The Treasurer has announced temporary changes to Australia’s foreign investment review framework considered necessary to protect the national interest in exceptional economic circumstances. The Government has removed the threshold for investments which require approval from the Foreign Investment Review Board (FIRB). This means that any acquisition of shares or units that represent 20% or more of an Australian company or unit trust, interest in land or direct interest in agribusiness will require FIRB approval, regardless of the value. This applies to new transactions as well as transactions which are underway but not completed. Further, the timeframe for FIRB review of applications has been extended from 30 days to 6 months.
The intention of the Government is to ensure appropriate oversight for foreign investments in a time where Australian companies are likely to be cheap and possibly under stress. It is predicted that the changes may result in sellers preferring Australian buyers over foreign investors to obtain a degree of certainty and speed in the transaction. However, the Government has made clear that they are not freezing foreign investment as they recognise it’s value in driving the economy. Proposals will continue to be reviewed on a case-by-case basis and the Government has said it will prioritise urgent applications for investments which protect Australian businesses.