Certain types of foreign investment proposals need to be
notified to a division of the Australian Treasury known as the
Foreign Investment Review Board (FIRB) for prior
approval in accordance with the Foreign Acquisitions and
Takeovers Act 1975 (Cth) (FATA).
Proposed foreign investment in industry sectors that are
commonly associated with the national interest – such as
media, transport and telecommunications – are generally the
subject of greater scrutiny. There is also specific legislation in
each of these areas that affects permissible levels of foreign
Typical transactions where an application for FIRB approval
needs to be lodged include:
acquisitions of "substantial interests" (as defined
below) in an Australian business where the value of its gross
assets is, or the proposal values it, above:
A$244 million for investments in prescribed sensitive sectors;
A$1,062 million in any other case.
These monetary thresholds are subject to annual indexation. For
US (and, at a date to be announced, New Zealand) investors, higher
direct investments by foreign governments and their agencies,
including proposals to establish new businesses, irrespective of
portfolio investments in the media of 5% or more, and all
non-portfolio investments, irrespective of size;
takeovers of offshore companies whose Australian subsidiaries
or gross Australian assets have a value in excess of A$244
million. For US (and, at a date to be announced, New Zealand)
investors, a threshold of A$1,062 million applies, except for
offshore takeovers involving prescribed sensitive sectors where the
A$244 million threshold applies;
acquisitions of interests in Australian urban land (including
interests that arise via leases, financing and profit sharing
arrangements) that involve:
developed non-residential commercial real estate, where the
subject to heritage listing, valued at $5 million or more and
the acquirer is not a US investor;
is not subject to heritage listing, valued at A$53 million or
more, or A$1,062 million or more for US investors;
vacant non-residential land, irrespective of value;
residential real estate, irrespective of value; or
shares or units in Australian urban land corporations or trust
estates, irrespective of value; and
proposals where any doubt exists as to whether they are
notifiable. (Funding arrangements that include debt instruments
having quasi-equity characteristics will be treated as direct
Investors should be aware that "urban land" (referred
to in paragraph 5 above) has a very wide definition. It includes
all land situated in Australia other than land that is used wholly
and exclusively for carrying on a business of primary
A "substantial interest" occurs when a single
foreigner (and any associates) has 15% or more, or when several
foreigners (and any associates) have 40% or more, in aggregate, of
the ownership of a corporation, business or trust.
For the purposes of the above requirements, a "US
investor" is a national or permanent resident of the United
States of America, a US enterprise or a branch of an entity located
in the United States of America and carrying on business activities
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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