New FIRB Business Exemption Certificates

Articles Written by Sophia Bobeff (Partner), James Rozsa (Partner), Trevor Yangsun

On 1 July 2017, the Australian Government introduced a new exemption certificate for business acquisitions by foreign investors (Business EC). A Business EC is issued by the Australian Treasurer and approves a program of acquisitions of interests in the assets of one or more Australian businesses or securities in one or more Australian entities. This is intended to remove the need to make multiple notifications to FIRB for acquisitions that are the subject of the Business EC.

Key takeaways

Business ECs will be of particular interest to private equity funds and their portfolio companies who may be deemed to be “foreign government investors” due to passive upstream investments by sovereign wealth and government pension funds. For example, rather than having to notify FIRB of each separate bolt-on acquisition, a private equity portfolio company could obtain a Business EC which would cover its anticipated strategic acquisition plans.   

As Business ECs are new, there are a number of associated issues and uncertainties. These are discussed below, together with an overview of the key features of a Business EC.

Who is eligible?

All foreign persons are eligible to apply for Business ECs. However, it is unlikely that a Business EC will be granted to first time investors to Australia as a key assessment in whether a Business EC will be granted is the investor’s acquisition history and track record in complying with Australian laws.

What transactions will be caught?

Business ECs are intended to only apply to acquisitions which are unlikely to raise significant national interest issues. In considering national interest issues, the character of the investor and the purpose and scope of the proposed acquisitions will be taken into account. FIRB has indicated that Business ECs will only be issued for transactions that are low risk or low sensitivity. Acquisitions of key infrastructure assets or businesses such as media, telecommunications and transport are unlikely to be considered appropriate for a Business EC nor would an acquisition in a sector that is likely to raise competition concerns.

A Business EC will usually provide a maximum cap on the value of each individual acquisition and the total value of all acquisitions.

The application process

Applications for Business ECs will require similar information to that required under the existing process of applying for a statement of “no objections” from the Australian Treasurer.

Where the applicant is a fund, key fund information in relation to the fund manager, fund governance rights and percentage interest of foreign government investors will be required.

In addition the applicant will need to provide details of the scope and value of the proposed investment(s), including:

  • sufficient information about the sector/market they wish to acquire interests in, the size of the proposed acquisitions relative to their existing market share and/or the purpose of the investment; and
  • details of the maximum amount in monetary terms to be covered by the Business EC and the breakdown for individual acquisitions (e.g. maximum consideration to be paid for each proposed acquisition to be made under the certificate, a specified maximum percentage interest for each entity or asset acquired and total maximum investment amount sought to be approved).

While in some cases an applicant may not know the target entity for their investments (such as in the case of bolt-on acquisitions), applications will need to contain sufficient detail about potential target entities or assets by identifying target industries, and the nature of the business and assets that the foreign person wishes to invest in. It is currently unclear in these circumstances the level of information that FIRB will require in order to grant a Business EC.


As part of the application process, the applicant can provide details of the preferred duration of the Business EC. However, the term will be determined by FIRB. FIRB has indicated that a Business EC will last for at least 12 months, but it is not clear how much longer.  A term of two to three years is likely to be the outside considered by FIRB.


Although FIRB will be subject to the same 30 day time frame and rules for Business EC applications, FIRB expects the application process to take longer than for single acquisition notifications. Accordingly, the time frame for a decision to be made is currently unclear. If a Business EC is being sought to cover an imminent acquisition, consideration should be given to making a separate notification for that acquisition. In these circumstances, FIRB will only charge the Business EC application fee and not a separate application fee for the pending acquisition.


The application fee for a Business EC is currently A$35,000 for the 2017-2018 financial year. This amount will be indexed annually. Given that there is a new $2,000 fee for acquisitions of less than $10 million, the anticipated value of the acquisitions should be taken into account as it may be more cost effective to continue to make single applications.


The Business EC was introduced in part to address some of the concerns raised by the PE industry with the new FIRB legislation that came into effect at the end of 2015. Exemption certificates relating to acquisitions of land were also introduced at that time and there have been a number of these certificates issued. However, the nature of business investments is very different to land and it is unclear whether the form of Business EC that FIRB is willing to grant will be broad enough to remove the need for subsequent applications. Given PE funds typically have broad mandates, it is difficult to see how these could work at a fund level, given the requirement for specific details regarding the market or sector of proposed investment. While the Business ECs may be more appropriate for bolt-on acquisitions, these proposed acquisitions may still have ACCC and other issues, which means they are unlikely to be approved by FIRB.

Important Disclaimer: The material contained in this article is comment of a general nature only and is not and nor is it intended to be advice on any specific professional matter. In that the effectiveness or accuracy of any professional advice depends upon the particular circumstances of each case, neither the firm nor any individual author accepts any responsibility whatsoever for any acts or omissions resulting from reliance upon the content of any articles. Before acting on the basis of any material contained in this publication, we recommend that you consult your professional adviser. Liability limited by a scheme approved under Professional Standards Legislation (Australia-wide except in Tasmania).

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