On 14 February 2022, the Federal Government released the Evaluation of Foreign Investment Reforms that commenced on 1 January 2021 together with a draft regulatory response in the form of a package of amendments to the Foreign Acquisitions and Takeovers Regulation 2015 (Cth).
The proposed amendments are designed to reduce the regulatory burden (with respect to the money lending exemption and transactions where there is no increase in a foreign person’s underlying interest in the asset or target as a result of the transaction) and streamlining less sensitive investment.
In summary, the regulation does seek to:
(a) clarify the money lending exemption by clarifying what constitutes a money lending agreement and money lending business;
(b) amending the money lending exemption to ensure that it is available to:
(1) a person who is in a position to determine investments or policy of an entity that entered into a money lending agreement;
(2) a security trustee who holds or acquires a security interest on behalf of an entity that has entered into a money lending agreement;
(3) a receiver or a receiver manager is appointed by a person otherwise captured by the money lending exemption;
(c) raise the control threshold for foreign persons who acquire an interest in an unlisted land entity from 5% to 10% - aligning the control thresholds for listed and unlisted land entities;
(d) exemption acquisitions of interests in securities where the proportionate share or unitholding does not increase as a result of a person’s acquisitions;
(e) clarify that foreign persons require additional securities in an Australian entity pursuant to a rights issue do not require further approval if the issue is consistent with the meaning with the Corporations Act 2001 (Cth); and
(f) amend the Foreign Custodian Corporations Exemption to ensure that foreign custodians do not require approval where they undertake acquisitions in the course of providing custodian services on behalf of someone who is not a foreign person.
Interested parties are invited to submit comments on the amendments to [email protected] before 11:59 AEDT on 25 February 2022.
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