Streamlined FIRB exemption certificates (ECs)

By specifying eligibility criteria for the new ECs, FIRB expects to be able to assess and grant them relatively quickly.
Australia Government, Public Sector
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In recent articles, we suggested that private equity (PE)  funds now required to obtain Foreign Investment Review Board (FIRB) approval for all new investments, should consider applying for a business exemption certificate (EC) so as to avoid being at a competitive disadvantage compared to domestic investors.

On 10 July 2020, FIRB updated Guidance Note 53 (Temporary measures in response to the coronavirus) to facilitate the process for obtaining ECs. FIRB has now advised that, in addition to applying for a standard business EC, for so long as the temporary changes to Australia's foreign investment review framework remain in place, foreign investors can apply for three new types of 'streamlined' ECs:

  1. Low-risk business ECs, for foreign investors (including private equity and venture capital fund managers) acquiring small entities in non-sensitive sectors that fall below the old FIRB monetary screening thresholds; 
  2. Low-risk commercial land ECs, for investors acquiring small interests in developed commercial land; and
  3. Restoration variations to existing ECs, that will amend the financial limit of existing business and land ECs to ensure that foreign investors can use existing certificates to pursue their original, approved, investment strategies. 

FIRB's rationale for introducing a new category of 'streamlined' ECs is that standard ECs can take a prolonged period of time before they are granted due to FIRB's desire to ensure that sensitive businesses or interests in land will not be acquired by foreign persons without sufficient scrutiny. By specifying the eligibility criteria to these new ECs, FIRB expects to be able to assess and grant the new streamlined ECs relatively quickly as these fixed eligibility criteria mitigate any national security risk. This is consistent with the underlying reason for FIRB introducing ECs a few years ago, which was to reduce the regulatory burden on foreign investors who are deemed to be 'low-risk' to make a series of routine and low-risk acquisitions within Australia. 

Streamlined ECs

Set out below are details of the 3 categories of 'streamlined' ECs recently announced by FIRB:

The "Low-risk business EC":

  • Overview a special 'low-risk business EC' is now available to foreign investors (including private equity and venture capital fund managers) who are seeking to acquire interests in 'small entities' in non-sensitive sectors where such acquisitions fall below FIRB's old monetary screening thresholds. Although FIRB has not provided any guidance as to what constitutes a 'small entity', it is reasonable to assume this covers all Australian entities valued at less than the previous FIRB monetary screening thresholds. FIRB confirmed that this EC is also available for foreign investors who are increasing their percentage interest as a result of a recapitalisation or for any 'top-ups' of interests in Australian entities or business that are already owned (or majority controlled) by these foreign investors.
  • Eligibility Criteria: Similar to standard Business ECs, FIRB will only grant this EC to foreign investors who:
    •  have invested in Australia previously – FIRB has clarified that, if the foreign investor applying for the EC is a PE fund/investment fund, it is the fund manager (i.e. general partner) that is relevant for determining whether the applicant has previously invested in Australia, not the fund being used to make the investment;
    •  are seeking to make investments in non-sensitive sectors (i.e. investments in sectors such as defence, health, critical minerals, critical infrastructure, or service providers that have access to critical infrastructure or sensitive data will be excluded).
  • Financial Limits: the financial limits on this type of EC will be set at $100 million for new investments, $200 million for top-up investments (i.e. where the foreign investor already controls the target) with an aggregate financial limit of $500 million.
  • Duration: the duration of these ECs are linked to the end of the temporary COVID-19 measures put in place by FIRB (and there is currently no indication of how long these temporary measures will remain in place). However, it should also be noted that any conditions attaching to an EC will remain for as long as is required to protect Australia's national interest, and as such, some conditions attaching to the ECs may remain in place following expiry of FIRB's temporary measures.
  • Applicable Fee: the standard application fee of $36,900 will apply for this EC compared to the fee of not less than $26,700 for individual transactions of $10 million or more. Taking into account that a low-risk business EC will last for as long as FIRB's temporary COVID-19 measures are in place and can cover multiple investments, significant cost savings could be made if a Business EC is obtained.

The "Low-risk developed commercial land EC"

  • Overview: FIRB has announced that a special 'low-risk developed commercial land EC' is now available to foreign investors who are seeking to acquire interests in low-value non-sensitive developed commercial land (or entities holding such land).
  • Eligibility Criteria: Similar to low-risk business EC's these will only be granted to foreign investors who have invested in Australia previously and will exclude any proposed investments of sensitive land (e.g. land leased to the Australian government, land that has bulk data storage, telecommunications facilities or land that has critical infrastructure on it)
  • Financial Limits: the financial limits on this type of EC are lower than the financial limits placed on a 'low-risk business EC'. They will be set at $50 million for each individual transaction with an aggregate financial limit of $200 million for all transactions covered by this EC.

  • Duration: As above, the duration of these ECs are linked to the end of the temporary COVID-19 measures put in place by FIRB.
  • Applicable Fee: an application fee of $36,900 will also apply for this EC, however:
    •  FIRB will consider reducing this fee in certain circumstances to $10,600 where a fee waiver is sought by the applicant and will be assessed on a case-by-case scenario;
    •  if a foreign person has already applied for (but has not yet been granted) a standard EC, they can – if they meet the relevant eligibility criteria - apply for their application to be processed as a streamlined low-risk commercial land EC and if successful, FIRB will refund some of the fees already paid so that the fees do not exceed the $10,600 fee that would have otherwise been paid. 

The "Restoration variations to existing ECs"

  • Overview: FIRB has stated that they will now assess 'restoration' variations for foreign investors which hold an existing EC. The intention is that these variations will amend the financial limits imposed on existing ECs to 'restore' the value of the EC. This is because the aggregate financial limit may be eroded more quickly while no monetary screening threshold applies and the value of all proposed investments is deducted from the aggregate financial limit (as opposed to only those that exceeded the monetary screening thresholds). In other words, FIRB will vary existing ECs to ensure that relevant foreign investors are able to pursue their original, approved, investment strategies. 
  • Eligibility Criteria
    •  FIRB has indicated that the 'restoration variations to existing ECs' will only be granted to foreign persons where they can demonstrate that the aggregate financial limit on their existing EC has either:
      • already been reached; or
      • is likely to be reached in less than 3 months.
    •  Given the purpose of these streamlined ECs is to expedite those applications that are not likely to be contrary to the national interest, FIRB has clarified that restoration variations to existing ECs will not be granted to Foreign Government Investors1.
  • Applicable Fee: Given that this is a variation of an existing EC and not a new application, the fees payable to FIRB are $10,600.

Who should consider applying?

Investors considering making investments in 'low-risk' Australian businesses or entities and whose previous Australian investments did not require FIRB approval (prior to the monetary screening thresholds being reduced to nil) should consider applying for either a "Low-risk business EC" or a "Low-risk developed commercial land EC" as applicable. 

Separately, existing holders of standard business ECs who have seen the financial limits on their existing ECs eroded due to FIRBs temporary reduction of the monetary screening thresholds to nil, should consider applying for a "restoration variation" to their existing EC.


The introduction of these streamlined ECs is part of a suite of changes recently introduced by the Australian government to endeavour to strike a balance between ensuring that Australia remains an attractive destination for foreign investment and continuing to protect Australia's national interests. By introducing streamlined ECs to minimise the timeframes for FIRB pre-approval of 'low-risk' investments, the Australian government is re-affirming its commitment to ensure that Australia's foreign investment regime remains fair and reasonable. 

All foreign investors, particularly private equity and managed investment funds who have previously invested in Australia and wish to continue to do so will welcome these latest changes. These ECs assist foreign investors requiring FIRB approval by streamlining the procedure, which in turn, helps remove eligible 'low-risk' foreign investors from being at a competitive disadvantage compared to local investors not requiring such approval.


1 This term has the meaning given to it in the Foreign Acquisitions and Takeovers Regulation 2015 (Cth) and includes PE funds or managed investment funds that have sovereign wealth funds, offshore government and/or government employee pension funds among their upstream investor base.

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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