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Professional Services


Chinese investment in Australia and the


ROLE OF FIRB


Australia is increasingly opening its doors to Chinese foreign investment and by following a few steps you can maximise the prospects of your investment application. The rapid rise of Chinese investment in Australia has been a defining feature of recent times. Increasing from its previous ranking of sixth in 2007-2008 and eleventh in 2006-2007, China has become Australia’s second- largest investor with a total of $26.6 billion of approved investment in 2008-2009. In the past two years, there have been more applications by Chinese companies seeking to invest in Australia than throughout the previous decade. Many of these applications have been in the resources industry. Although the Australian government


welcomes and encourages this foreign investment from China, the procedures for obtaining investment approval can, at times, be complex and difficult. Becoming familiar with key aspects of the relevant legislation and the approval process will help to facilitate any investment application.


FOREIGN INVESTMENT: THE LEGAL CONTEXT Foreign investment in Australia is regulated by the Foreign Acquisitions and Takeovers Act 1975 (FATA). The FATA, and the Australian government’s foreign investment policy, are administered by the Australian Treasurer, who is advised by the Foreign Investment Review Board (FIRB). While it is the Treasurer who is ultimately responsible for policy and decisions in relation to foreign investment, FIRB is an important element of Australia’s foreign investment approval regime. It is compulsory for foreign persons to notify FIRB of


certain types of investment proposals and substantial penalties apply for non-compliance. Investment proposals requiring notification include, for example: “ acquisitions by a foreign person or persons of a controlling interest in an Australian corporation that has gross assets exceeding $231m or where the proposal values the corporation at over $231m; “ acquisitions by a foreign person or persons if they


102 Australia China: BEYOND TOMORROW


wish to acquire an interest in an offshore company with Australian subsidiaries or gross assets are valued above $231million;


“ direct investment by foreign governments and their agencies irrespective of the size of the proposal; and


“ acquisitions of interests in Australian urban land. Notification of a foreign investment proposal under


FATA must be made in accordance with the forms prescribed in the Foreign Acquisitions and Takeovers (Notices) Regulations 1975. Upon receipt of a valid notice by the Treasurer, a 30-day statutory examination period commences. If the Treasurer does not take action within this period, the power to prohibit the proposal or to impose conditions expires. A further period of 10 days is available to publish any order in the Commonwealth of Australia Gazette and to notify the parties. The 30-day examination period may be extended by


up to a further 90 days by the issue of an interim order. Some parties elect to withdraw their application prior to the issue of an interim order and resubmit to preserve the confidentiality of their proposal.


AUSTRALIA


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