The Treasurer has announced changes to Australia’s foreign investment review framework, effective from 10.30pm AEDT on Sunday 29 March 2020, relating to monetary thresholds and timeframes for reviewing applications. Details are available in our Guidance Note number 53, which addresses the effects of the changes. All material on this website should be read in light of the Treasurer’s announcement.

Q&A – Temporary changes to foreign investment framework

What is changing and what is staying the same?

Zero monetary screening thresholds for all

Starting from 10:30 pm AEDT 29 March 2020, proposed foreign investments into Australia subject to the Foreign Acquisitions and Takeovers Act 1975 (the Act) will require approval, regardless of value or the nature of the foreign investor. This temporary change will be achieved by reducing the monetary screening thresholds to $0 for all foreign investments under the Act.

There are already a range of proposed acquisitions that are subject to $0 thresholds under existing rules, for example all acquisitions by foreign government investors, private acquisitions in Australian media businesses, residential land proposals, mining and production tenements, and vacant commercial land proposals.

Extended deadlines for case processing

To ensure sufficient time for screening applications, the Foreign Investment Review Board (FIRB) will work with existing and new applicants to extend timeframes for reviewing applications from 30 days to up to six months. In doing so, the Government will prioritise urgent applications for investments that protect and support Australian businesses and Australian jobs.

Who is affected by the changes?

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.

Foreign investors will play a key role in supporting our economic recovery. But in this time of crisis, the Government needs oversight of all foreign investment activity to ensure it is consistent with the standards that would normally be applied and what the community expects.

If you are concerned that you may be a party to a proposed transaction that will require FIRB approval, it is important that you understand your legal obligations and rights under the Act, and seek legal advice regarding your particular circumstances as necessary.

When do these changes have effect and how long will these measures be in place?

Starting from the Government’s announcement of 10:30 pm AEDT 29 March 2020, proposed foreign investment into Australia subject to the Act will require approval, regardless of value or the nature of the foreign investor. These are temporary measures that will remain in place for the duration of the coronavirus crisis. 

Why is the Government doing this? What risks is the Government trying to protect against?

Australia is being fundamentally disrupted by the coronavirus, including potentially threatening economic security and the viability of critical sectors. Businesses are increasingly under pressure. There will likely be a rise in debt restructuring transactions for Australian businesses, along with opportunities to invest in distressed assets.

Without these changes, it is possible many normally viable Australian businesses would be sold to foreign interests without any government oversight, presenting risks to the national interest.

Will foreign investors still be able to apply?

Australia continues to welcome foreign investment, which remains vital to our long-term economic success and stability. The Government recognises that foreign investment will play an important part in helping many businesses get to the other side – securing jobs and supporting our economic recovery.

These extraordinary measures are necessary to safeguard the national interest as the coronavirus outbreak puts intense pressure on the Australian economy and Australian businesses. This is about making sure the Government has visibility of investments made during this crisis and ensuring those investments are not contrary to the national interest (including economic and national security, and ensuring public order and the viability of critical sectors). We will prioritise applications to ensure that investments which support the national interest are not unnecessarily delayed.

How do these changes affect state-owned enterprises?

Most investment by foreign government investors is already subject to screening at zero dollars.

What kinds of conditions will be put on to protect Australian businesses and Australian jobs?

Consistent with current screening processes, the type of conditions which will be imposed on applications would be determined on a case-by-case basis and will be applied to address a specific risk to the national interest. The impact on employment and the community is one of the national interest factors which are taken into account when screening applications. The Government will be particularly mindful of the potential impact on the community and employment in screening applications.

Who will FIRB consult on applications?

FIRB will continue to consult with other government agencies as required when assessing applications to ensure they are not contrary to the national interest.

Do the monetary threshold changes alter the meaning of significant or notifiable actions under the Act, or the definition of a foreign person?

No. The new measures do not change the meaning of significant or notifiable actions under the Act, other than the monetary threshold component of those definitions. In addition, the changes do not affect the meaning of a foreign person under the Act.

Does this mean a foreign investor requires FIRB approval to buy shares in a publicly-listed Australian company?

Foreign persons proposing to take certain actions will need to notify the Treasurer if the action satisfies the meaning of a notifiable action under the Act. The change announced by the Treasurer means the threshold test will be met in relation to all acquisitions in entities, businesses or land. However, the other conditions of a notifiable action must also be met. In particular, private foreign investors may not require approval for acquisitions of less than 20 per cent in a publicly-listed entity.

Acquisitions of interests in securities of particular entities may require approval at a lower percentage threshold. For example:

  • Acquisitions of 10 per cent 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 per cent or more in an Australian media business, as defined under the Act; and
  • Acquisitions of 10 per cent 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.

I entered into an agreement before 10:30pm AEDT 29 March 2020, but the acquisition has not yet occurred. Am I required to notify?

(Updated 17 April 2020)

No. The Regulation, as amended, specifies that the changes do not apply to agreements entered into prior to 10:30pm AEDT 29 March 2020, including in relation to acquisitions that have not yet occurred, regardless of whether there are unmet conditions or not.

What would happen if investors go ahead with their investments without seeking FIRB approval?

The Australian Government expects all entities operating in Australia to maintain the highest standards of corporate behaviour, irrespective of whether those entities are Australian or foreign-owned. Persons involved in operating these entities are expected to understand Australia’s regulatory environment and abide by all the relevant requirements.

Compliance with foreign investment legislation is a priority for the Australian Government, to ensure that foreign investment is not contrary to the national interest. Foreign persons who fail to meet their obligations under law may be subject to a disposal order, civil penalty orders, and/or criminal prosecutions.

How will the FIRB and Treasury prioritise applications?

To ensure sufficient time for screening applications, Treasury will be working with existing and new applicants to extend timeframes for reviewing applications from 30 days to up to six months. Priority will be given to processing applications for investments that protect and support Australian businesses and jobs.

The Treasurer and his delegates will continue to review foreign investment proposals against the national interest on a case-by-case basis. Where appropriate, conditions will be applied proportionately to address identified risks on a non-discriminatory basis.

Who will be deciding foreign investment applications? Will they all be decided by the Treasurer?

Consistent with current practice, the Treasurer will continue to provide delegations to other Treasury portfolio ministers, as well as senior officers of the Treasury and the ATO, to make decisions on certain applications. For example, senior officers of the Treasury can make decisions on some non-sensitive low-value applications for land, while senior officers of the ATO generally make all decisions relating to investments in residential real estate. The Treasurer remains the decision-maker for the most sensitive cases.

What happens if foreign investors don’t agree to the delay?

The Treasurer or a delegate may extend the statutory period by up to a further 90 days by publishing an interim order. An interim order extends the period of time in which the proposal can be considered. Interim orders must be published on the Federal Register of Legislation and prohibit the proposed acquisition for that period.

I currently have an investment application with the FIRB. What does this announcement mean? Will it be extended by another six months?

We appreciate that there are a large number of applications that are currently in the screening process. Due to the need to prioritise our work to respond to the coronavirus crisis, we will be seeking to extend statutory deadlines on existing applications up to six months. We will not be requesting an extension in all cases, and if we do request an extension, it does not mean that your application will necessarily require six months to make a decision. We appreciate your patience during this time as we work with applicants to prioritise and process cases as quickly as possible in the current environment.

Case officers will contact applicants to discuss the expected time frame for processing their applications, taking account of any commercial deadlines related to those proposed investments.

Priority will be given to processing applications for investments that protect and support Australian businesses and jobs.

My application requires urgent attention and cannot wait six months for a decision. What can I do?

Extending the statutory deadline to up to six months does not mean that your application will take the full six months for a decision to be made.

To assist in the prioritisation of applications, please advise if your application has commercial imperatives or broader economic impacts, by submitting additional supporting information to FIRBapplications@treasury.gov.au outlining:

  • Your case number (FIXXXX/XXXX)
  • Detail the commercial imperatives and impact if a decision is not able to be made by a certain date

I currently have an investment application with the FIRB and I wish to withdraw my application. What do I have to do?

The FIRB has previously announced on its website that it will consider refunding an applicant’s paid fee where the applicant decides to delay or defer their investment – and therefore withdraw their application – in response to the economic conditions associated with the coronavirus pandemic. Please see the FIRB website for more details.

How will the threshold changes impact on my existing exemption certificate?

(Updated 17 April 2020)

Exemption certificates granted prior to 10:30pm AEDT 29 March 2020 (the time of announcement) are still valid providing the conditions (if any) continue to be met. The temporary changes do not revoke or amend any certificate. Foreign persons are still able to apply for an exemption certificate, which will be granted if the proposed actions by the foreign person are not contrary to the national interest.

Certain exemption certificates granted prior to 10:30pm AEDT 29 March 2020 contain conditions which exclude the acquisition of particular interests which were specified in s 52(6) of the Foreign Acquisitions and Takeovers Regulation 2015. Section 52(6) and associated provisions have now been repealed. However, transitional measures have been implemented so that subsection 52(6) (and associated provisions) continue to apply in relation to an exemption certificate granted prior to 10:30pm AEDT 29 March 2020 as if the repeal had not happened. This means that acquisitions of those relevant interests will continue to not be covered by the exemption certificate and separate notification may be required.

As a result of the temporary changes, certain acquisitions may now potentially give rise to significant and/or notifiable actions where this would not have previously been the case. Such acquisitions may be covered by exemption certificates that are already held by a foreign investor and, where this occurs, those acquisitions will be taken into account in determining whether the exemption certificate holder has exceeded the financial limit specified in their exemption certificate.

Example: Jack Pty Ltd was issued an exemption certificate on 2 February 2020 which allows it to acquire up to $400 million in commercial land over the next 12 months. As there is now a nil threshold value for all acquisitions of developed commercial land, all acquisitions of developed commercial land (which meet the terms of the exemption certificate) will be taken into account in determining whether Jack Pty Ltd has exceeded the $400 million financial limit in its exemption certificate.

Is anything changing for residential real estate approvals?

(New - added 6 April 2020)

No. Residential real estate is already subject to a zero dollar threshold, and approvals are already subject to a range of conditions which will remain unchanged. Residential real estate applications are typically processed within 30 days – this is not expected to change.

Will this Q&A be updated regularly?

(New – added 17 April 2020)

Following minor updates made on 17 April 2020, the Q&A page will remain unchanged. A new Guidance Note will be developed to provide specific information on how the temporary changes apply for different acquisitions. The new Guidance Note is being provided for guidance only and should be read in conjunction with the legislation and regulation. Please refer to the Guidance Notes for further updates.

Where can I go to get more information?

For further information on these changes, or for general enquiries relating to foreign investment in commercial land, agricultural land or an Australian business, you can contact the Foreign Investment Review Board on +61 2 6263 3795, or via email at firbenquiries@treasury.gov.au

The circumstances of each individual may be different and it is important to understand your rights and obligations under the legislation. If you are concerned about the impact of these changes on a proposed investment in this country, you should seek a legal assessment of your circumstances.