FIRB reporting obligations in Australia 2023
The Foreign Investment Review Board (FIRB) has implemented a new register of foreign ownership of a myriad of Australian assets.
This register coincides with the introduction of obligations on foreign persons to report to FIRB their ownership of these Australian assets. In summary, where a foreign person acquires an interest in an Australian business or entity, or Australian land (agricultural land, commercial land, residential land or a mining or production tenement), an obligation may arise to enter this interest on the register.
It is important to be aware that this obligation may arise even where the foreign person is not otherwise under an obligation to seek FIRB approval.
Partner Michael Hansel and Senior Associate Christina Hooper from our Corporate Advisory and Governance practice discuss the new amendments and can advise if you are seeking professional legal advice on Australian foreign investment.
A new register with complimenting reporting obligations took effect from 1 July 2023. This register is being administered by the ATO and has replaced the existing registers (namely the agricultural land register, residential land register and water register).
The amendments to the reporting obligations are extensive and administratively burdensome – all required reporting must occur within 30 days of each relevant registrable event day. The registrable event day will vary on the type of event under the legislation, but is generally either the date on which the notifiable event occurs or when the foreign person is aware, or reasonably ought to be aware, that the relevant event has occurred.
The following is a high-level summary of the reporting obligations:
These notification obligations also arise where a person who has any of the above Australian land interests becomes a foreign person, or there is a change in the nature of the foreign person’s interest in the relevant land, or where the foreign person ceases to have the interest which triggered a notification requirement, or the foreign person ceases to be a foreign person.
This is a significant increase in compliance for foreign investors. Previously, the foreign person was only required to notify FIRB of an acquisition if they were subject to FIRB approval requirement and if notification was specified on the approval received. The obligation now extends to all acquisitions of freehold interest and leasehold interests in commercial land exceeding five years.
Practically, this could be extremely difficult monitor. For example, where a listed entity had a number of foreign person shareholders (all holding more than 5% but none more than 20%) – where the number of shares held by these people reached 40%, there would be an obligation on that entity to notify the Register of all of their Australian land interests.
The notification obligations also capture all foreign persons who acquire an interest and would extend to all foreign persons in a corporate group. This differs from the entity which directly acquired the relevant interest.
There are civil penalties associated with failing to give the requisite notice within 30 days of the registrable event day.
This is likely to create administrative burden for a number of foreign person investors as well as entities with foreign person shareholders.
HopgoodGanim is an award-winning Australian law firm with a strong track record of obtaining foreign investment approvals and interacting with the FIRB. Our expertise includes providing FIRB legal advice, with FIRB lawyers experienced in FIRB approvals, FIRB applications, negotiating FIRB fees and applying legislation for businesses and investors.
HopgoodGanim can support you and your business with international compliance and foreign investment into Australia. Find out more about our FIRB expertise and connect with Partner Michael Hansel and Senior Associate Christina Hooper in our Corporate Advisory and Governance team about methodologies for ensuring compliance with this new legislation.