FIRB: Property, Securities & Acquisitions
3 April 2020 - Stella Sun, Calvin Mai and Michael Cossetto
Restrictions on foreign investment in business and property tightened
The Federal Treasurer has introduced temporary changes to Australia’s foreign investment review framework, which will remain in place during the COVID-19 crisis.
Effective from 10:30pm AEDT on Sunday 29 March 2020, the main changes include:
the removal of all monetary thresholds for foreign investments requiring approval;
the extension of timeframes for reviewing applications, from 30 days to up to 6 months; and
the Government will prioritise urgent applications for investments that protect and support Australian business and Australian jobs.
This means that from the effective date, all proposed foreign investments into Australia that are subject to the Foreign Acquisitions and Takeovers Act 1975 will now require FIRB (Foreign Investment Review Board) approval during the COVID-19 crisis, regardless of the value of the transaction or nature of the foreign investor.
The changes will apply to all foreign persons subject to the Act, irrespective of the investor’s country of origin, and irrespective of whether they are a private foreign investor or a foreign government investor.
The types of investments covered by these changes include the acquisition of real property, securities in an entity or the acquisition of business assets.
Potential impact under different scenarios
Other thresholds unchanged
The changes to the monetary thresholds do not affect any other existing thresholds in relation to acquiring interests in securities of particular entities, businesses or land. For example:
private foreign investors may require approval for acquisitions of 20% or more in publicly-listed entities;
acquisitions of 10% or more in an Australian agribusiness or land entity, or where the foreign person has a legal arrangement in place with the entity or is in a position to participate, influence or control the management of the entity;
acquisitions of 5% or more in an Australian media business, as defined under the Act; and
acquisitions of 10% or more in any Australian entity by a foreign government investor, or where the foreign government investor has a legal arrangement in place with the entity or is in a position to participate, influence or control the management of the entity.
At this stage, it is unclear as to whether the Government will announce further explanation or criteria on what kind of proposed acquisition should be prioritised, or whether there will be further changes to the exemptions applicable under the Foreign Acquisitions and Takeovers Regulation 2015 (Cth).
If you would like advice on any existing agreement involving a foreign investment, or if you are proposing to sell to a foreign purchaser, or you are an overseas purchaser looking to buy a business or property in Australia, we can advise you of the impact of the new regime and assist you in your transaction.
Further details are also available on the FIRB website