The Government has recently passed the latest set of promised changes to the Overseas Investment Act.
These changes continue the overhaul of the Overseas Investment Act 2005 that began in 2018 with the inclusion of residential land as part of the overseas investment regime.
The recent changes replace the emergency notification provisions introduced under urgency in 2020 in response to the Covid-19 pandemic. The changes also streamline aspects of the OIO application process by removing some "lower risk" transactions and by simplifying investor requirements including the "investor test" and benefits tests.
One significant change is the introduction of the "National Security and Public Order" (NSPO). This change is aimed at ensuring that the Government can consider the risks of overseas investment in some key strategic business areas. Some transactions require mandatory notification while others can be notified voluntarily – which can provide a "safe harbour" if later investigation shows that the investment was of national interest.
The Overseas Investment Office (OIO) is also taking an increasingly proactive role in monitoring overseas investment and determining whether consent has been obtained where it is required by law. Several high profile examples of this enforcement action have been recently reported in the media and the penalties imposed include fines (in some cases amounting to several million dollars) and orders that properties or assets be sold.
Understanding whether a proposed transaction needs consent under the Overseas Investment Act is complex and requires expert advice. If you are considering buying or selling sensitive assets that may fall within the ambit of the Overseas Investment framework, please contact the experts in our Business and Property team for advice.
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