AUSTRALIA: Government modernises and simplifies foreign investment framework

Thursday August 13 2015

Following the issuance of a consultation paper on Modernising Australia’s Foreign Investment Framework on 2 May 2015, the Government has consequently agreed on a modernisation package. As a result of the consultation, the Government is taking steps to modernise and simplify the foreign investment framework.

The following measures that will be implemented in the future by the government are explained in this modernisation package.

Item 1: A legislated framework supported by guidance.
 Incorporating the foreign government investor rules into the legislative framework;

• Legislating the media specific requirements;
• Removing the special screening requirements for heritage listed commercial developed property.
• This framework would be implemented under Australia’s Foreign Investment Policy.

Item 2: Update the Policy to reflect core administrative practices and requirements.

• Updating the Policy to reflect core administrative practices and requirements.

Item 3: Closer alignment with other commonwealth legislation.

• Increasing the substantial interest (control) threshold for a single foreign person from 15 to 20 percent;
• Allowing certain interests to be disregarded when applying the foreign person definition;
• Updating the ‘associates’ definition;
• Modernising the moneylending exemption in the Act to reflect current lending approaches;
• Exempt compulsory acquisitions and buy-outs following takeover bids (i.e. where investor already has 90 percent);
• Importing the selected exceptions from Australia’s takeovers rules (subject to any necessary modifications);
• Providing an exemption for underwriters;
• Waiving the applicable fee for compulsory notification acquisitions where a majority owner (greater than 50 percent) is increasing their direct interest.

Item 4: Exempting proposals that are unlikely to impact the national interest and increasing the consistency of the exemptions available across the different acquisition types.

• Coverage of annual programs;
• Fixing and updating the exemption for passive investments in urban land trusts;
• Broadening the scope of exemptions for Australian urban land corporations and trusts;
• Raising the developed commercial real estate screening threshold for some (non-sensitive) commercial real estate from $55 million to $252 million (indexed).

Item 5: Framework to apply equally irrespective of transaction structuring.

Item 6: Other issues.

• Removing investments in financial sector companies from the foreign investment framework for all investors;
• Tidy-up the legislation and policy.

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