Cross border insights into FDI screening regimes 2023 Australian Perspectives

1 minute read  14.12.2022 Alberto Colla, Samuel Robertson, Julia Riley & Thomas Galloway for ICLG

MinterEllison's Foreign Investment and Trade team share their Australian insights in the Fourth Edition of ICLG's Foreign Direct Investment Regimes.

There has been a proliferation of Foreign Direct Investment (FDI) screening regimes recently, which now number over 50 FDI worldwide, as noted by report's Fourth Edition of ICLG's Foreign Direct Investment Regimes report expert analyses.

This occurs against a backdrop of global FDI flows recently reaching their highest quarterly level in the past five years at an estimated US$1.815 trillion, notably with developed countries seeing the biggest rise (OECD International Direct Investment Statistics database).

Australian foreign investment perspectives

MinterEllison is delighted to have contributed to ICLG's Foreign Direct Investment Regimes publication, covering foreign investment policy, law and scope of application, jurisdiction and procedure and substantive assessment.

Read the full article for MinterEllison's Australian perspectives. Australia’s foreign investment rules apply broadly, with certain foreign direct investment transactions captured and screened to ensure that they are not ‘contrary to the national interest’. The national interest is determined at the discretion of the Treasurer of the Commonwealth of Australia (Australian Treasurer) as advised by the Foreign Investment Review Board (FIRB), though usually five factors are taken into account – national security, competition, Australian government policies (including tax), impact on the economy and community.

Sensitivities include investments in national security-related businesses, businesses with government contracts, businesses in the health sector, businesses dealing with bulk or sensitive data, agribusinesses, businesses in the transport, media, telecommunications and critical infrastructure sectors.

In Australia, the principal regime that applies to the control of foreign investments includes:

  • the Foreign Acquisitions and Takeovers Act 1975 (Cth) (FATA);
  • the Foreign Acquisitions and Takeovers Regulation 2015 (Cth) (FATR);
  • the Foreign Acquisitions and Takeovers Fees Imposition Act 2015 (Cth); and
  • the Foreign Acquisitions and Takeovers Fees Imposition Regulations 2020 (Cth).

Specific rules apply for certain foreign investors. This includes:

  • stricter rules apply to foreign government investors (such as State Owned Enterprises) compared with private foreign persons. At a high level, FGIs require prior FIRB approval for a broad range of transactions, regardless of the value of the relevant asset; and
  • some countries with whom Australia has a free trade agreement, as well as countries for which the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (TPP-11) is in force (which extends to the region of Hong Kong), have less stringent notification requirements. This is provided that very specific criteria are met and that the acquirer is not considered an FGI. Accordingly, in practice, the higher thresholds for certain free trade agreements or TPP-11 countries are rarely available.

There are both mandatory filing obligations and voluntary filing options for foreign persons under the regime. Filings are made by completing and submitting the online application form through FIRB’s online portal, together with supporting documents. For transactions that require mandatory approval, investors are required to seek and obtain approval prior to taking the relevant action. The application process requires the applicant to complete an application form and pay the relevant filing fee.

Please get in touch if you need assistance preparing for a foreign investment into Australia, including understanding the scope of application of Australia's foreign investment policy, and how to navigate our foreign direct investment regime.

Read the full article for MinterEllison's Australian perspectives

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