On 30 March 2020, Federal Treasurer Josh Frydenberg announced that all thresholds associated with foreign investments into Australia subject to the Foreign Acquisitions and Takeovers Act 1975 (the Act) will require approval by the Foreign Investment Review Board (FIRB).
This threshold change is regardless of the value of the investment or the nature of the foreign investor.
Prior to the announcement by the Treasurer, significant and disparate monetary thresholds had to be met before approval was required from FIRB.
As a result of this change, for example, the following investments by a foreign person (or foreign company) will now require FIRB approval (regardless of deal value):
- an investment of more than a 20% interest in an Australian company, unit trust or holding company;
- an investment of more than a 5% interest in ‘sensitive business’ which includes media, telecommunications, transport and various military applications;
- in residential land;
- any land where the acquirer in land is a foreign government investor;
- commercial land that is vacant;
- mining or production tenement; and
- interests in an Australian land corporation.
The Treasurer has advised that this change will be temporary and will remain in place during the duration of the current COVID-19 crisis. Further, that the change is not intended to be an investment freeze.
From a practical application perspective, it has been advised that FIRB will be working with new and existing applications to extend the timeframes for reviewing the applications from 30 days to up to 6 months.
The government is yet to enact legislation to bring into effect the changes as outlined by the Treasurer but has advised that the changes are effective as of 10:30PM AEDT on Sunday 29 March 2020.
If you have any questions regarding FIRB applications, please contact our Mergers and acquisitions team.