The Foreign Acquisitions and Takeovers Legislation Amendment Bill 2015 (Bill) has been introduced in response to a parliamentary report on foreign investment in residential real estate. Under the Bill, transactions by a foreign person will now be classified as either a “significant action” or a “notifiable action”.
A “significant action” is an action to acquire specified interests in securities, assets or entities which have a connection to Australia. A foreign person will not be required to notify the Treasurer in respect of all significant actions. A “notifiable action”, on the other hand, must be reported to the Treasurer. The following are “notifiable actions:
- an acquisition of a direct interest in an agribusiness (above the threshold)
- an acquisition of a substantial interest (now increased from 15% to 20%) in an Australian entity
- an acquisition of an interest in Australian land
Despite this new formulation, a foreign person may choose, in the interests of certainty, to notify the Treasurer before proceeding with a “significant action” (since the Treasurer may still intervene and block or reverse a “significant action”). However, with the introduction of fees for FIRB applications (ranging from AU$5,000 – AU$100,000), the notification of every “significant action” may become unduly expensive.
Some other key features of the Bill include the redefinition of “foreign person” (to now include all foreign government investors), and the imposition of a new civil and criminal penalty regime for offences.
These changes are due to take effect on 1 December 2015 and serve as a good reminder to submit any outstanding FIRB applications before the new fees are implemented.