As announced on 5 June 2020 by the Federal Treasurer (the Treasurer), the Australian government is introducing major reforms to Australia’s existing foreign investment review and approval framework in the interests of reinforcing national security.
The Treasury has recently published proposed legislative amendments to the Foreign Acquisitions and Takeovers Act 1975 (Cth) (FATA or the Act) in the form of an “exposure draft”, subject to public review and comment (the Exposure Draft). While the Exposure Draft is subject to potential amendment following rounds of stakeholder engagement (submissions regarding the proposed changes closed on 31 August 2020), it sets out the government’s preferred reforms and is unlikely to be substantively altered prior to implementation.
The Exposure Draft of the Foreign Investment Reform (Protecting Australia’s National Security) Bill 2020 (Cth) intends to “strike a balance between the benefits foreign investment into Australia bring and emerging national security concerns”, by introducing a series of substantive amendments, including:
A third limb of regulated acquisitions – “notifiable national security actions” (in addition to pre-existing “notifiable actions” and “significant actions”)
A new “call-in” power, allowing the Treasurer to “call-in” acquisitions for review on national security grounds
A “last-resort” power, allowing the Treasurer to impose new conditions, vary existing conditions or even force the divestment of any completed investment that was subject to review under the FATA, including transactions previously approved, where national security concerns are later identified
The potential impact of this reform was not apparent when initially announced on 5 June 2020 due to the ambiguity of what the Australian government would consider to impact national security or exactly how the Treasurer’s new powers would operate. In light of the Exposure Draft, the future of foreign investment into Australia is now clearer. Download our PDF for a high-level summary of the proposed key changes.