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At 10.30pm on Sunday 29 March 2020 the Treasurer of Australia, Josh Frydenburg, announced a temporary change to the way all proposed foreign investment into Australia is dealt with under the Foreign Acquisitions and Takeovers Act (1975) (Act) and Foreign Acquisitions and Takeovers Regulation 2015 (Regulations) in response to COVID-19.

Background

The Act and Regulations govern foreign investment into Australian businesses, companies, mining and production tenements, property and land. This is done by requiring foreign persons to lodge an application with the Foreign Investment Review Board (FIRB) where they meet certain thresholds of investment.

Examples of the previous thresholds include:

  • acquiring a company or business (that does not carry on a business in a sensitive sector) by a foreign person with consideration of more than $252 million,  and
  • investment into an agribusiness by any foreign person with consideration of more than $55 million.

Temporary changes

The Australian Government has announced two key changes to the way foreign investment into Australia will be dealt with during the COVID-19 crisis:

  • All foreign investment subject to the Act will now have a $0 monetary threshold for the purposes of FIRB approval, and
  • FIRB will be extending the time frames for reviewing applications from 30 days to 6 months.

As a result, all foreign investment into Australian businesses, an Australian company or Australian land that is governed by the Act will be required to submit a FIRB application and receive FIRB approval before the transaction can complete. It is important to note that if your transaction previously did not require FIRB approval (because you did not meet the relevant monetary threshold) or was the subject of an exemption (e.g. the purchase of certain residential properties) FIRB will most likely find no objection to the transaction or issue a no objection, subject to some minor conditions still allowing the transaction to proceed.       

The Australian Government have been careful to note that this is not an investment freeze. Australia is open for business and recognises investment at this time can be beneficial if in the national interest. In line with this, FIRB will prioritise urgent applications for investments that directly protect and support Australian businesses and Australian jobs, taking into account any commercial deadlines related to those proposed investments. The temporary changes will continue for the duration of the current crisis. 

FIRB are currently in the process of updating their policies and guidance in line with the Treasurer’s announcement.

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