AUSTRALIA: Foreign Acquisitions and Takeovers Legislation Amendment Regulation 2015

Monday December 14 2015

Following a consultation process, the FATA, 1975 has been amended by The Foreign Acquisitions and Takeovers Legislation Amendment Act, 2015.

Additionally the Foreign Acquisitions and Takeover Amendment Regulation, 2015 has been approved, which repeals the Foreign Acquisitions and Takeovers (Notices) Regulations 1975 and The Foreign Acquisitions and Takeovers Regulations 1989.

Australian’s foreign investment framework is regulated by the below:,

1. The Foreign Acquisitions and Takeovers Act 1975
2. The Foreign Acquisitions and Takeovers Fees Imposition Act 2015, and
3. The Registrar of Foreign Ownership of Agricultural Land Act 2015

The legislation deals with certain actions to acquire interests or substantial interests in securities, assets or Australian land, and significant actions taken in relation to entities (being corporations or unit trusts) and businesses, that have a connection to Australia, and result in changes in control involving a foreign person, with exceptions applying to sensitive industries.

The new legislation introduces fees for foreign investors, civil penalties, increased maximum penalties and extends the definition of Foreign Persons:

• To include foreign governements
• To acquisitions by foreign persons exceeding an interest in voting power or potential voting power, alone or together with one or more associates to 20% (previously 15%). See Section 17 of the Regulations.

Aggregated foreign substantial interest exceeding 40% continues to apply to two or more persons (who are not associates of each other) holding an aggregate interest together with any one or more associates of them.

The exceptions to sensitive industries as defined in Section 15 of the updated Regulations, continue to include media, telecom, transport and military supply industries and Regulations are able to provide for “Different conditions for different sensitive businesses”.

The previous substantial interest thresholds continue to be valued at A$252m, as outlined in Section 36 of The Regulations (with exceptions continuing to apply to US, NZ, Japanese, Chilean and Korean investors equating to A$1094m, except in prescribed sensitive sectors where A$252m applies). Foreign persons are required to make a notification when obtaining an interest in residential real estate or commercial real estate valued in excess of A$55m, with a reduced screening threshold of A$15m applying.

A foreign person must not take certain actions without first notifying the Treasurer (new section 81). These actions are called ‘notifiable actions’. The acquisition of certain interests in an agribusiness, an Australian entity, or an interest in Australian land, are all notifiable interests. Generally, an action is only a notifiable action if the entity, business or land meets the applicable monetary threshold (new section 47).

If a notice has been supplied, the action must not be taken before the end of a specified period (generally 40 days, or an additional period of up to 90 days from the publication of an interim order).
The Treasurer has the power to:

• Decide that the Commonwealth has no objection to the action
• Impose conditions on the action
• Prohibit the action
• Require the action to be undone (for example, by requiring the disposal of an interest that has been acquired).

Offences and civil penalties apply for failing to comply with:

• An order made prohibiting an action, or requiring an action to be undone; or
• A condition imposed on an action.

The new Section 7 of The Act, requires a person to keep records for the purposes of the Act. Information that is obtained for the purposes of this Act (called protected information) may be disclosed only for certain purposes. A person who obtains, uses or discloses protected information other than as authorised by the Act may commit an offence.

For more information, please see the above link: