FIRB has provided some Q&A material which clarifies the earlier announcements.
What you need to know
- The monetary screening threshold for all foreign investments under the Foreign Acquisitions and Takeovers Act 1975 (Cth) has been temporarily reduced to AUD 0.
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The amendments will not apply to agreements entered into prior to 10.30pm AEDT 29 March 2020 including in relation to acquisitions that have not yet occurred, regardless of whether there are unmet conditions or not (although if an application to FIRB has been made timing may be affected – see below). Accordingly an acquisition which was not required to be notified to FIRB when the relevant agreement was entered into will not need to be notified merely because of this change. Parties will need to take care – amending the existing agreement may change this outcome.
- The statutory timeframe for reviewing applications has been extended from 30 days to 6 months. This will apply to new and existing applications. FIRB will be in touch with applicants to discuss existing applications.
- The changes are effective from 10.30pm AEST on Sunday 29 March 2020 and will remain in place for the duration of the current crisis.
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All foreign persons (irrespective of country of origin) are subject to the new monetary screening thresholds.
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The Government will prioritise urgent applications for investments that directly protect and support Australian businesses and jobs.
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We expect more detail as to the practical implications of these changes to follow. Further updates will follow as the Government provides additional detail.
Key considerations for foreign investors
- The monetary threshold has been reduced to AUD 0. However the other requirements of a significant action or notifiable action still need to be satisfied before foreign investment approval is required.
- For example, investments into companies or trusts will not be notifiable unless they exceed the relevant percentage interest threshold, which will continue to apply.
- Further, subject to limited exceptions, including those applicable in a listed scenario, all acquisitions of an 'interest in land' will be notifiable.
- The Treasurer has not made any announcement as to the applicable fees for applications that would previously not have been notifiable. No mention has been made of refunds for applications which are now not commercially relevant because of delay.
Existing agreements
The amendments will not apply to agreements entered into prior to 10.30pm AEDT 29 March 2020 including in relation to acquisitions that have not yet occurred, regardless of whether there are unmet conditions.
Investments in Australian publicly-listed companies
The exemptions available for investment in Australian publicly-listed companies continue to apply. In addition, the lower percentage interest thresholds that apply to some investments in Australian publicly-listed companies will also continue to apply. For instance, acquisition of 5% or more in an 'Australian media business'.
Prioritisation
Priority will be given to processing applications for investments that protect and support Australian businesses and jobs.
Protecting and supporting Australian businesses and jobs
FIRB has noted that the impact on employment and the community is one of the national interest factors which are taken into account when screening applications and the Government will be particularly mindful of these factors.
Fees
The Treasurer has not made any announcement as to the applicable fees for applications that would previously not have been notifiable.
Refunds for existing applications
FIRB has announced that it will consider refunding an applicant's paid fee where the applicant decides to delay or defer its investment, and therefore withdraw its application, in response to the economic conditions associated with the coronavirus pandemic.
Corporate reorganisations
At this time there is no indication that corporate reorganisations will be treated differently to other investments and as such will be subject to the same AUD 0 monetary screening threshold.
In progress transactions
These changes do not necessarily mean that existing transactions for which an agreement has already been entered into (at a time at which notification was not required) now require notification. However, those agreements and the related circumstances should be assessed carefully.
Money-lending exemption
At this stage the money lending exemption appears untouched.
Authors: Bruce Macdonald, Partner; Samantha Robson, Senior Associate; and Michael Dearden, Counsel.
