Australia requires a wide variety of transactions involving foreign businesses to be reviewed and approved before completion

FIRB has been increasingly willing to use conditions and undertakings as a mechanism to increase the government's oversight of more complex or sensitive investments.

The decision to approve or deny a foreign investment application is ultimately made by the Treasurer of Australia, based on an assessment of whether or not the investment would be contrary to the national interest. When making its decision, the Treasurer is advised by the Foreign Investment Review Board (FIRB), which examines foreign investment proposals and advises on the national interest implications.

Australia's foreign investment policy framework comprises the Foreign Acquisitions and Takeovers Act 1975 (the Act), the Act's related regulations and Australia's Foreign Investment Policy (the Policy).


A foreign person or entity making an acquisition that requires approval under the Act must apply to FIRB for approval before completion of the acquisition. An application includes filing fees that vary according to deal value.


Approval is required for any acquisition by a foreign person of:

A substantial interest in an Australian entity (at least 20 percent for an entity valued at more than AUD 252 million (US$191 million)). Consistent with Australia's commitments under the Act, a higher threshold of AUD 1.094 billion (US$829 million) applies to investors from Chile, China, Japan, Korea, New Zealand and the US. However, the lower AUD 252 million (US$191 million) threshold applies to these investors if they are investing in "sensitive businesses," which include media, telecommunications, transport, defense and military-related industries, as well as the extraction of uranium or plutonium and the operation of nuclear facilities.

A 10 percent or greater interest in an agribusiness with a value of AUD 55 million (US$41.6 million) or more.

Any residential or vacant Australian land or any land for redevelopment (no threshold for acquired interest or deal value applies).

A developed commercial property, which has two categories: "sensitive," with a AUD 55 million (US$193 million) threshold, and "non-sensitive," with a AUD 252 million (US$191 million) threshold (entities with significant real estate holdings also have thresholds reflecting their underlying land interests).

A media business (when acquiring more than a 5 percent interest or any percentage non-portfolio interest).

In addition, all foreign government investors (which can include domestic or offshore entities where foreign governments hold at least a 20 percent interest) must get approval before acquiring a direct interest (i.e., at least a 10 percent interest or the ability to influence, participate in or control) in an Australian asset or entity, starting a new business or acquiring an interest in Australian land regardless of the value of the investment.


The Treasurer may prohibit an investment if he or she believes it would be contrary to the national interest. In making this decision, the Treasurer will broadly consider:

  • The impact on national security
  • The impact on competition
  • The effects of other Australian government laws and policies (including tax and revenue laws)
  • The consequences for the economy and the community
  • The character of the investor


  • Generally, the Treasurer approves the vast majority of applications.
  • However, FIRB has been increasingly willing to use conditions and undertakings as a mechanism to increase the government's oversight of more complex or sensitive investments. Undertakings required from FIRB may include matters relating to governance, location of senior management, listing requirements, market competition and pricing of goods and services (e.g., that all off-take arrangements must be on arm's-length terms) and other industry-specific matters. FIRB has also recently issued a set of standard tax conditions that apply to those foreign investments that pose a risk to Australia's revenue and make clear the requirements and expectations for investors.
  • The Treasurer also has wide divestiture powers and can issue criminal and civil penalties for serious breaches of the Act.


Historically, there have been few rejections by the Treasurer on the grounds of national interest. There have been some significant investment proposals that have been rejected, however, including the blocking of Shell's proposed acquisition of Woodside in 2001, due to concerns over foreign ownership of Woodside's significant natural gas interests in Australia, and the blocking of Singapore Exchange's attempted takeover of the Australian Stock Exchange in 2011, as the transaction would have reduced Australia's economic and regulatory sovereignty over the Australian Stock Exchange.

More recently, the Treasurer has blocked these high-profile investment proposals:

Archer Daniels Midland Company's November 2013 proposed takeover of GrainCorp (a leading Australian agribusiness). This was reported as a largely political decision, with the Treasurer citing that the proposed AUD 3.4 billion (US$2.6 billion) takeover was contrary to the national interest and had the potential to undermine Australia's public support for the government's foreign investment policy. The Treasurer also noted his competition concerns, as approximately 85 percent of eastern Australia's bulk grain exports are handled through GrainCorp's ports network.

A foreign investor's April 2016 purchase of S. Kidman & Co Limited. The sale was deemed as against Australia's national interest due to the size and significance of Kidman's property portfolio which, at the time, was 1 percent of Australia's land mass and more than 2 percent of its agricultural land.

New South Wales's August 2016 plan to sell electricity distributor Ausgrid to Chinese and Hong Kong bidders. It was found to be not in the national interest due to national security concerns.

In September 2016, the Treasurer granted conditional approval for the Lonsdale Consortium, comprising both Australian and foreign investors, to acquire a 50-year lease on the Port of Melbourne. Importantly, CIC Capital, a subsidiary of the Chinese sovereign wealth fund CIC, and OMERS, a Canadian pension fund, would each hold a 20 percent stake in the port. A key reason behind the approval was that a number of foreign investors were part of the consortium and no individual foreign investor had a controlling interest. Further, the Treasurer has indicated that the proportions of foreign ownership of the port cannot be altered without the Treasurer's approval under FIRB's conditions on the acquisition.


Foreign persons should file an application in advance of any transaction or make the transaction conditional on foreign investment approval, and a transaction should not proceed until the Treasurer advises on the outcome of its review. For a more sensitive application (e.g., transactions involving the banking, media and telecommunications sectors), foreign investors should consider taking up the Government's invitation in the Policy to engage with FIRB before filing an application for a significant investment. These discussions may help foreign investors understand national interest concerns the Government may hold about a particular proposal and the conditions the Treasurer may be considering imposing on the proposal should it be approved. These discussions can also help with structuring a transaction in order to reduce the likelihood of rejection.

Such discussions should be held at an early stage in order to provide enough time to satisfy all FIRB queries. Where there is a competitive bid process for the acquisition, a foreign investor that does not actively engage with FIRB early in the bidding process may be placed at a competitive disadvantage to other bidders who do. Foreign investors should be prepared to discuss in detail any conditions and undertakings that may be requested by FIRB, especially for acquisitions that are likely to attract greater political or media scrutiny.


Under the Act, the Treasurer has 30 days to consider an application and make a decision. The time frame for making a decision will not start until the correct application fee has been paid in full. The Treasurer may also extend this period by up to 90 days by publishing an interim order. An interim order may be made to allow further time to consider the exercise of the Treasurer's powers. Investors can also voluntarily extend the period by providing written consent.

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