Recent changes to the Foreign Investment Review Framework

The Government has announced significant temporary changes to Australia’s foreign investment review framework. These changes are aimed at protecting Australia’s national interest, in response to the evolving economic implications arising from the spread of COVID-19.

Monetary thresholds reduced to zero

All foreign investments made on or after 10:30pm (AEST) on 29 March 2020 which are subject to the Foreign Acquisitions and Takeovers Act 1975 (Act), will now require approval from the Foreign Investment Review Board (FIRB), regardless of the value of the transaction.

This change is achieved by reducing the monetary screening threshold to $0 for all foreign investments that fall under the Act. Whilst this had already been the case for foreign government investors, the zero threshold now also applies to all private foreign investors (regardless of whether the investor is from a country which previously qualified for a higher treaty threshold).

It should be noted that the changes to the monetary thresholds do not apply to agreements which had been entered into before 10:30pm (AEST) on 29 March 2020, including where the acquisition has not yet occurred (and regardless of whether there are unmet conditions).

Extension of review time

In addition, FIRB will now have up to 6 months (instead of 30 days) to review applications. This extension also applies to all investment applications which have been lodged prior to 29 March 2020 and which have not yet been approved. FIRB will not be seeking to extend all applications, and has emphasised that the additional review period will not result in each application taking the full 6 months before a decision is made.

The Treasurer has stressed that these measures are not designed to stifle foreign investment, stating that ‘Australia continues to welcome foreign investment, which remains vital to our long-term economic success and stability.’ Government will also prioritise urgent applications for investments that protect and support Australian business and Australian jobs.

Implication of the changes

The changes mean that the monetary threshold test under the Act will be met in relation to all acquisitions in entities, businesses or land. The changes however do not impact on the meaning of significant or notifiable actions under the Act, and the relevant conditions (including the percentage thresholds) for these actions must still be met before a transaction falls within FIRB’s remit.

For example, under the new regime, the following acquisitions by a private foreign investor may proceed without FIRB approval:

  • acquisitions of an interest of less than 20% in an Australian entity that is not an Australian land entity and does not operate a business that is subject to a specific lower threshold;
  • acquisition of an interest of less than 10% in an agribusiness or a listed Australian land entity; and
  • acquisition of an interest of less than 5% in an unlisted Australian land entity or in a company, unit trust or business that wholly or partly carries on an Australian media business.

To assist in prioritising existing applications, FIRB has requested that applicants advise FIRB if an application has commercial imperatives or broader economic impacts, which warrants its prioritisation.

Further, FIRB has announced that it will consider refunding an applicant’s fees if the applicant decides to delay or defer an investment – and withdraw their application – having regard to the economic conditions associated with the COVID-19 pandemic.

Failure to comply with the Act may result in a disposal order, civil penalty orders and/or criminal prosecutions.

The team at Addisons is available to assist you with navigating these changes.


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