The Commonwealth Treasurer, Scott Morrison, announced on 1 February changes to the regulatory framework around foreign investors acquiring interests in Australian agricultural land including the requirement that foreign investors must be able to satisfy that the sale of agricultural land was open and transparent.
To give effect to the Treasurer’s announcement, the Foreign Investment Review Board (FIRB) issued an amended guidance note in relation to agricultural land investments. Under the guidance note, when considering an application by a foreign investor to acquire an interest in agricultural land the FIRB will take into account whether there was an opportunity for Australians to acquire a given parcel of the land. The FIRB has indicated that, in general, approval will not be granted for any acquisition of agricultural land by a foreign person where the land was not offered for sale publicly and marketed widely for a minimum of 30 days. This is to ensure that Australians have had a sufficient opportunity to bid in any sale process of agricultural land. In order to be “marketed widely”, agricultural land must be listed or advertised on widely used real estate listing websites in regional and national media. Applicants for FIRB approval may be requested to provide evidence that the sale process met the requirements for it to be “marketed widely”.
When considering an application by a foreign person to acquire an interest in Australian agricultural land, the FIRB will take into account whether the sale process was open and transparent. While it will be the responsibility of the foreign investor to satisfy the FIRB that the sale process was open and transparent, onus will also fall on the sellers of agricultural land to ensure that the sale process is open and transparent. Foreign investors should ensure that they check, as a preliminary matter, with a seller or the real estate agent that the sale process meets the FIRB requirement.
The FIRB guidance provides that an open and transparent sale process means:
- public marketing and advertising was undertaken for the sale of the property, using channels that Australian bidders could reasonably access (e.g. advertised on a widely used real estate listing site or large regional/national newspaper);
- the property was marketed or advertised for at least 30 days; and
- there was equal opportunity for bids or offers to be made for the property while still available for sale.
An acquisition by a foreign investor of an interest in Australian agricultural land does not need to meet the requirements for an open and transparent sale process where the applicant:
- is acquiring a property via a private sale that was marketed or advertised in an open and transparent sale process in the last six months but did not sell or where the sale did not go through; or
- has a substantial Australian ownership (50% or more), as this constitutes an opportunity for Australian bidders, despite a foreign ownership share; or
- where the applicant is required to make the acquisition comply with State or Commonwealth law such as mining buffer zones.
The treasurer of the Commonwealth has also noted in his press release that exemption certificates for businesses will no longer be available for an acquisition of agribusinesses.