On March 29 2020 the Australian Treasurer announced further temporary economic measures which would be introduced in response to the COVID-19 pandemic. The announcement centred around changes to the Foreign Investment Network, with the most prominent being the decision to prescribe nil monetary value thresholds for particular significant actions and notifiable actions under the Foreign Acquisitions and Takeovers Regulation Act 2015. This amendment was given effect by the Foreign Acquisitions and Takeovers Amendment (Threshold Test) Regulations Act 2020.
What does this mean?
These changes mean that all proposed foreign investments into Australia that are normally subject to the Foreign Acquisitions and Takeovers Act 1975 will require approval, irrespective of the value or nature of the foreign investor.
In order to achieve this change, the monetary screening threshold for all foreign investments was reduced to $0 as of 10.30pm 29 March 2020. These changes apply to all foreign persons under the Act, irrespective of their country of origin, or whether they are a private foreign investor or foreign government investor. Furthermore, the threshold test will be met by all acquisitions in entities, businesses or land. However, please note that private foreign investors may not require approval for acquisitions of less than 20% of a publicly listed entity.
It is important to note that there are already a range of proposed acquisitions already subject to $0 thresholds, including all vacant commercial land proposals, mining and production tenements, and all acquisitions by foreign government investors, just to name a few.
What effect will this have?
These measures were introduced as a safeguard so that Australian businesses are not sold to foreign interests without government oversight. In the current economic climate, Australian businesses are under immense financial pressure, and normally viable businesses are more likely to be sold to foreign interests. The government, through announcing these temporary measures, are ensuring that the necessary oversight is provided so that national interests are protected.
If you are a foreign investor and your application for investment is supporting national interests, the Australian Government has issued assurances that your application will not be delayed unnecessarily. Activities that are seen to be supportive of national interests are as follows:
- Investments that support Australian businesses;
- Investments that support Australian jobs; and
- Investments that ensure critical sectors remain viable
If the above is followed, it may be the case that your application is prioritised.
Will the application process take longer?
The Foreign Investment Review Board (FIRB) announced that they will work with new and existing applicants to extend timeframes for reviewing applications.
The timeframe will be extended from 30 days to up to 6 months in some cases.
Whilst these changes may be disruptive in some cases to foreign investors, rest assured that the Australian Government recognises the key role that foreign investors play in helping our economy to recover from the effects of COVID-19.
If you are a foreign investor and are concerned or have questions about these changes, please get in contact with our office on +61 (07) 2102 7109 for an obligation free consultation. We are also able to assist in drafting your FIRB applications.
Kayleigh Whittaker, Senior Lawyer
About the author
Kayleigh Whittaker is a senior lawyer on our Commercial and Property team who assists with Employment Law matters. With a high level of experience in commercial and retail leasing, voluntary and involuntary purchase and sale acquisitions property development and employee relations, Kayleigh provides practical advice to ensure smooth business transactions.