Foreign investment review for overseas buyers

The ACCC’s notification rules come from the Competition and Consumer Act. Foreign investment obligations come from the Foreign Acquisitions and Takeovers Act 1975, and the Treasury reminds foreign investors to understand and follow other laws that apply to their investment too, such as consumer, business and employment laws. The ACCC side is covered in when a merger must be notified.

Each 1 January the monetary thresholds are indexed, “except for the more than $15 million (cumulative) threshold for agricultural land and the more than $50 million threshold for agricultural land for Thailand investors, which are not indexed.”

The table says: “The certain FTA partners are: Chile, China, Hong Kong, Japan, New Zealand, Peru, Singapore, the Republic of Korea, the United States of America, the United Kingdom and any other countries not otherwise listed (other than Australia) for which the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), done at Santiago on 8 March 2018, is in force (i.e. Brunei Darussalam, Canada, Mexico, Malaysia and Vietnam).” Only an immediate acquirer formed in one of those countries can use them; buying through a subsidiary incorporated elsewhere brings the thresholds of the subsidiary’s jurisdiction instead.

A direct interest is defined in section 16 of the Foreign Acquisitions and Takeovers Regulation 2015; it is usually a holding of 10 per cent or more, though a smaller holding can count in some circumstances. A substantial interest is defined in section 4 of the Act. Where two or more parties are associates, their interests are taken together when working out whether a given percentage is acquired, and a foreign government investor is an associate of every other foreign government investor from the same country.

Sensitive businesses “include businesses carried on in the following sectors/fields: media; telecommunications; transport; defence and military related activities; encryption and security technologies and communications systems; the extraction of uranium or plutonium; or the operation of nuclear facilities.”

If a proposal is allowed, the investor receives a no objection notification, which may carry conditions, some of them ongoing. For a high volume of low-risk investments, an exemption certificate lets an investor make multiple proposed investments over time instead of notifying each one, and it too may carry ongoing conditions.

Fees for notifying a proposal or applying for an exemption certificate are payable when the proposal is submitted, are generally calculated on the value and kind of investment, and generally apply to variations as well. An investor who failed to notify before acting is told to tell the Treasury anyway, through a retrospective notice.

The Register of Foreign Ownership of Australian Assets has been live since 1 July 2023. Foreign investors must record their investment on it for many kinds of action, covering Australian land, water, entities, businesses and other assets, unless an exemption applies, and must amend the registration if they dispose of the investment or it changes.

Some conditions require reports to the Treasurer, including on compliance with the conditions, and a notice requiring information or documents must be complied with. A notice, or a notice imposing conditions, can be varied on application, and an extension of a period specified in such a notice has to be sought at least 2 months before the period ends.

Records about the investment must be made and kept, in physical or electronic form, in English or in a format readily converted into English. The Treasury’s examples include keeping records of an action specified in an exemption certificate for 5 years after the action is taken, and records of compliance with a condition for 2 years after the condition stops applying.

Criminal offences and civil penalties apply for non-compliance, and infringement notices can be given in some cases. For a corporation, the Treasury says the consequences “may range from administrative action to penalties over $30 million, 10 years imprisonment, or both.”

The Treasurer can compel information or documents relevant to the Treasurer’s powers, and responding is a legal requirement. The Treasurer can also review some decisions using last resort powers, where national security concerns arise after the decision or where the investor gave false or misleading information before receiving a no objection notification or exemption certificate.