Updated Foreign Investment Review Board Requirements

Acquisition of Agricultural Land

Foreign persons intending to acquire agricultural land in Australia must notify the Treasurer before an acquisition is made if the cumulative value of a foreign person’s (or its associates) interests in agricultural land, in Australia, exceeds $15 million (including the purchase price for the target purchase). The notice is given by way of application to the Foreign Investment Review Board (FIRB).

The application to the FIRB will be assessed by a FIRB decision maker who makes a recommendation to the Treasurer that the proposed acquisition be permitted or prohibited. When considering the application, the decision maker will have regard to how the acquisition by the foreign person (Applicant) may impact Australia’s national interests.

Updated Requirements

In a media release dated 1 February 2018, the Treasurer stated, “foreign investors will need to demonstrate that agricultural land they intend to acquire has been part of a public sales process and marketed widely to potential Australian bidders for a minimum of 30 days, and Australian bidders have had an opportunity to participate in the sale process.”

The policy is further explored in the FIRB Guidance Note 17 for Agricultural Land Investments, dated 27 February 2018 (Guidance Note). The Guidance Note makes clear that Australians need to be given the opportunity to participate in the sale process and introduces the concept of an “open and transparent sale process” as part of the national interest test.

So what is an open and transparent sales process?

An “open and transparent sale process” is where:

1. the agricultural land is marketed publicly through outlets that are easily accessible to Australian bidders for a period of 30 days; and
2. potential purchasers of agricultural land are provided with an “equal opportunity” to bid or make offers for the agricultural land while it is offered for sale

When considering an application relating to agricultural land, the FIRB decision maker must be satisfied there was an “equal opportunity” for Australians to purchase the property and that the Requirements have been met. The Applicant may be required to provide evidence of compliance with the Requirements, as the onus is on the Applicant to prove that the Requirements have been satisfied.  Note: the onus is not upon the Vendor of the relevant property to prove that the property has been marketed in an “open and transparent” way. If it is apparent that the Requirements were not satisfied, FIRB approval may not be granted.

Exceptions to compliance with the Requirements may be permitted in particular circumstances, for example, in situations where the Applicant is undertaking an internal reorganisation. See the Guidance Note for a full list of exceptions.

If you have any questions concerning the implementation of the Requirements, or if you would like us to assist you with any matters associated with obtaining FIRB approval, please contact us.

This article was written by Georgette Georges, Lawyer – Commercial.