Authored by Tim Bednall and Himashi Cameron
This article notes the regulation of foreign ownership of Australian assets, including registration requirements and updated compliance reporting.
Registration obligations
In July 2023, foreign owners of a wide range of asset classes in Australia became obliged to register those interests, whether or not FIRB “approval” was required to acquire those interests.
The Register of Foreign Ownership of Australian Assets has been established under the Foreign Acquisitions and Takeovers Act and Regulations. The register is administered by the ATO (the registrar). The register is not public.
Foreign persons (widely defined, including Australian entities with more than 20% foreign ownership) are required to notify the registrar of the acquisition of interests in the following asset classes, using an online registration template:
Land:
Any legal freehold interest
Any legal or equitable interest as a lessee of agricultural land where the term of the lease is likely to exceed 5 years
Any legal interest as a lessee of commercial or residential property where the lease is likely to exceed 5 years
Any legal interest in a mining or production tenement
Any legal interest in a security in an entity that entitles the holder to occupy a residential flat or unit (a time share scheme)
Any legal interest in a share in an Australian land corporation or agricultural land corporation
Any legal interest in a unit in an Australian land trust or agricultural land trust
Any legal interest in a share in a corporate trustee of an Australian land trust or agricultural land trust
Exploration tenements:
Any legal interest in an exploration tenement
Water interests:
Any registrable water interest if also held at the end of the financial year in which it was acquired
A domestic holder of interests in any of these asset classes that subsequently becomes a foreign person must also register those interests and provide a stocktake of the interests they hold.
Foreign persons are also required to lodge a register notice after completion of acquisitions of certain “significant actions”, “notifiable actions” and “reviewable national security actions” in relation to Australian entities or businesses, generally being actions that require FIRB “approval”.
Additional notification obligations apply to foreign government investors, including starting a business, acquiring a direct interest in an Australian entity or business, acquiring a legal or equitable interest in a tenement, or acquiring an interest of at least 10% in securities in a mining, production or exploration entity. All of these actions require a register notice.
Changes to information on the register must be updated. If the interest is sold/disposed of, this must be updated on the Register. If the investor is no longer a foreign person for FIRB purposes, this also must be updated on the Register.
Registration of acquisitions and other matters listed above, and notification of changes, must be made within 30 days of the relevant event.
Details can be found in Foreign Investment Guidance Note 15.
Comment:
The registration obligations apply quite selectively and inconsistently. For example, they do not apply to equitable interests in certain asset classes. Failure to comply with registration requirements may result in material penalties.
As a consequence, care needs to be taken to ensure compliance with these complex registration obligations. The authentication process is challenging with a personal myGovID requirement. If you require assistance with registration obligations (or compliance reporting – see below) please contact the authors.
Compliance obligations
An approval (a no objection notification from the Australian Federal Treasurer) or exemption certificate granted to a foreign person to acquire an Australian asset will usually be accompanied by conditions with which the foreign person must comply.
Foreign persons are obliged to report on compliance with those conditions, in the manner set out in the relevant approval or exemption. Reporting obligations may be ongoing annual obligations, or may be required when “one off” conditions are satisfied. Such obligations may be in addition to the Register of Foreign Ownership of Australian Assets registration requirements mentioned above.
Foreign Investment Guidance Note 13 provides additional information on compliance reporting obligations, including a template for reporting on common conditions.
This publication is a joint publication from King & Wood Mallesons, and KWM Compliance Pty Ltd (ACN 672 547 027) trading as Owl Advisory by KWM. KWM Compliance Pty Ltd is a company wholly owned by the King & Wood Mallesons Australian partnership. KWM Compliance Pty Ltd provides non-legal compliance and governance risk advisory services for businesses. KWM Compliance Pty Ltd is not an incorporated legal practice and does not provide legal services. Laws concerning the provision of legal services do not apply to KWM Compliance Pty Ltd.
Comments