “rigorous” screening by U.S. law enforcement agencies,

“This included review by the Federal Bureau of Investigation, U.S. Department of Homeland Security and other U.S. government agencies,” the application says. “This recent, rigorous, screening by Canada’s closest security partner demonstrates the absence of any legitimate concerns about Mr. Zeng.”

“There is no reasonable basis to conclude that Mr. Zeng’s appointment would give rise to any improper transfer of sensitive CorActive technology.”

CorActive claims Zeng will help it “remain competitive” at a time when its sales are declining and it’s losing key employees.

The application says Han’s Laser has pumped $11 million into the firm since the 2017 deal, and Zeng’s experience and relationship with the Chinese parent company “will help ensure that capital is applied strategically, safeguarding the future of the business and high-tech Canadian jobs.”

The company filed a second judicial review application late last month challenging the federal government’s renewal of the undertaking for another year.

The company claims there is no longer a risk of its technology being transferred, and the “overwhelming majority” of its sales last year were for telecommunication and industrial uses rather than defence.

It claims it only made a sale to one defence customer outside Canada in 2025, and the deal was worth less than $30,000.

“CorActive’s technology is no longer sensitive in nature, as demonstrated by the fact that Han’s Laser has almost entirely stopped purchasing CorActive technology, despite owning CorActive,” the second application says.

The company says its technology “falls well behind its global competitors” in Canada, Europe, the U.S. and China, while its research and development efforts have declined significantly since signing the undertaking.

“There is no reasonable basis to conclude that the unauthorized transfer of sensitive CorActive technology could benefit foreign militaries, or that such a transfer would occur absent the undertaking,” the application says.

“The undertaking impedes the ability of CorActive to obtain investment and support from Han’s Laser during a critical time for the company. The company’s recalibration is impeded by the undertaking and would be facilitated by its removal,” the application says.

Federal lobbyist registration records show the firms tapped former Liberal MP Don Boudria, then a consultant with public relations firm Hill + Knowlton Strategies, in 2017 to arrange meetings “with government officials with respect to regulatory approval of company restructuring under the Investment Canada Act.”

U.S. government contract award records show CorActive had also been awarded small five-figure contracts from the Department of Defense for fibre optic products in 2008, 2009, 2012 and 2014.

Innovation, Science and Economic Development Canada says in a written statement that the federal government “welcomes foreign direct investment that benefits Canada’s economy.”

It says the Investment Canada Act allows for reviews of “the most significant investments by non-Canadians to ensure their likely net benefit to the Canadian economy, and for the review of foreign investments of any size for national security concerns.”

“Some information on national security reviews conducted each year under the Investment Canada Act is available in the act annual reports,” it said. “Due to the confidentiality provisions of the act, the government cannot comment on specific transactions.”

The companies’ lawyer, Nikiforos Iatrou with McCarthy Tétrault in Toronto, said in an emailed statement that the firm would not comment on ongoing litigation.

This report by The Canadian Press was first published Aug. 17, 2026.

Darryl Greer, The Canadian Press