Australia : Reform of Foreign Investment Framework - Release of Exposure Draft Legislation (Tranche 2)

24-hour hotline : 23 922 922

e-mail address : enquiry@tid.gov.hk

Ref: EI 891/1/4

27 October 2020

Dear Sirs,

As foreshadowed in Commercial Information Circular No. 600/2020 cum Textiles Trader Registration Circular No.8/2020 of 6 August 2020, the Australian Government released Tranche 2 of the exposure draft legislations to amend its Foreign Acquisitions and Takeovers Act 1975 (the "Act") on 18 September 2020, providing more details for implementing reforms to its foreign investment framework which is scheduled to commence on 1 January 2021. This circular provides information for traders' reference.

2.Tranche 2 of the exposure draft legislations include (i) Foreign Investment Reform (Protecting Australia's National Security) Regulations 2020 ("Exposure Draft Regulations"); and (ii) the Foreign Acquisitions and Takeovers Fees Imposition Regulations 2020 ("Exposure Draft Fees Regulations"). Major measures are highlighted below -

1. Time limit on the "call-in power" - The Australian Government will have the ability to review an action that is a reviewable national security action or a significant action that has not been notified. The time prescribed for the "call-in" power is 10 years.
2. Exemption certificate - A foreign person may apply for an exemption certificate so as to obtain an up-front approval for a programme of investments without the need to seek separate approvals before each acquisition. Application for exemption certificate is open from 1 January 2021 onwards. Two types of exemption certificates will be available as follows -
   1. Exemption certificates for actions that would otherwise be notifiable national security actions; and
   2. Exemption certificates for actions that would otherwise be reviewable national security actions.
3. Reinstating monetary screening thresholds - The Australian Government introduced a temporary measure in response to COVID-19 pandemic in March 2020 which amended the monetary screening thresholds for significant and notifiable actions to A$0. For background, please refer to Commercial Information Circular No. 282/2020 cum Textiles Trader Registration Circular No.4/2020 of 3 April 2020. The exposure draft legislations propose to reinstate the monetary screening thresholds from 1 January 2021, subject to the final decision on the impact of the COVID-19 on the economy and whether there is an ongoing risk that foreign investment in Australia could occur in ways that would be contrary to the national interest.
4. The exposure draft fees regulations set out the fees payable for particular actions or notices given or issued under the Act.

The above exposure draft legislations are available at the following link (English version only) -
https://treasury.gov.au/consultation/c2020-113460.

3.For enquiries concerning the content of this circular, please contact us at 2398 5594.

Yours faithfully,

(Miss Carmen Chan)
for Director-General of Trade and Industry

Note: While every effort is made to ensure the accuracy of the above information, the Department cannot guarantee this to be so and will not be held liable for any reliance placed on the same.