The Foreign Investment Review Board (“FIRB”) is a body which reviews and examines foreign persons’ proposals to undertake direct investment in Australia. The FIRB makes recommendations to the Australian Government on whether proposals made by foreign interests are suitable for approval under the Australian Government’s foreign investment policy.
The Australian Government’s approach to foreign investment is “to encourage foreign investment consistent with community interests and concerns while balancing these concerns against the economic benefits to Australia that arise from such investment”. The Australian Government is empowered under the Foreign Acquisitions and Takeovers Act 1975 (“the Act”) to block proposals that are required to be notified and which are determined to be contrary to national interests. The Act and the Foreign Acquisitions and Takeovers Regulations 1989 (“the Regulations”) provide monetary thresholds for the notification of individual investment proposals.
Under the Act, Foreign Persons intending to purchase real estate in Australia must obtain prior approval from the Australian Government through the FIRB unless specifically exempted by the Regulations.
Section 5 of the Act defines a “Foreign Person” as:
If you are a Foreign Person (and you are not specifically exempted by the Regulations), you are to obtain foreign investment approval before entering into a Contract for the purchase of real estate in Australia. If prior approval is not obtained, then the Contract must be made conditional upon foreign investment approval. The FIRB generally makes a decision within 30 days of receiving a foreign investment approval application, with another 10 days in which to advise the parties of the decision. As the FIRB cannot give an approval in-principle, it is necessary to supply the address of the property intended to be purchased when you apply for foreign investment approval.
The Regulations provide that certain acquisitions of residential real estate are exempt from the foreign investment approval requirements. These include acquisitions by:
Residential real estate is defined under Section 5 of the Act to mean all Australian urban land other than commercial properties such as offices, shops, warehouses, factories and restaurants.
Commercial real estate can take the form of developed commercial property and vacant land for commercial development. Under the Regulations, acquisitions of commercial real estate by a Foreign Person are exempt from foreign investment approval where:
The following acquisitions must be notified to the FIRB, irrespective of the value or the foreign nationality of the investor:
All other acquisitions (including shares or assets of an Australian business) should be notified if the target is valued at or above the applicable monetary threshold set by the Australia’s Foreign Investment Policy or the Foreign Acquisitions and Takeovers Act 1975.
Comasters is able to advise clients regarding FIRB matters (notification and obtaining approval) and can act for foreign persons wishing to invest in Australia.
© Comasters May 2013.
Important: This is not advice. Clients should not act solely on the basis of the material contained in this paper. Our formal advice should be sought before acting on any aspect of the above information.