On 24 November, the changes to the Foreign Investment Regime were passed by Parliament.
Australia’s new foreign investment regime starts on Tuesday 1 December – including the introduction of application fees.
At this time the new Foreign Acquisitions and Takeovers Act and the Foreign Acquisitions and Takeovers Fees Imposition and Register of Foreign Ownership of Agricultural Land Bills are publicly available.
The regulations supporting the Foreign Acquisitions and Takeovers Act (which includes a significant amount of detail including thresholds and certain exceptions) are not yet publicly available.
WHAT ARE THE KEY CHANGES TO AUSTRALIA’S FOREIGN INVESTMENT REGIME?
The key changes (described in more details below) include:
- An increase to the ‘substantial interest’ screening threshold
- Significant changes to screening thresholds for acquisitions of agricultural land
- Introduction of an agribusiness screening threshold
- Introduction of an agricultural land register
- Foreign government investor screening provisions now becoming law
- Imposition of fees for almost every FIRB application.
OVERVIEW OF KEY CHANGES
Increase to ‘substantial interest’ screening threshold
Foreign investors (other than foreign government investors) will be permitted to acquire up to 20% of a company before foreign investment approval is required.
Significant changes to screening thresholds for acquisitions of agricultural land
Consistent with Australia’s current Foreign Investment Policy – foreign investment approval will be required for the acquisition of agricultural land by a foreign person who already holds at least $15 million worth of agricultural land, or which will take their holding of agricultural land from below $15 million to above $15 million, now requires FIRB approval.
Introduction of an agribusiness screening threshold
Foreign persons now require FIRB approval to acquire a direct interest (generally 10% but less in certain circumstances) in an agribusiness (the threshold is not yet available).
Agribusiness is defined broadly so that it captures primary production businesses and certain first stage downstream manufacturing businesses (including meat, poultry, seafood, dairy, fruit and vegetable processing and sugar, grain and oil and fat manufacturing).
Introduction of an agricultural land register
The ATO will maintain an agricultural land register to keep track of foreign holdings in Australian agricultural land.
Acquisitions of all freehold interests, and leasehold interests likely to exceed five years, in agricultural land by foreign persons now need to be notified to the ATO through an online portal on the ATO website within 30 days of acquisition completing / lease commencing.
The post-acquisition notification requirement applies regardless of whether FIRB approval was required for the acquisition. Subsequent changes to holdings also need to be notified to the ATO (including ceasing to hold the interest in agricultural land, the holder ceasing to be a foreign person or land ceasing to be agricultural land).
In addition to notifying future acquisitions of agricultural land, all previous interests in agricultural land held by foreign persons at 1 July 2015, or subsequently acquired up to 1 December 2015, need to be notified to the ATO by 31 December 2015 at the latest.
Foreign government investor screening provisions now becoming law
The previous FIRB Policy requiring notification by ‘foreign government investors’ to start an Australian business or to make a direct investment in Australia will now be law.
What fees are required?
- Fees of between $5,000 and $25,000 will apply to most FIRB applications, with larger transactions attracting a fee of up to $100,000. You can view a table of the new fees here.
- Where multiple fees apply to a transaction, only the higher fee is payable.
- Any FIRB applications lodged by 30 November 2015 (ie before the commencement of the revised laws) will not attract a fee.
- FIRB will only commence reviewing an application after the correct fee has been paid.