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Participants in Australia’s infrastructure sector are, as a general rule, already familiar with the Foreign Investment Review Board (FIRB) and Australia’s foreign investment regime. Large assets, significant landholdings, and the involvement of a variety of foreign financial investors (including sovereign wealth funds) mean that FIRB is rarely a non-issue. And then there is the overlay of the Critical Infrastructure Centre, with its focus on system integrity and data security in critical sectors.
So the infrastructure sector should be well placed to deal with the recently-announced changes to Australia’s foreign investment regulation.
However, there are still likely to be a number of unexpected complications, and participants will need to tread carefully to ensure they don’t inadvertently fall foul of the new laws.
As has been well publicised, Australia’s foreign investment laws have been temporarily altered in response to the COVID-19 crisis, in order to address the perceived risk that many otherwise viable Australian businesses will be opportunistically acquired by foreign buyers without any government oversight, presenting risks to Australia’s national interest.
Key elements of the changes are as follows:
Other thresholds for approval generally remain unchanged. For example, non-sovereign investors generally still do not need approval for acquisitions of <20% in Australian companies and trusts (other than land entities), or <10% in listed land entities. Additionally, transactions covered by agreements entered into before the 29 March 2020 changes, and existing exemption certificates granted by FIRB, remain unaffected.
Participants in the infrastructure sector, despite being fairly FIRB-savvy already, may well find that there are a number of unexpected complications arising from these changes, and they would be well advised to think ahead and factor these issues into their business planning.
Particularly noteworthy are each of the following:
Infrastructure owners and investors, already grappling with all types of strategic, operational and financial complications, need to add unanticipated FIRB complications to that list.
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The Federal Treasurer has announced reforms to Australia’s foreign investment framework which will come into effect on 1 January 2021.
Governments and businesses around the world are dealing with a new paradigm and greater uncertainty in the face of COVID-19.
With significant regulatory change coming into effect the spotlight is staying firmly on
culture, ethics and regulatory compliance. An organisation’s social licence to operate
remains a priority...