FIRB Regime Reforms

FIRB Regime Reforms – 1 January 2021

Currently: The Treasurer has the power and discretion to review significant actions by foreign investors. Currently there are 2 categories – (1) notifiable actions whereby the investor must notify the treasurer and seek prior approval to the investment; and (2) significant actions with no positive obligation to notify the Treasurer of the action. This reform will give the Treasurer more power for reviewing and includes more actions that are subject to review.

New regime: The new regime is summarised below. The national security amendments will not have a retrospective effect and will only apply in respect of actions taken/proposed to be taken on or after 1 January 2021.

‘Call-in’ PowerTreasurer will gain the power to review investments which raises national security concerns (including those exempt from mandatory notification). There will be a 10 year limit for them to call in any investments.
Last Resort Power Currently: Treasurer cannot amend the no objection notification.
Introducing a third category of actions by foreign persons.
In addition to notifiable action & significant action		The reform will introduce Notifiable National Security Actions
New National Security Test A new national security test for foreign investors who will be required to seek approval to start or acquire a direct interest in a ‘national security business’ or to acquire an interest in ‘national security land’ – regardless of the value of the investment.
Fees, penalties, compliance and enforcement powersThere are now higher fees and harsher penalties for failing to oblige which are outlined in the drafts.
Foreign government investor (passive exemption not automatic)An investment fund will no longer be a foreign government investor where they have more than 40% foreign government ownership in aggregate but less than 20% from any single foreign government, but only if two conditions are met.
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