3 September 2018240

What do you need to know about the new investment regime in Australia?

Foreigners planning to invest in Australia should first familiarize themselves with the new rules. These rules completely replaced the pre-existing regime, and the amendments continue to be introduced so far. While Australia generally welcomes foreign investment, some of them may require additional government approval.

Before investing in the Australian economy, foreign investors need to assess whether the government should not be notified about them, in accordance with the new regime. It depends on the nature and size of the investment, as well as the personality of the investor himself. If a foreign investor violates these rules, he can expect both civil and criminal liability with appropriate penalties. The same applies to persons who knowingly help foreign investors to violate these rules.

Who is the new regime for regulating foreign investment in Australia?

In accordance with Australian law, the new regime for regulating foreign investment extends to investments made by foreigners. The foreign person in this case is:

  • a private person who does not normally reside in Australia;

  • a corporation or trust trust in which a significant interest is held by an individual, usually not resident in Australia, a foreign corporation or a foreign government;

  • a corporation or trust trust in which a cumulative significant interest is held by 2 or more persons, each of which is an individual, usually not resident in Australia, a foreign corporation or a foreign government;

  • foreign governments and foreign government investors;

  • the main partner of a limited partnership where: (1) a person who does not normally reside in Australia, a foreign corporation or a foreign government has a share of at least 20%; or (2) the aggregate interest of at least 40% is shared by 2 or more persons, each of which is an individual, usually not resident in Australia, a foreign corporation or a foreign government;

  • Any other person who meets the conditions established by the new rules.

What foreign investments in Australia are subject to registration?

In accordance with Australian law, in most cases, a foreign person is required to be notified:

  • direct share in agribusiness (for a total of more than A $ 55 million);

  • a significant stake in the Australian enterprise (for a total of more than A $ 252 million);

  • rights to Australian land;

  • at least 5% in an enterprise or business that fully or partially relates to the Australian media sector.

In addition, a foreign investor needs to notify the Australian government if he is going to acquire an Australian enterprise, start a business in Australia, acquire a stake in mining, manufacturing or exploration companies, or at least 10% of the securities of such enterprises.

Significant actions of foreign investors in Australia.

In accordance with the new rules, there are two types of actions, those that need to be notified (notifiable actions), and significant actions (significant actions). It is not necessary to inform the regulator of the intention to perform significant actions, but the regulator has the right to determine whether this action is contrary to national interests and, if necessary, to prohibit it.

Considerable action is considered, for example:

  • purchase of securities in an Australian company (or holding company that owns such an enterprise), which is valued at more than A $ 252 million;

  • the conclusion of an agreement with respect to an Australian enterprise that is valued at more than A $ 252 million, as a result of which a foreign entity takes control of one top manager or several;

  • amendment of the constituent document in respect of the Australian enterprise, which is valued at more than A $ 252 million, as a result of which the foreign entity takes control of one top manager or several;

  • Acquisition of Australian business assets worth more than A $ 252 million.

Significant actions are also the acquisition of a share in agribusiness for more than A $ 55 million and the acquisition of Australian land.

Exceptions.

Legislation also provides for a number of actions to which no substantive provisions apply, which relate to notices of intent or significant actions by foreign investors.

For example, you can purchase land without notification of your intention, if you have a special certificate. They are issued, for example, for new residential buildings or for other types of real estate. There are also certificates that allow you to purchase a share in the business and require prior approval of the investment activity program for the specified period and within the specified cost.

There are also a number of other exceptions, for example: acquisition under a will or in the process of transfer by inheritance, investments in shares of a financial company, acquisition of residential property for diplomatic purposes, etc.

How to apply for investments in Australia?

Notifications are filed electronically through a system established by the Audit Commission for Foreign Investment of Australia. Within 30 days of the filing of the notice, it is considered and a decision is made. In certain cases this period can be extended up to 90 days.

After the notice is submitted, the foreign investor must pay a fee. Its size depends on the type and cost of the planned actions, and can range from several thousand to several hundred thousand AUD.

There is also a requirement to keep data on foreign investment - on every action, transaction, event or circumstance. The absence of such data can lead to a fine.

A violation that can lead to punishment is also:

  • The absence of a notice of an action to be notified;

  • the commission of a significant act before it is permitted;

  • resistance to the decisions of the Treasury.