More FIRB reforms proposed

Foreign Investment Review Board (FIRB) reforms are proposed to commence on 1 January 2021.

The reforms include: 

  • power enabling the Treasurer to review acquisitions that raise national security risks
  • power that provides the ability to impose or vary conditions and order disposal on national security grounds.
  • the expansion of infringement notices and higher civil and criminal penalties
  • measures to streamline approval for passive investors and investments into ‘non-sensitive’ businesses (these include most commercial real estate investments but data centres will receive more scrutiny).

The government will release draft legislation in July ahead of a six week consultation period. The Institute will engage and welcome any views you may have.

The Treasurer indicated that Australian firms with foreign direct investment support 1 in 10 jobs in Australia. He welcomed foreign investment for the significant benefits it provides but also committed to ensure that investments are not contrary to the national interest.

Questions? Email Martin

Temporary measures in response to the coronavirus

The Treasurer has also confirmed that the temporary COVID-19 changes to the Foreign Investment Review Board (FIRB) rules will remain in place until 1 January 2021. This included reduction in monetary thresholds and increased approval timeframes.

On 29 March 2020, the Treasurer announced that due to the impacts of the coronavirus outbreak, all monetary screening thresholds will be temporarily reduced to $0. The statutory timeframes for reviewing applications will be changed from 30 days to up to six months.

  • Affected real estate matters included:
  • land (agricultural, commercial, residential, or mining or production tenement) regardless of value and type
  • whether the land is a vacant land or developed land.
  • residential land used for residential care, retirement villages and certain student accommodation 
  • car parks
  • lease tenure applying in excess of 5 years.

New exemption certificates issued after 29 March 2020 are likely to include conditions that prevent the exemption certificate holder from being able to acquire interests in sensitive developed commercial land.

Establishment of companies by foreign non-government investors (i.e. an Australian subsidiary company) for the purpose of carrying on an Australian business does not require FIRB approval. However, where a later substantive transaction is proposed to occur (i.e. the newly established company is involved in activities such as entering into leases or acquiring securities in entities that it was set up to acquire) that transaction may be subject to prior approval.

Please check your arrangements and plans. Further information is available here.