Canada will likely introduce a national security test for foreign takeovers of Canadian companies within the first half of the year, Finance Minister Jim Flaherty says.

Ottawa has been considering changes to foreign investment rules amid public concern over a series of high-profile deals that involved the sale of some of the country's most iconic companies to foreign buyers.

The changes could block certain investments on national security grounds.

"I expect that within the first six months of this year we should be able to come to the conclusion on all those discussions."

While the review is ongoing, Flaherty said Corporate Canada is well-positioned when it comes to global takeovers and the government wouldn't institute drastic measures to prevent so-called "hollowing out."

While acknowledging the debate over the sale of so many Canadian firms, Flaherty said the concern around hollowing out is not unique to Canada.

He also pointed to several studies that concluded the country wasn't seeing any significant impact due to the buyouts.

"Let there be no doubt of the government's view that increasing foreign direct investment has certainly been a priority of our government and that it is imperative if we are going to expand and strengthen our economy," he said during a Toronto speech.

"We will not achieve our goals by slamming the door on foreign investment, or by lacking the courage to face up to our challenges."

Corporate tax cuts announced in October, he said, were brought in to help companies remain competitive after the government anticipated the economic slowdown.

"Now we need the provinces to step up to the plate on this ... (and) brand Canada as a low-business-tax jurisdiction - we need Ontario especially to get on board," Flaherty said at a conference titled The Hollowing Out and Transformation of Corporate Canada: Myth or Reality?

"We've done the business tax cuts."

His comments came as the Conference Board of Canada said Ottawa should only apply foreign investment restrictions to state-owned enterprises when national security interests are threatened.

The board said governments should also examine relaxing ownership restrictions on a sector-by-sector basis.

"Policy changes that restrict foreign investment could have negative ramifications for Canada," said Anne Golden, president and CEO of the Conference Board.

"Restrictions should only be considered where takeovers present a potential risk to Canadian security."

Ian Telfer, chairman of Goldcorp Inc. (TSX:G) and one of the day's speakers, said in an interview he was not " big on restricting capital flows."

"I think the best defence is an offence: Our CEOs need to be more aggressive, our boards have to take more risks, you have to have leaders that really want to build something and grow it and keep it and not sell it at the first opportunity.

"These are things you can't legislate."

The Conference Board study comes a few months after the federal government established a competition policy review panel to investigate Canada's policy options on foreign takeovers.

The panel, headed by former Bell Canada CEO Red Wilson, was set up following Canadians' emotional response to a recent spate of foreign takeovers of iconic Canadian companies, including miners Inco and Falconbridge, Hudson's Bay Co. and aluminum giant Alcan Inc.

Initial findings by a separate study, conducted by consulting firm SECOR, suggested that while Canadian companies are active buyers in the merger-and-acquisition market when it comes to the number of transactions, they're "buying small and selling big."

SECOR said Canada had become a significant net seller in terms of value, with the steepest increase in the value of inbound deals taking place from 2005 to 2007.

Over that period, the cumulative "net deficit" of outbound to inbound deals was US$24.3 billion.

The SECOR study looked at deal announced on or before Dec. 31 with a deal value greater than US$1 million.