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FOREIGN ACQUISITIONS AND TAKEOVERS ACT 1975 - SECT 139 Regulations

FOREIGN ACQUISITIONS AND TAKEOVERS ACT 1975 - SECT 139

Regulations

  (1)   The Governor - General may make regulations prescribing matters:

  (a)   required or permitted by this Act to be prescribed by the regulations; or

  (b)   necessary or convenient to be prescribed for carrying out or giving effect to this Act.

  (2)   Without limiting subsection   (1), the regulations may provide for a method for indexing a value or an amount prescribed for the purposes of this Act.

  (3)   Despite subsection   14(2) of the Legislation Act 2003 , the regulations may provide in relation to a matter by applying, adopting or incorporating, with or without modification, any matter contained in any other instrument or other writing as in force or existing from time to time.

This Act deals with certain actions to acquire interests in securities, assets or Australian land, and actions taken in relation to entities (being corporations and unit trusts) and businesses, that have a connection to Australia. These actions are called significant actions. For an action to be a significant action, the action must in most cases result in a change in control involving a foreign person or be taken by a foreign person.

This Act also deals with actions taken by persons that have, or may have, implications for Australia's national security. These actions may or may not be significant actions. Actions relating to a national security business or national security land are notifiable national security actions. If an action is a reviewable national security action, or a significant action that is not a notifiable action or a notifiable national security action, the Treasurer may review the action if the Treasurer considers that the action may pose a national security concern.

If a person proposes to take or has taken an action, the Treasurer has power to do one or more of the following:

  (a)   decide that the Commonwealth has no objection to the action;

  (b)   impose conditions on the action;

  (c)   prohibit the action;

  (d)   require the action to be undone (for example, by requiring the disposal of an interest that has been acquired).

Offences and civil penalties apply for failing to comply with:

  (a)   an order made prohibiting an action, or requiring an action to be undone; or

  (b)   a condition imposed on an action.

Significant actions that are notifiable actions, and notifiable national security actions, must generally be notified to the Treasurer before the actions can be taken. Offences and civil penalties may apply if a notifiable action is taken without a notice having been given. Broadly, if a notice has been given stating that a significant action is proposed to be taken, the action must not be taken before the end of a specified period (generally of 40 days, or an additional period of up to 90 days from the registration of an interim order).

Fees are payable in relation to applications and orders made, and notices and notifications given, under this Act.

A person must make and keep records for the purposes of this Act, including in relation to significant actions and notifiable actions. Information that is obtained for the purposes of this Act (called protected information) may be disclosed only for certain purposes. A person who obtains, uses or discloses protected information other than as authorised by this Act may commit an offence.

The Register of Foreign Ownership of Australian Assets is kept under Part   7A.

The Register records certain actions relating to interests acquired, held or disposed of by foreign persons. A foreign person who takes such an action (which may or may not be a significant action or a notifiable action, or otherwise covered by this Act) must give a register notice to the Registrar. In some circumstances, other people must also give notices to the Register. A civil penalty applies to a failure to give a notice under Part   7A.

This Part defines the concepts of significant action , notifiable action , notifiable national security action and reviewable national security action .

The Treasurer has powers under Part   3 in respect of these kinds of actions.

Broadly, a significant action is an action to acquire interests in securities, assets or Australian land, or otherwise take action in relation to entities (being corporations and unit trusts) and businesses, that have a connection to Australia. For an action to be a significant action, the action must in most cases result in a change in control involving a foreign person or be taken by a foreign person.

Generally, the action is only a significant action if the entity, business or land meets the threshold test. A different threshold test applies for certain significant actions taken in relation to agribusinesses.

The regulations may also prescribe actions that are significant actions.

An acquisition of an interest in Australian land by a foreign person that is specified in an exemption certificate under Division   5 is generally not a significant action.

Division   6 deals with the treatment of entities whose securities are stapled and entities operating on a unified basis.

A notifiable action is an action by a foreign person:

  (a)   to acquire a direct interest in an Australian entity or Australian business that is an agribusiness; or

  (b)   to acquire a substantial interest in an Australian entity; or

  (c)   to acquire an interest in Australian land.

Generally, the action is only notifiable if the entity, business or land meets the threshold test. A different threshold test applies for certain notifiable actions taken in relation to agribusinesses.

There does not need to be a change in control for actions relating to entities and businesses to be notifiable actions.

The regulations may also prescribe actions that are notifiable actions.

Actions to acquire interests in Australian land that are specified in an exemption certificate under Division   5 are generally not notifiable actions.

Division   6 deals with the treatment of entities whose securities are stapled and entities operating on a unified basis.

Two important tests in determining whether an action is a significant action are whether the threshold test is met and whether there has been a change in control. The threshold test is also important in determining whether an action is a notifiable action.

For the threshold test to be met, a certain value must be above a threshold prescribed by the regulations. The value depends on the action taken.

There is a change in control of an entity or business if the Treasurer is satisfied that one or more foreign persons begin to control the entity or business, or the foreign persons who currently control the entity or business change.

A person who holds a substantial interest in an entity is taken to control the entity. Also, a person controls the entity if the person is in a position to determine the policy of the entity or business.

There are broad powers for the regulations to prescribe thresholds under this Part.

A person may apply for an exemption certificate under this Division.

The Treasurer must generally make a decision on an application within the period prescribed by the regulations. The regulations may also provide for additional kinds of exemption certificates.

This Part deals with the powers that the Treasurer has if an action is proposed to be taken or has been taken.

The Treasurer may review actions in the circumstances set out in Division   1A. Such actions are reviewable national security actions, and significant actions that are not notifiable actions or notifiable national security actions. The Treasurer may make orders and decisions of a kind mentioned below in relation to any actions so reviewed.

If an action is proposed to be taken, the Treasurer may prohibit the action. The Treasurer may make an interim order before deciding whether to make an order prohibiting an action.

If an action has been taken, the Treasurer may order that the action be undone (for example, by requiring an acquisition to be disposed of).

Instead of making an order, the Treasurer may give a notification (called a no objection notification) stating that the Commonwealth does not object to an action. The Treasurer may impose conditions on an action.

If the Treasurer is given a notice that an action is proposed to be taken or reviews an action under Division   1A, the Treasurer must make a decision under this Part within a certain period, although the period may be extended. A person must not take the action during this period unless the person is given a no objection notification.

The Treasurer also has last resort powers to deal with national security risks arising in relation to an action. If the Treasurer is permitted to review the action, the Treasurer may make orders to eliminate or reduce any such risks.

A foreign person must give the Treasurer a notice before taking a notifiable action or notifiable national security action or, if section   18A (increasing percentage of interests without acquiring additional interests in securities) applies, before the end of 30 days after the action is taken.

A foreign person must not take an action during a certain period (unless the person is given a no objection notification or section   18A applies) if:

  (a)   the foreign person chooses to notify the Treasurer of the action despite not being required to do so; or

  (b)   the foreign person is given a notice by the Treasurer under subsection   66A(4) (actions that may pose a national security concern).

Generally, the period is 40 days from receiving the notice, or up to 90 days from the registration of an interim order. The person may be prevented from taking the action by an order under Part   3.

To ensure that persons comply with their obligations under this Act, this Part provides for a range of enforcement options, including criminal offences and civil penalties.

There are additional civil penalties in relation to residential land. Some of these penalties may be calculated by reference to the market value of, or consideration for, the acquisition of the interest in the residential land or the capital gain from disposing of the interest.

Part   2.4 of the Criminal Code , which among other things extends criminal responsibility to those who attempt to commit an offence or incite another person to commit an offence, applies to offences against this Act. A similar provision for civil penalty provisions is found in section   92 of the Regulatory Powers Act, and applies to civil penalty provisions in this Act.

An officer of a corporation who authorises or permits the corporation to commit an offence or contravene a civil penalty provision may also commit an offence or contravene a civil penalty provision. Similarly, an officer of a corporation may contravene a civil penalty provision by failing to prevent a contravention of the civil penalty provision by the corporation.

The Regulatory Powers Act applies in relation to civil penalty orders, infringement notices, searches and enforceable undertakings under this Act. The Treasurer may give directions if the Treasurer has reason to believe that a person has engaged, or is engaging, in conduct that contravenes, or will contravene, this Act.

A charge on Australian land may apply for unpaid penalties under this Act.

Fees are payable under this Part to ensure that foreign persons and others who take action regulated by this Act bear the costs relating to the administration of this Act.

Fees are payable for:

  (a)   applying for an exemption certificate or a variation of an exemption certificate; and

  (b)   giving a notice of a notifiable action or notifiable national security action; and

  (c)   giving a notice relating to a significant action that is not a notifiable action or notifiable national security action; and

  (d)   giving a notice relating to a reviewable national security action; and

  (e)   being given a notice under subsection   66A(4); and

  (f)   applying for a variation of a no objection notification or notice imposing conditions.

The Treasurer is not required to take any action before the fee is paid.

A fee is also payable if the Treasurer makes a decision or order under Part   3 relating to a significant action and a person has not notified the Treasurer of the action.

The amounts of the fees are found in regulations made under the Foreign Acquisitions and Takeovers Fees Imposition Act 2015 .

A fee may be waived or remitted.

A vacancy fee is payable by a foreign person for any dwelling on residential land, for any year (called a vacancy year), if the dwelling is residentially occupied for less than 183 days in the year.

A dwelling is residentially occupied on a day in any of the following circumstances (or any combination of these circumstances over the vacancy year):

  (a)   the foreign person, or a relative of the foreign person, genuinely occupies the dwelling as a residence (whether or not with other persons);

  (b)   the dwelling is genuinely occupied as a residence under a lease or licence with a term of 30 or more days;

  (c)   the dwelling is genuinely available for occupation as a residence under a lease or licence with a term of 30 or more days.

The amount of the vacancy fee is found in regulations made under the Foreign Acquisitions and Takeovers Fees Imposition Act 2015 . However, a vacancy fee may be waived or remitted.

The foreign person is required to give a vacancy fee return to the Commissioner of Taxation after the end of each vacancy year for a dwelling. The person must also keep all relevant records for 5 years after disposal of the interest in residential land.

Unpaid vacancy fees for a dwelling may be recovered as a debt, or by the creation of a charge over Australian land in which an interest is held by the foreign person. The charge also secures any unpaid penalties for contraventions of civil penalty provisions under this Part relating to giving annual returns and keeping records.

A person must make and keep records relating to:

  (a)   actions specified in exemption certificates; and

  (b)   compliance with conditions in no objection notifications and exemption certificates; and

  (c)   certain disposals of interests in residential land; and

  (d)   register notices.

The records must be kept for 5 years, except records that relate to conditions which must be kept for 2 years. A person may commit an offence if the person fails to make or keep the records in accordance with Division   2.

Information that is obtained for the purposes of this Act (called protected information) may be disclosed only for authorised purposes. A person who obtains, uses or discloses protected information other than as authorised by this Act may commit an offence.

A person may apply to the Administrative Appeals Tribunal for review of a decision of the Treasurer that a national security risk exists in relation to an action. Division   4 modifies provisions of the AAT Act for this purpose.

The Register of Foreign Ownership of Australian Assets records certain actions relating to interests in land, water, entities, businesses and other assets in Australia.

The Register is kept by the Registrar, which is a body or person appointed by the Treasurer.

Generally, a foreign person who acquires or disposes of such an interest must give a register notice to the Registrar. The register notice may result in there being a registered circumstance in relation to the person, and the person may be required to give further register notices in relation to the registered circumstance.

For example, a person may be required to give a further register notice in relation to a registered circumstance if the nature of the interest that gave rise to the registered circumstance changes, or if the registered circumstance ceases. The events that result in a registered circumstance ceasing are set out in this Part.

No fee is payable for giving a register notice under this Part.

The Register will be required to be kept, and the notice requirements will begin to apply, on the Register commencement day.

A civil penalty applies to a failure to give a notice as required by this Part.

This Part   contains a number of miscellaneous provisions including the following:

  (a)   the power of certain courts to preserve interests, and enforce orders and conditions;

  (b)   the power of the Treasurer to require additional information;

  (c)   the power of the Treasurer and the Secretary to delegate his or her powers under this Act;

  (d)   a provision clarifying that a failure to comply with this Act does not invalidate an action;

  (e)   the requirement for applications and notices to be given in a manner approved by the Secretary;

  (f)   a regulation - making power.