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New FIRB Approval Requirements Pausing Foreign Investment in Australia

Fei WANG, Edmund LEUNG



The Treasury has announced that the monetary threshold for foreign investment requiring approval from the Foreign Investment Review Board (FIRB) will be lowered to $0 from 10:30pm on 29 March 2020. The change will mean that all applicable foreign investment actions, no matter their monetary value, will require an approval from FIRB before they may proceed. The time to process the applications has also been extended from 30 days to 6 months. FIRB says that this extension does not necessarily mean that an application will take 6 months to arrive at a decision.


Duration of New Policy


Although the Treasury has stated that the new policies are temporary in nature, due to the rapid development of the coronavirus crisis, there is no expected date of the end of these new policies and it is unknown whether the government will have other economic measures after the crisis affecting their FIRB policy.


No Limitation on Business Sectors


It should be noted that the news release from the government did not limit the new policies to specific business sectors, hence the new policies will apply to all business sectors and all investments. Any investment in Australian companies or businesses by foreign entities or individuals may need approval from FIRB.


Purchase of Land


Residential Land

All purchases of residential land by foreign entities or individuals require FIRB approval under pre-existing rules. The processing time for applications for purchasing residential land is still expected to be 30 days. New purchasers and purchasers who have already signed the contract may need to check if the clauses related to FIRB in their contract of sale provides enough time for receiving FIRB approval. Purchasers will need to liaise with the vendor to ensure that the vendor will allow time for the FIRB application to come through and the purchaser will not need to be responsible for any delays.


Other Types of Land (Agricultural, Commercial…)

All purchases of Australian land and properties by foreign entities and individuals will require FIRB approval under the new policies. Purchases with value under the threshold previously would not require FIRB approval, but now that the threshold has been lowered to $0, all purchases will require approval.


Purchase of Company Shares/Business/Unit Trusts


The concepts of “significant action” and “notifiable action” are crucial to understanding the obligations to apply for FIRB approval. Significant actions need not notify FIRB, but if the Treasurer opines that a significant action affects the national interest, that significant action may be reversed or the assets acquired be required to be disposed. The acquisition of 20% or more of shareholding is a notifiable action and will require FIRB approval. As long as the acquisition leads to owning 20% or more of the company, FIRB approval is needed no matter the price of the acquisition.




Overseas Migration Clients

Clients requiring investment as a criterion in their visa application may be affected by the new FIRB policies. They will need to be aware of how the extended application times will affect their fulfilment of investment requirements.


Overseas Investment and Acquisitions

As the ownership structures of companies will be changed under such circumstances, such investment would require FIRB approval with specific attention paid to the definition of notifiable actions.


Property Investment by Overseas Persons

Investors from overseas will need to liaise with vendors to ensure contract clauses take into account the FIRB policies, such that the investor will not suffer loss or even have the contract cancelled due to needing more time for FIRB approval even when the processing time is expected to be same as before.


Q & A


Q: If commercial contracts have already been signed prior to the time when new policies come into effect, but shares and/or assets are not yet transferred, is FIRB approval needed under the new policies?

A: The new policies do not affect contracts and investment plans already executed before the effective date of the policies.


Q: For current FIRB applications in progress, will the processing time be affected by the new policies?

A: FIRB has stated that the processing time for current applications will also be extended to within 6 months, but it does not mean that an application necessarily takes 6 months to process. For applications to purchase residential properties, the application processing time is still expected to be within 30 days.


Q: Can foreign persons or entities establish new companies in Australia?

A: The new policies did not affect current rules on establishing new companies. Foreign persons or entities can still establish new companies in Australia for their operations.


Consequences of Contravention


If FIRB was not notified of notifiable actions or if other FIRB regulations are contravened, there may be criminal or civil sanctions, including imprisonment and fines.




We expect that the investment plans of many foreign entities and individuals will be affected by the new policies and such effects will be made known soon. Government policies in response to the coronavirus and economic crisis are expected to be updated frequently and the implementation of policies will be detailed once they are in place. Prudentia Legal will continue to follow updates in government policy and provide our analyses on the impact of such policies.


Relevant Links


News Release from the Treasurer:


FIRB Q&A on the new rules:


FIRB Guidance Notes on monetary thresholds (Note information may require updates):


FIRB Guidance Notes on Significant Actions and Notifiable Actions:


Foreign Acquisitions and Takeovers Act 1975as in force on 31 March 2020


Foreign Acquisitions and Takeovers Regulation 2015as in force on 31 March 2020


Please note: The content of our publication is intended for general information purposes only, and should not be construed as legal advice on any matter. Please contact our firm for discussion of your particular circumstances.