The new package of legislation overhauling Australia's foreign investment laws, the first major revision in 40 years, commenced on 1 December 2015. While many features of the previous regime have been retained (and sometimes re-named), there are also a number of significant changes. Partners Jeremy Low, Wendy Rae and Richard Kriedemann and Senior Associate Eve Regnard review the key new elements.
Some of the key new elements are:
- Fees: applications under the Act will now attract an application fee, ranging from $5000 to $100,000.
- 20% threshold: previously an acquisition of a substantial interest of 15% could trigger a requirement to make an application under the Act. That threshold has generally increased to 20%.
- Lower review thresholds for agricultural land and agribusiness: Acquiring a stake of 10% in an agribusiness, or less in some cases, will need approval. The screening threshold for agricultural land was lowered from $252 million to $15 million (cumulative). A $55 million threshold (based on the value of the investment) for investments in agribusiness now applies.
- Agricultural land register: foreign holders of land in Australia that is used, or could reasonably be used, for a primary production business are required to submit detailed information for this new register (filings are due 31 December 2015). A register of water rights is to follow.
- Revised exemptions for moneylenders: a modernised and expanded exemption for moneylenders and others involved in financing transactions will benefit foreign lenders.
- Exemption power: the Treasurer will now have the power to issue exemption certificates, a power not available previously. The existing practice of allowing 'annual programs' for certain land acquisitions will now be conducted using exemption certificates. They will also be used for the benefit of foreign underwriters and to facilitate certain tenement acquisitions.
While the legislative re-write aspired for a 'more modern and simpler foreign investment framework', the package still delivers a complex and layered system of categories, exceptions and multiple thresholds not unlike its predecessor. Our experts have put together a comprehensive overview outlining the changes, how the law now operates and provide guidance to foreign investors as they consider how their transactions will fit into the new regime.
The changes to Australia's foreign investment laws are significant. The changes impact not only foreign persons proposing to enter into transactions but also transactions that have already completed, for example, the obligation to file under the agricultural land register.
If you would like to talk to an expert about how the changes will impact on your business, please contact one of the partners listed below.