On Sunday 29 March 2020 at 10:30pm AEST, the Treasurer announced temporary changes to the foreign investment review framework which will remain in place for the duration of the Coronavirus pandemic.
Effective from the date of the announcement, all proposed foreign investments into Australia subject to the Foreign Acquisitions and Takeovers Act 1975 (Cth) will require approval by the Foreign Investment Review Board (FIRB), regardless of the value or the nature of the foreign investor.
What are the key changes and affects of these changes?
1. Zero monetary screening threshold
The monetary screening threshold is now $0 for all foreign investment applications.
The reduction in the monetary threshold means that some transactions that were previously exempt from FIRB approval will now require this approval.
2. Extended deadline to review applications
The timeframe for FIRB to review an application has been extended from 30 days to 6 months. This extension also applies to all existing applications.
Transactions conditional on FIRB approval being obtained within 30 days should be reviewed as significant consequences may arise, if overlooked.
3. Additional conditions
Additional conditions may be applied to an approval granted by FIRB to address identified risks on a non-discriminatory basis.
Foreign investors may be subject to additional conditions and incur costs in order to comply with the conditions.
4. Applications that support Australian businesses and jobs will be prioritised
Applications will also be assessed on a case by case basis to ensure that the proposed investment is not contrary to national interest, including economic and national security.
For applications submitted before the changes, foreign investors should consider submitting additional information to FIRB concerning the commercial and broader economic impacts of the investment. This may assist FIRB to determine an application as “urgent“ and assess it before the extended deadline of 6 months.
Penalties may apply for not seeking FIRB approval
Foreign investors should take great care in noting these changes by FIRB as serious civil and criminal penalties may apply for breaches of the Foreign Acquisitions and Takeovers Act, even if unintentional.
Please contact our Commercial Team should you require assistance in respect of these changes or if you have any other queries arising from the impact of Coronavirus on your business.