The agency has sought the amendment to Onex's by-laws to ensure that matters related to WestJet are voted where a majority of Canadian directors are present.

WestJet said it is in the process of reviewing the determination.

Air Canada had challenged Onex Corp's proposed acquisition of WestJet Airli
nes, on grounds that the deal may not meet the country's ownership rules. (https://reut.rs/2LHqQvk)

Air Canada had argued that the likely presence of Onex co-investors such as foreign wealth funds and carriers, and "the opaque nature" of the deal to buy WestJet through company subsidiary Kestrel Bidco, will make it harder to ensure compliance with ownership laws.

Under Canada's Transportation Act, carriers must be Canadian and controlled by Canadians in order to hold a domestic license.

Shareholders of WestJet Airlines in July voted in favor of the Onex deal.

Under Canadian rules, foreigners cannot own more than 49% equity in a Canadian airline. The rules further restrict a foreign airline and any single foreign owner from controlling more than a quarter of voting interests in a Canadian carrier.

Onex did not immediately respond to Reuters request for comment.

(Reporting by Arundhati Sarkar in Bengaluru; Editing by Shailesh Kuber and Uttaresh.V)