Foreign investment benefits Australia’s economic development, and the government accepts and encourages foreign investment that aligns with the national interest. Australia has a long-standing vetting procedure for foreign investment that undergoes occasional adjustments. The government can block or reject investment proposals deemed detrimental to national interests.

All foreign investment proposals must comply with the Foreign Acquisitions and Takeovers Act 1975 (Cth) (FATA) and must be suitable for approval under the Australian government’s Foreign Investment Policy. The Foreign Investment Review Board (FIRB) is a non-statutory body that examines various foreign investment proposals to check whether they comply with the requirements and then makes recommendations to the Treasurer – the ultimate decision-maker – accordingly.

Substantial Interest

Any acquisition by a foreign individual of a significant interest in an Australian entity requires FIRB approval, where the monetary threshold is triggered. A ‘substantial interest’ where a company is concerned is where a foreign person holds an interest of at least 20%. Where a trust is concerned, a ‘substantial interest’ is where a foreign person and one or more associates hold a beneficial interest in a minimum of 20% of the income or the property of the given trust.

The four actions under the FATA include “notifiable actions”, “notifiable national security actions”, “significant actions”, and “reviewable national security actions”. Notifiable actions need a compulsory prior notification to the FIRB if specific criteria are unmet. Notifiable national security actions must be alerted to the FIRB for review regardless of the investment value. Significant actions do not need prior notification to the FIRB, but voluntary notices are welcome. Reviewable national security actions also do not mandatorily need to be notified about.

Foreign Government Investors

A foreign government investor is a foreign government or a separate government entity, or a corporation or a trustee of a trust or general partner of a limited partnership in which a foreign government or a separate government entity holds a substantial interest of at least 20% or governments or government entities hold an aggregate substantial interest of at least 40%.

Due to the Australian government’s distinctive viewpoint on the national interest, when foreign government entities are involved in investments, foreign government investors are treated differently than other foreign persons.

Call-in Powers

The Treasurer may “call in” significant and reviewable national security activities that have not been independently notified, subject to a time restriction. This power may be used whenever convenient up to ten years after the pertinent action. The treasurer cannot call in a notification of an action, a no-objection notification, or an exemption certificate. The Treasurer may provide a no-objection notification with or without limitations, forbid the action, or demand that the investor sell the acquired asset if the Treasurer uses the call-in power and finds a national security concern.

Register of Foreign Ownership

In addition to FIRB responsibilities, foreign investors must lodge a notice of their interests in Australian land, water, entities, businesses and other Australian assets on the Register of Foreign Ownership of Australian Assets. Generally, interests only include legal or equitable interests in leases or licences in agricultural land. Notifying the registrar of certain modifications, like a disposal, is an ongoing requirement.

Austrade

The Australian Trade and Investment Commission (Austrade) is a government entity tasked with promoting Australia’s global trade, education, investment, and tourism interests. It achieves this by furnishing information, counsel, and services, including coordinating government support to encourage, attract, and streamline foreign direct investment in Australia.