What kind of investment needs to be approved by the Australian Foreign Investment Review Committee (FIRB)? Australia's finance minister has the power to block foreign investment that is seen as contrary to Australia's national interests. The Foreign Investment Review Committee (FIRB) advises the Federal Secretary of the Treasury on written applications and related circulars for the "no objection (i.e. effective)" program submitted by the Foreign Investment Review Committee (FIRB) for foreign investment. This is often referred to as the FIRB approval process. Foreign investors must apply to the FIRB before implementing their investment plans. Investment applications need to meet the following three requirements:
1. foreign investo
Individuals (non-permanent residents of Australia)
Belonging to a foreign enterprise or goverment (including SOE, a state-owned enterprise)
Corporate entity (an entity that can be established in Australia)-any overseas investor has a share of that entity (20%), or two or more overseas investors have a cumulative stake in the entity (40%)
Note: FIRB will penetrate the enterprise and trust architecture in accordance with retroactive terms to confirm the identity of the enterprise's ultimate holde
2. Investment
Substantive interest in corporate entities: 20% or more equity in an Australian business or trust.
Direct investment in an agribusiness: holding 10% or more of the enterprise; obtaining a 5% stake in the enterprise through legal arrangements; or management control of the enterprise.
Australian interests in land: including permanent leases, leases (more than 5 years, including options), or securities of land-holding companies.
3. Minimum investment approval threshold
- Australian business entity $ two hundred and sixty million nine hundred and ninety nine thousand nine hundred and ninety nine
- Total corporate principal assets (no mortgage burden) or higher value of issued securities (a minimum investment threshold of $one billion one hundred and thirty three million nine hundred and ninety nine thousand nine hundred and ninety nine if the investor is from a country that has signed a free trade agreement and invests in non-sensitive industries)
- Australian commercial land $261 million
- Acquisition consideration paid for acquisition of land assets / equity (a minimum investment threshold of $one billion one hundred and thirty three million nine hundred and ninety nine thousand nine hundred and ninety nine if the investor is from a country that has signed a free trade agreement and invests in non-sensitive Australian industries)
- Australian Agriculture US $57 million
- Cumulative value-acquisition of other interests held by a foreign investor in consideration
- Low threshold commercial land US $57 million
- Consideration paid for acquisition of related land interests, including mines and public facilities sites (e.g. airports or ports)
- Australian agricultural land $15 million
- Cumulative value-acquisition of other interests held by a foreign investor in consideration
- Residential land, vacant commercial land, media or foreign goverment $0
- All residential land, vacant commercial land, investment in the media industry or investment by foreign goverment (regardless of the value of the investment)
What powers does the Treasury secretary have?
The Treasury Secretary has the power to issue decrees on overseas investors who have adopted or are about to adopt any major investment plan.
Foreign investors must apply to the FIRB before implementing certain types of declared investment plans. Otherwise, the overseas investor will receive the following decrees, and will be subject to the appropriate penalties.
Foreign investors can also voluntarily submit applications to the FIRB for other major programs. Even in the absence of an application, it is possible for the finance minister to issue a decree.
The Treasury Secretary will issue a decree within a certain period of time upon receipt of a valid notice, which would invalidate the Treasury Secretary's authority.
Decree type
The Finance Minister has the following powers:
- Prohibit a major investment plan
- Ask for the release of a major investment plan (eg by forcing the sale of acquired investments)
- Attach conditions to a major investment plan
- Issue of "No objection is valid" notice for a major investment plan
What are major investment plans?
A major investment plan refers to certain rights and interests acquired by foreign investors through the acquisition of securities, assets or land, and the amount of investment exceeds the threshold for the minimum amount of investment approval.
Examples:
- Acquisition of significant interests (20%) or cumulative equity (40%).
- Buy 10% or more of direct equity in agribusiness / business or 5% by legal agreement.
- Acquisition of Australian land interests.
- Acquisition of related interests in enterprise / business securities.
- Sign agreements on business / business matters.
- Investors change the articles of association of the acquired enterprise, stipulating that the enterprise must comply with the instructions of an Australian foreign entity. Act in accordance with the instructions and requirements of foreign business entities.
- Change the articles of association to ensure compliance with the requirements of foreign business entities.
- Decision makers to replace business entities / business regulations.
How to apply for FIRB approval
Applicants must submit online applications to FIRB, including:
1. Details of the transaction (including the type of investment and consideration of the transaction); and
2. At the same time, provide an overview of the reply to the FIRB application list required information.
The information requested in the FIRB request list includes:
- Identify major investment plans and declare investment plans;
- Confirm that the transaction reaches the minimum investment approval threshold;
- Details of the corporate entity implementing the investment plan and its parent company;
- Details of the proposed transaction and the relevant details of the target entity (e.g., business structure, land value, etc.); and
- Investment plan after the implementation of the company structure and financial situation.
Costs and processes:
- FIRB will calculate the amount of the application fee payable and issue invoices.
- Unless FIRB temporarily causes an extension, FIRB must make a resolution within 30 days of the charge and notify investors within 10 days of the resolution.
- FIRB may request an extension if it needs additional information or is in a busy period of business. This will not result in further costs.
- Overall, the amount of the application fee is related to the amount of consideration to be paid for the transaction.
Type of investment
Application fee (1)
$2000
$25700
$103400
Entities / Enterpri
Within $10 million
Between $10 million and $1 billion
Over US $1 billion
Commercial land (2)
Within $10 million
Between $10 million and $1 billion
Over US $1 billion
Agricultural land (2)
Within $2 million
Between $2 million and $10 million
Over US $10 million
(1) data released as of July 1, 2018. (2) the application fee for land acquisition is based on the highest consideration for the acquisition of land property rights by investors, not the acquisition consideration for the entire transaction. Investors, for example, spent A $5 million on agricultural land, which owns five property rights, the highest of which is A $1.5 million, or $2000 in application fees.
Residential land application fee structure is different, belongs to ladder structure.
Allow fee reduction and relief under specific circumstances.
Specific requirements for the acquisition of agricultural land
Key definition
Primary industries: include cultivation or cultivation of crops, farming of livestock and sale of agricultural and livestock products, aquaculture and forestry activities.
Rational use of land: assessment of land status and environment, including: the main use of land under zoning; land use history (especially in recent years); and land attributes (including land area and freshwater stock).
A measure of business activity: whether an activity has a significant commercial purpose or characteristic is to make a profit-not just a hobby.
1. Type of rights and interests
Interest in immovable property: property with any legal or fair interest.
Leasehold or license: the term (and option) is reasonably expected to be more than 5 years.
Equity in a company or trust: any securities issued by an enterprise whose land assets account for more than 50% of its total assets.
2. Agricultural land
Agricultural land: land within Australia that can be used for primary production or reasonable use.
3. Approval threshold
FIRB cumulative approval threshold: foreign investors must apply for FIRB approval if the cumulative consideration paid (including property rental fees / licences) and the value of agricultural land held by them totals more than $15 million.
4. FIRB approval
If all of the above requirements are met, foreign investors must be approved by the FIRB before investing.
5. Open and transparent proc
FIRB does not normally approve the request unless the sales process is publicly transparent. (article 17 of the Guide Manual)
1. To be widely marketed (e.g. through a real estate listing website or a local / national newspaper).
2. Sell ads for at least 30 days
3. To provide a fair opportunity to bid or bid.
Note: all acquired interests in Australian agricultural land (including water resources) must be registered with the Australian Inland Revenue Authority (IRS) regardless of their value.
"Open and transparent sales process" in Agricultural acquisition
Impact on farmers and investors
[经] foreign investor
1. If the purchaser owns at least 50 per cent of the Australian business ownership, there will be exceptions to the open and transparent sales process:
If a foreign investor owns more than 20 percent or more foreign investors have a cumulative stake of more than 40 percent, they still need to be approved by the FIRB.
Any future increase in equity holdings must be carried out in accordance with an open and transparent sales process.
2. FIRB's approval application must specify how the foreign buyer identified the acquisition opportunity and state that the acquisition meets an open and transparent sales process.
3. Exclusionary periods that can still be negotiated:
After a 30-day open and transparent sale period; o
Other buyers may be free to bid during open and transparent sales until the end of the sales period-as long as the seller is not bound by a foreign investor's offer.
Australian farme
1. The seller can choose the preferred buyer according to his own standard. There is no priority for Australian buyers to rethink foreign buyers or just the highest offer. But fair bidding and bidding opportunities must be ensured.
2. There is no need to repeat propaganda. The seller has been widely available in the market except for the past six months prior to the acquisition.
3. There is no need to disclose information about the target asset in an advertisement-just to attract interest from the buyer. Design ads that allow "investors in Australia to participate". Detailed business information may be kept confidential or disclosed at the seller's discretion.
