AUSTRALIA
Australia Kevin O’Sullivan, Peter Wiese and Heath Lewis, Clayton Utz
1. Overview of FDI in the jurisdiction
1.1 Which countries are the principal sources of FDI into your jurisdiction? The largest sources of FDI into Australia are the US, the UK, Japan, China (including Hong Kong), the Netherlands and Singapore.
1.2 What are the key sectors in your jurisdiction which attract, or the government is seeking to attract, FDI? FDI into Australia’s mining sector attracts the largest share (32 %) of total FDI into Australia.
The energy (oil and gas), manufacturing, retail and finance sectors also attract significant FDI.
1.3 Is the government generally supportive of FDI? Which government, and regional, bodies are responsible for driving FDI in your jurisdiction? The Government of the Commonwealth of Australia (Government) welcomes FDI.
One of the responsibilities of the Australian Trade Commission (Austrade) - the Government’s trade, investment and education promotion agency - is to promote and facilitate productive FDI into the country. Austrade has offices in over 50 countries and can provide international investors with: • initial coordination of investment enquiries and assistance; • information on the Australian business and regulatory environment; • market intelligence and investment opportunities; • identification of suitable investment locations and partners in Australia; and
• advice on Government programmes and approvals.
Each Australian state and territory government also provides information on opportunities within their respective jurisdiction and local requirements.
2. Investment vehicle
2.1 What are the most common legal entities and pass-through vehicles used for FDI in your jurisdiction, and how long do they take to become operational? A foreign company may carry on business in Australia either through an Australian branch or Australian subsidiary.
To carry on business through an Australian branch, a foreign company must register with the Australian Securities and Investment Commission (ASIC). A registered foreign company must lodge copies of its financial statements and comply with notification obligations under the Corporations Act 2001 (Cth).
The most common investment vehicle is an Australian limited liability company incorporated under the Corporations Act. A company is a separate legal entity capable of holding assets in its own name and is liable for its own obligations. Shareholder liability is limited to the amount paid or payable on subscription for shares.
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The two main types of company are proprietary and public. A proprietary company is limited to 50 non-employee shareholders and cannot engage in public fundraising. Proprietary companies enjoy less regulation and cost less to administer. A public company may be listed on the Australian Securities Exchange (ASX).
Registration of an Australian branch of a foreign company, or of an Australian company, takes approximately one week once all required information is to hand. Alternatively, the acquisition of shelf companies or new incorporations may be completed within 24 hours.
2.2 What are the key requirements for establishment and operation of these vehicles which are relevant to FDI? An Australian company must have a local registered office, Australian resident directors (one for proprietary companies, two for public companies), and an Australian resident company secretary (optional for proprietary companies).
A registered foreign company must have a local registered office and must appoint a local agent to represent it.
3. Investment approval
3.1 For foreign investment approval (including national security review) explain the following:
a) The regulator/s’ name, factors it must consider when making its decisions, and how much discretion it has; Foreign investment in Australia is regulated by the Foreign Acquisitions and Takeovers Act 1975 (Cth) (FATA) and Foreign Investment Policy. FATA notifications are lodged with the Foreign Investment Review Board (FIRB) for assessment. FIRB makes recommendations to the Treasurer, who has statutory discretion to prohibit any proposal regarded as contrary to Australia’s national interest.
The Treasurer typically considers the following factors: • National security: whether the investment affects Australia’s ability to protect its strategic and security interests;
• Competition: whether an investor may gain control over market pricing and production of a good or service in Australia, or over global supply of a good or service;
• Other Government policies: the impact on Government policies; • Economy and community: the impact on the Australian economy and community generally; and
• Character of the investor: whether the investor operates on a transparent, commercial basis and is subject to adequate regulation.
The Treasurer also considers: • whether the foreign investor is wholly or partly government owned, and whether it operates on an arm’s length and commercial basis;
• whether the investor is pursuing broader political or strategic objectives that may be contrary to Australia’s national interest; and • the size, importance and political impact of the investment.
The Treasurer may object to (ie reject) a notification or approve it (including by making it subject to certain mandatory conditions).
18 IFLR REPORT | FOREIGN DIRECT INVESTMENT 2014
WWW.IFLR.COM
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