From 1 September 2018, any foreign person with an interest of 2.5 per cent or more in an Australian media company must notify the Australian Communications and Media Authority.
The Broadcasting Legislation Amendment (Foreign Media Ownership, Community Radio and Other Measures) Act 2018 (Cth) (Registration Act) became law on 1 September 2018. The Registration Act, amongst other matters, amends the Broadcasting Services Act 1992 (Cth) to require each foreign person, as defined in the Foreign Acquisitions and Takeovers Act 1975 (Cth) (FATA), that has a company interest of 2.5 per cent or more in an Australian media company to notify Australia's communications sector specific regulator, the Australian Communications and Media Authority (ACMA).
The Registration Act requires notification only, and the rules requiring Australian Foreign Investment Review Board approval for acquisitions of interests in Australian media companies as set out in the FATA remain unchanged. Furthermore, no other notification regimes applicable to shareholdings (such as applying to media companies listed on the Australian Stock Exchange) have been altered.
In introducing the Registration Act to Parliament, the Government stated the new notification requirements are intended to improve transparency regarding foreign investment in Australian media companies. The Government promised to introduce the Registration Act as part of the package of concessions that were agreed with the minor parties in the Senate to obtain support for the legislation to abolish the so called "75 per cent reach" and "2 out of 3" rules governing cross media ownership which took effect in late 2017 (see our article on these reforms here).
Elements of the regime
The notification requirement applies to "foreign persons" within the meaning of the FATA.
Broadly speaking, this covers:
- individuals not ordinarily resident in Australia
- corporations in which an individual not ordinarily resident in Australia, a foreign corporation or a foreign government holds an interest of 20 per cent or more (or corporations in which two or more such persons hold in aggregate an interest of 40 per cent or more)
- trustees of trusts in which an individual not ordinarily resident in Australia, a foreign corporation or a foreign government holds an interest of 20 per cent or more (or trusts in which two or more such persons in aggregate hold an interest of 40 per cent or more)
- foreign governments and foreign government investors
- general partners of limited partnerships in which an individual not ordinarily resident in Australia, a foreign corporation or a foreign government holds an interest of 20 per cent or more (or trusts in which two or more such persons in aggregate hold an interest of 40 per cent or more).
Australian media company
The rules apply to company interests held in an "Australian media company", being any company that:
- holds an Australian commercial television broadcasting licence
- holds an Australian commercial radio broadcasting licence
- is a publisher of a newspaper associated with the licence area of an Australian commercial television broadcasting licence or a commercial radio broadcasting licence (provided that the company falls within section 51(xx) of the Australian Constitution, which covers trading or financial companies formed within Australia and also foreign companies).
The notification regime applies only where the foreign person has a "company interest" of 2.5 per cent or more. A company interest is a beneficial interest in shares or a voting interest or dividend entitlement in respect of a company or a right to share in the property of a company in its winding up.
Information to be contained on ACMA's register
ACMA will maintain the Register of Foreign Owners of Media Assets. This register will be publicly searchable and will include not only the name of each relevant foreign person, but the company interest held and details of how the company interest was determined, among other matters. ACMA has not yet published the form of that Register.
When is registration required?
Existing foreign investors have until the end of February 2019 to notify ACMA. A foreign investor who acquires an interest in an Australian media company that takes that foreign investor over the threshold must notify ACMA within 30 days of the acquisition and a foreign investor that ceases to hold 2.5 per cent or more must also notify ACMA within 30 days of that change occurring.
An additional notification is required at the end of each 12 month period ending 30 June, with that notification required by 30 July each year.
What are the rules under the FATA?
As mentioned, no changes have been made to Australia's foreign investment laws under the Registration Act. Under the FATA, the acquisition of an interest by a foreign person of 5 per cent or more in an entity or business that wholly or partly carries on an Australian media business is a notifiable acquisition.
Interest, as defined under the FATA, is a broader concept than company interest, as applies under the Registration Act. The definition of an Australian media business also differs between the two legislative regimes. Under FATA, an Australian media business is any business of publishing daily newspapers, or broadcasting television or radio, in Australia (including on websites from which all or part of those newspapers or broadcasts may be accessed, as long as publication or broadcast does not exclusively occur through such websites).
What does this mean for foreign investors in the media sector?
There are civil penalties for a failure to comply with the Registration Act. Therefore foreign investors who have any interest in an Australian media company should carefully consider whether the new regime applies to them. The fact that consent may not have been required for the acquisition of that interest under the FATA is not determinative of whether notification is required under the new Registration Act.
This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.