The Government introduced the Foreign Acquisitions and Takeovers Legislation Amendment Bill 2015 (Bill) to parliament on 20 August 2015, which amends the Foreign Acquisitions and Takeovers Act 1975(Cth) (FATA) and Australia’s Foreign Investment Policy (Policy). There are a number of amendments that will have a substantial impact on transactions commonly undertaken by exploration and mining companies. This article provides a brief overview of the key changes.

Key changes generally

‘Notifiable actions’ and ‘significant actions’

Transactions will be divided into ‘notifiable actions’ (transactions which must be notified, with failure to do so being an offence) and ‘significant actions’ (these technically speaking do not have to be notified, but the Treasurer has the power to block or unwind them unless they are notified and a statement of no objection is received).

In practice, applicants and their advisers have in the past treated these two categories the same, lodging applications in order to ensure the Treasurer does not exercise his or her powers.  It remains to be seen what effect the high fees (discussed below) will have on this behaviour.  Common transactions that are notifiable either as ‘notifiable actions’ or ‘significant actions’ include:

  • acquisitions of 20% or more in Australian entities valued above the current monetary thresholds (currently $252 million for most investors, and $1,094 million for investors investing directly from certain treaty countries in non-sensitive sectors);
  • acquisitions of interests in Australian land above the current monetary thresholds (which differ depending on the type of land and the nature of the acquirer, and can be nil);

  • former ‘policy only’ notifications described below.

As with the current regime, overseas transactions can be notifiable as ‘significant actions’ if there is a sufficient connection to Australia.

Policy-based notifications

All Policy based notifications under the current regime will be both notifiable actions and significant actions under the new regime. These include:

  • acquisitions of ‘direct interests’ by foreign government investors in Australian entities or businesses (the definition of ‘direct interest’ may change, but presently is proposed to capture interests of 10% or more, or each 1% increase in any 12 month period over 5%, among other things);
  • the establishment of a new Australian business by a foreign government investor; and
  • all acquisitions of land by foreign government investors.


As we discussed in our previous alert, applications will now attract substantial fees, generally ranging from $5,000 to $100,000 depending on the nature of the application.  We remain concerned about the level of fees, as these are very high by international standards, and the burden of this will fall particularly severely on a range of high volume applicants, including any person that has 15% or more upstream foreign government investor ownership. 

Relaxation around definitions of ‘substantial interest’ and ‘aggregate substantial interest’

The concepts of ‘substantial interest’ and ‘aggregate substantial interest’ are important ones in FATA, as they are used to determine whether a person is a foreign person and to determine whether an acquisition of an Australian entity is a significant action or a notifiable action. The threshold for a ‘substantial interest’ in securities has increased from 15% to 20%.

While the concept of ‘aggregate substantial interest’ (cumulative 40% interests by foreign persons) has been retained, there is some proposed relief in the draft regulations for listed companies to assist them to control from day to day whether they are ‘foreign’ by disregarding certain small shareholdings.

Key changes relating to common exploration and mining transactions

Definition of Australian Land 

The definitions of Australian land (previously Australian urban land) is proposed to be amended to specifically include “mining or production tenements” which is, in turn, defined to be a right to recover minerals, oil or gas and specifically excludes the right to recover minerals, oil or gas for the purposes of exploration or prospecting. This finally clarifies the often debated issue of whether foreign investments relating to exploration or prospecting licences or companies that only hold exploration and prospecting licences requires the Foreign Investments Review Board’s (FIRB) approval. This will now only be the case if they constitute the assets of any Australian business and satisfy the criteria in respect of the provisions relating to Australian businesses (see further discussion below).

In addition, two new categories have been added to the definition of “interests in Australian land”:

  • “an interest in an agreement giving a right (known as a profit à prendre) to take something off another person’s land, or to take something out of the soil of that land”, if the term of the agreement is reasonably likely to exceed 5 years; and
  • “an interest in an agreement involving the sharing of profits or income from the use of, or dealings in, Australian land”, if the term of the agreement is likely to exceed 5 years.

The majority of transactions that are commonly conducted in the mining industry would be considered to be dealing with “an interest as a lessee or licensee in a lease or licence giving rights to occupy Australian land”, a category of interests that has not been changed under the Bill. However, if a particular transaction cannot be characterised as a lease or licence, it is likely that such a transaction would fall within the two new categories of interests.

Interests in Australian businesses

Under the Bill, amendments have been made to clarify requirements for transactions relating to Australian businesses which result in a change of control of the Australian business, such as:

  • the acquisition of interests in the assets of Australian businesses (where the consideration for the acquisition is over the monetary thresholds, currently $252 million for most investors); and
  • certain “significant agreements” entered into by an Australian business (where the value of the Australian business exceeds the monetary thresholds).

In particular, the definition of Australian business specifically includes persons who have interests in mining or production tenements and it is taken that such a person carries on a business of exploiting that tenement for profit or gain. This means that a company holding a mining or production tenement will be caught by this provision even when it sells its exploration tenure (assuming the sale is over the monetary threshold and amounts to a change of control).

One transaction, multiple significant actions

As with the current FATA and Policy, under the Bill, one transaction may constitute several different “significant actions” or “notifiable actions”. For example, the acquisition of an interest in a Western Australian mining lease could be considered to be a “significant action” under provisions relating to the acquisition of an interest in Australian land as well as under provisions relating to the acquisition of an interest in the assets of an Australian business. This means that a statement of no objection may need to be sought from the Treasurer under two or more separate provisions, with different conditions to be satisfied under each of these provisions.