I recently advised an international client in relation to the Foreign Acquisitions and Takeovers Act 1975 (Cth) (‘the Act’). The Act contains a complex list of scenarios which require approval from the Foreign Investment Review Board. These provisions are often inadvertently overlooked by international investors when considering investing in an Australian company or purchasing Australian Land.
I specifically advised my client in relation to an investment into an Australian privately company which owned land.
If you are considering acquiring an interest in Australian Urban Land, and you are classed as a ‘foreign person’ under the Act, you will need to seek approval from the Foreign Investment Review Board.
Am I a ‘foreign person’ under the Act?
Summarised, a person/company will be classed as ‘foreign person’ under the Act, if:
- they are not ordinarily resident in Australia;
- it is a corporation in which a natural person is not ordinarily resident in Australia, or a foreign corporation holds a controlling interest, which is an interest of 15% or more in the company.
What is Australian Urban Land?
Australian Urban Land under the Act is simply classified as land that is not Australian Rural Land.
What is an Australian Urban Land Corporation?
An Australian Urban Land Corporation is a corporation which has 50% or more of its total eligible land assets in Australian Urban Land.
What are eligible land assets?
Eligible land assets mean the corporation’s total assets which consist of interests in Australian Urban Land.
This may be legal ownership of land or a legal interest in land.
Am I acquiring an interest in an Australian Urban Land or an Australian Urban Land Corporation?
Under the Act, an interest in Australian Urban Land may be acquired directly or indirectly.
An example of an interest in an Australian Urban Land that is acquired directly may be by a legal or equitable interest in Australian Urban Land, or simply entering into an agreement to acquire an interest in Australian Urban Land.
An example of an interest in an Australian Urban Land that is acquired indirectly may be by the purchase of shares in a corporation which is classed as an Australian Urban Land Corporation, or acquires an option to purchase an interest in Australia Urban Land.
In both scenarios, approval will need to be sought from the Foreign Investment Review Board.
If you are considering making a purchase or investment in any Australian land or an Australian company that owns land, and are unsure as to whether the Act will apply to you, please do not hesitate to contact our property team.