The economic climate shifted drastically during the coronavirus pandemic. In order to protect Australia’s national interests, the Treasurer introduced many temporary measures during this time. 

Following on from these changes throughout 2020, on 9 December 2020 the Treasurer announced what has been labelled as the “most significant reforms” to foreign investment laws in 50 years. These changes came into effect from 1 January 2021.

Some of these changes sought to reinstate pre-pandemic laws, while some have completely changed how businesses in certain industries will get foreign investment. 

If you’re a business working with foreign investors, it’s important to stay up to date with your Foreign Investment Review Board (FIRB) notification obligations.  

If you’re interested in finding out more, keep reading! We’ve written about FIRB, when you need to get FIRB approval, the January 2021 changes and the general application process.

FIRB Changes From 1 January 2021

The Treasurer introduced temporary measures throughout 2020 to protect Australia’s national interests during the pandemic.

Then, on 9 December 2020 the Treasurer announced some major changes to foreign investment laws that have taken effect from 1 January 2021 – some of them reinstating the pre-pandemic status quo, and some of them completely shaking up many industries.

If you’re an Australian company working with foreign investors, you’ll need to think about your obligations around notifying the Foreign Investment Review Board (FIRB). 

What Is The Foreign Investment Review Board?

The FIRB is a non-statutory body that reviews foreign investment proposals, and advises the Treasury to inform their decisions around foreign investment. 

FIRB deals with reviewing all types of foreign investments by foreign investors, such as interests in Australian land, businesses, and other entities.

Although the Treasurer ultimately decides and approves foreign investment proposals, the FIRB assists the Treasurer in coming to their decisions. 

Relevant Legislation

The FIRB regime can be difficult to navigate because there are a number of different legislation that come into play.

Here are the ‘main’ two you’ll need to be aware of:

Depending on your industry or what you’re after, the following might also be relevant:

Transactions That Require FIRB Approval

Working out whether your transaction requires notice can be a difficult task. It generally depends on the:

  • Type of investor
  • Nature of the investment
  • Monetary value of the investment

The two main categories of transactions are:

  1. Notifiable actions
  2. Significant actions 

FIRB approval is required if a foreign person invests in an Australian entity, business or land where the transaction involves a notifiable action

If the transaction is a significant action and not a notifiable action, then it is not mandatory to seek FIRB approval. However, the Treasurer can prohibit or overturn the transaction if it is inconsistent with Australia’s national interest.

So what do these terms mean, anyway? 

Who Is A Foreign Person?

A ‘foreign person’ can include, but isn’t limited to:

  • Individuals
  • Corporations
  • Trustees
  • General partners of limited partnerships who do not ordinarily reside in Australia. 

If someone ‘ordinarily resides’ in Australia, they generally have continually been in Australia for 200 or more days within the past 12 months (and aren’t subject to any time restrictions). 

There are many factors involved in determining whether someone is a ‘foreign person’ and it’s always helpful to get professional advice on this if you’re not sure. 

What Is A Significant Action?

An action is considered a ‘significant action’ if it meets certain criteria set out in the legislation (in Part 2, Division 2 of the Act). 

Different conditions apply to different types of transactions, but for acquisition of interests in Australian businesses, an action could be a significant action if it meets the monetary threshold test and it results in a change of control.

Other significant actions include acquisition of a ‘direct interest’ in an Australian agribusiness and Australian media businesses, acquisition of any land interests and foreign government acquisitions, but they’re also likely to be a ‘notifiable action’ at the same time. Yes – this is very confusing but that’s what the legislation says!

In any case, if an action is a ‘significant action’, FIRB notification is not compulsory, but it may be a good idea to apply anyway. This is because the Treasurer has the power to overturn significant actions and by getting FIRB approval you can get some deal certainty.

What Is A Notifiable Action?

An action is a ‘notifiable action’ if it meets certain criteria set out in the legislation (in Part 2, Division 3 of the Act).

Again, this analysis can be complex, but you should start asking questions if your transaction meets the monetary threshold test and involves any of the following:

  • A ‘direct interest’ in an Australian agribusiness
  • A ‘substantial interest’ in an Australian entity
  • Any interest in Australian land

Also, regardless of the monetary value of the transaction, the following are also likely to be notifiable actions:

  • A ‘direct interest’ in an Australian media business
  • Foreign government acquisitions

If your transaction is considered a notifiable action, then FIRB must be notified before the action can be taken. 

If you’re unsure as to whether your transaction is a notifiable action – it’s important to get advice as there are offences and penalties which could end up costing you more.

What Is A Direct Interest?

If a person is considered to hold a ‘direct interest’ in an entity or business, it generally refers to an interest of 10% or more

However, an interest of 5% or more could be considered a direct interest if it is accompanied by a ‘legal arrangement’. 

A common example of this is in the airline industry, where an airline carrier who is also a foreign investor acquires 5% or more in an Australian airline. As part of the transaction, if they also decide to enter a ‘legal arrangement’ such as a strategic alliance agreement relating to business activities, then this may also constitute a ‘direct interest’, even though it is below 10%.

Acquisitions accompanied by board appointment rights may also be considered a direct interest, even if the percentage is below 10%.

What Is A Substantial Interest?

This generally means acquisitions of an interest of 20% or more. 

Where Can I Find More Information About These Definitions?

FIRB has published a Guidance Note on these key concepts which you can access here.

FIRB Monetary Screening Thresholds

If the interest or the value of a business entity or assets is over the threshold amount, according to the type of action, you must lodge a FIRB application.

The monetary threshold depends on the nature of the acquisition and the identity and nationality of the acquirer.  

As a temporary response to the coronavirus pandemic, the monetary threshold was reduced to nil.

This change was reversed from 1 January 2021, reinstating the monetary threshold (which is indexed annually). We’ve written more about this below.

The Identity And Nationality Of The Acquirer

The monetary threshold changes depending on the country of the foreign investor. 

There are two categories of foreign investors:

  1. Free Trade Agreement (FTA) partner countries
  2. Non-FTA partner countries. 

FTAs are intended to reduce the barriers to trade between two or more countries, to sustain local markets and industries. 

Generally, there are higher thresholds available for investors from FTA countries. 

If you are a private foreign investor who has trading relationships with Australia (under a FTA), then you must check whether the specific action of the acquisition and the monetary threshold (according to the country) is over your proposed investment. If it is, then you may need to seek FIRB approval.  

The Nature Of The Acquisition

The monetary threshold may also depend on the nature of the acquisition. Knowing whether you’ll need to notify FIRB or not can be a complex issue, as the nature of the investment proposal, and the identity of the investor can significantly change the threshold value. 

To give you an idea, some thresholds are $0 (e.g. for land and foreign government acquisitions), some are in the $250 million range (e.g. for acquisitions from non-FTA countries), all the way up to above $1 billion (e.g. for acquisition from FTA countries). In addition, these numbers are indexed annually.

In any case, it’s always good to get advice if you’re not sure! 

Temporary Measures In Response To The Coronavirus Pandemic 

During 2020, there were temporary measures put in place to protect Australians and Australian businesses. Some notable measures include: 

  • All monetary screening thresholds were reduced to nil – this was significant as a greater number of investments were required to be notified to the Treasurer. 
  • The application review process was lengthened (timeframes for reviewing applications were increased from 30 days to up to 6 months).
  • New types of exemption certificates were introduced. 

There were many more changes that impacted FIRB and investments in 2020, which you can read more about here

From January 2021: Changes To FIRB

On 9 December 2020, the Treasurer announced what has been labelled as the ‘most significant reforms’ to foreign investment laws in 50 years. 

From 1 January 2021, many of the temporary measures that were introduced during COVID-19 have been reversed. However, there are still many industries that the Treasury will continue to closely scrutinise (such as sensitive national security businesses and media businesses).

We’ll go through some of these changes and what the applicable laws now say. 

New Monetary Thresholds

One of these reforms was the removal of the nil monetary screening thresholds that came into force during the pandemic . 

From the beginning of this year, foreign investors will be subject to their pre-Covid monetary threshold (indexed for 2021). You can read more about the thresholds here.

However, the nil monetary threshold will still apply to foreign government investors and investments considered ‘notifiable national security actions’. 

What Are Notifiable National Security Actions?

If the transaction is regarded as a ‘notifiable national security action’, it will be compulsory to notify FIRB (regardless of its value). 

This could be when an investor is looking to start or acquire a direct interest in a national security business or acquire an interest in national security land. 

National security businesses include those which own, operate or provide goods or services to Australia’s defence or intelligence communities. This will have particular importance for transactions in the communications, technology and data sectors.      

What Is An ‘Australian Media Business’ ? 

Under the current laws, FIRB approval is necessary if a foreign person intends to acquire 5%+ of an Australian media business (regardless of its value).

Previously, ‘Australian media business’ was defined to include businesses that publish daily newspapers, broadcasting television or radio (including on websites where these broadcasts or newspapers can be accessed). 

From 1 January 2021, the definition of ‘Australian media business’ has been expanded and modernised. It will now include businesses where content is only published or broadcasted via the Internet, or businesses that provide an ‘electronic service’. 

A business will be providing ‘electronic service’ if the following apply: 

  • The content is delivered over the Internet.
  • The business is operated wholly or partly to serve Australian audiences. 
  • It either consists primarily of news or predominantly by way of audio or video content.
  • It could reasonably be considered to reach audiences of over 40,000 people daily.

In line with the modern Australian media landscape this definition covers web-only news services. 

According to FIRB’s guidance note, the intention of this definition is to capture journalism and reporting about politics, current affairs, business and major events, such as sports competitions or cultural events. It is not intended to capture ordinary websites that provide product reviews, academic publications, lifestyle issues unrelated to public policy, and entertainment issues unrelated to public policy.

Call-In And Last Resort Powers 

From 1 January 2021, the Treasurer now has new powers to ‘call-in’ investments for review on the basis of national security, as well as use its ‘last resort’ powers to reconsider already assessed matters. 

These powers are generally reserved for national security matters, but it’s worth noting that they’re significant new powers available to the Treasurer that may affect foreign investor transactions.

Other Reforms 

There are many other reforms made to foreign investment laws that may affect your business. You can read more about them here

Getting FIRB Approval: The Process 

If your transaction does need FIRB Approval, this is a brief guide on the process. If you may need approval, make sure you don’t proceed with your transaction prior to receiving it. 

Step 1: Making an application

In order to get FIRB approval, it must be in writing and lodged online via the FIRB portal. An application is made in the form of a letter and must include the FIRB checklist. 

Additional information may be needed depending on the nature of the parties, acquisition or investment involved. 

Step 2: Application fees

It is important that you pay the application fees as soon as possible, as FIRB will not consider your application until you do so. Your statutory timeframe of 30 days to make the decision will not start until payment is made. You can read more on the specifics here. 

Step 3: The Review Process

During the pandemic, the statutory timeframe to review an application was extended to 6 months, but this has now returned to pre-pandemic timeframes. The Treasurer now has 30 days to make a decision as to approve or object to the foreign investment, and an additional 10 days to notify the applicant of the decision.

An interim order, or also known as a temporary order, may be provided, extending the decision period for up to a maximum of 90 days if the Treasurer believes that further time is required to evaluate the proposal. 

The Treasurer has the power to prohibit notifiable actions or significant actions if they are inconsistent with the national interest.

As for foreign government investors, the Treasurer and FIRB will determine a decision based on the commerciality of the investment, in particular, whether the investors is in pursuit of political purposes or strategic objectives. 

Step 4: Final Decision Or Conditions On The FIRB Approval

The Treasurer will make the decision of whether the investment can proceed or not. 

The Treasurer may set out specific conditions on any approval given, with the intention to ensure the relevant action from being contradictory to Australia’s national interest. 

How Can Sprintlaw Help?

Here at Sprintlaw, we have expert lawyers who specialise in various areas of law. If you are interested in seeking notification with FIRB for certain investments – we can assist with the application process.
Feel free to get in touch at or 1800 730 617 to learn more!

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