Examination by Sector
5. The Foreign Acquisitions and Takeovers Act 1975
applies to most examinable proposals and provides penalties for non-compliance.
Rural Properties, Agriculture, Forestry, Fishing,
Resource Processing, Oil & Gas, Mining, Manufacturing, Non-Bank Financial
Institutions, Insurance, Share Broking, Tourism (Hotels and Resorts), Most Other Services.
6. In relation to investments by foreign interests
in these sectors, all proposals above certain thresholds need prior approval and therefore
need to be notified. Notification thresholds are: over $3 million for purchases of rural
properties; over $5 million for acquisitions of substantial interests in other existing
businesses; $10 million or more for the establishment of new businesses; and $20 million
or more for offshore takeovers. All tourism proposals that incorporate an accommodation
facility, irrespective of value, need to be notified.
7. The Government normally raises no objections to
proposals above the notification thresholds where the relevant total assets/total
investment is below $50 million.
8. The Government examines in more detail proposals
to acquire existing businesses (with total assets of $50 million or more) or establish new
businesses (with a total investment of $50 million or more) and raises no objections to
those proposals unless they are contrary to the national
interest. Offshore takeovers do not generally raise national interest issues.
9. Approvals of proposals may be made subject to
the parties meeting certain conditions. In practice, such conditions relate almost
entirely to the time period for real estate development or to environment protection
requirements.
Real Estate
10. Proposed acquisitions of residential real
estate are exempt from examination in the case of Australian citizens living abroad and
foreign nationals who are the holders of permanent resident visas or are holders, or
entitled to hold, a 'special category visa'.
11. Proposed acquisitions of real estate for
development (within 12 months) are normally approved unless they are considered contrary to the national interest.
12. Foreign interests are normally given approval
to buy vacant residential land (on condition that continuous construction of a dwelling is
commenced within 12 months) and to buy home units, townhouses, etc 'off-the-plan', under
construction or newly constructed but never occupied (the 'off-the-plan' criteria only
apply to new development projects or extensively refurbished commercial structures which
have been converted to residential), on condition that no more than half of the units in
any one development is sold to foreign interests.
13. Proposed acquisitions of residential property
(both vacant land and existing dwellings) which are within the bounds of a resort that the
Treasurer has designated as an 'Integrated Tourism Resort' are exempt from examination.
14. Proposed acquisitions of developed residential
real estate by certain categories of foreign nationals temporarily resident in Australia
for more than 12 months purchasing a residence for use as their principal place of
residence while in Australia (and not for rental purposes) are normally approved. This
category includes long-stay retirees.
15. All other proposals by foreign interests to
acquire developed residential real estate are examinable and are not normally approved,
except in the case of foreign companies, with an established substantial business in
Australia, buying for named senior executives resident in Australia for periods longer
than 12 months, provided the accommodation is sold when no longer required for this
purpose. Whether a company is eligible, and the number of properties that may be acquired
under this category will depend upon the extent of the foreign company's operations and
assets in Australia. Unless there are special circumstances, foreign companies normally
will not be permitted to buy more than two houses under this category. Foreign companies
would not be eligible under this category where the property would represent a significant
proportion of its assets in Australia.
16. Proposed acquisitions of developed
non-residential commercial real estate are normally approved unless they are contrary to the national interest.
17. Hotels and motels operating under one title are
normally approved (unless considered contrary to the national
interest) under the tourism sector policy, other accommodation facilities such
as guest houses, holiday flats, strata titled hotels and motels are examined under policy
applying to residential real estate sector.
Banking
18. Foreign investment in the banking sector needs
to be consistent with the Banking Act 1959, the Banks (Shareholdings) Act 1972 and banking
policy, including prudential requirements. Any proposed foreign takeover or acquisition of
an Australian bank will be considered on its merits on a case by case basis.
19. The Government will permit the issue of new
banking authorities to foreign owned banks where the Reserve Bank is satisfied the bank
and its home supervisor are of sufficient standing, and where the bank agrees to comply
with Reserve Bank prudential supervision and arrangements.
Civil Aviation
Domestic Services
20. Foreign airlines operating into Australia can
generally expect approval to acquire up to 25 per cent of the equity in a domestic carrier
individually or up to 40 per cent in aggregate provided the proposal is not considered contrary to the national interest. In special circumstances
the Government is prepared to consider foreign equity proposals in excess of these
guidelines provided the proposal is not contrary to the national interest. All other
foreign investors (including those which do not operate an airline service to Australia)
may acquire up to 100 per cent of a domestic carrier or establish a new aviation business
unless judged contrary to the national interest.
International Services
21. Foreign airlines can generally expect approval
to acquire up to 25 per cent of the equity in an Australian international carrier (other
than Qantas) individually or up to 35 per cent in aggregate provided the proposal is not
considered contrary to the national interest. In the
case of Qantas, total foreign ownership is restricted to a maximum of 49 per cent in
aggregate, with individual holdings limited to 25 per cent and aggregate ownership by
foreign airlines limited to 35 per cent. In addition, a number of national interest
criteria must be satisfied, relating to the nationality of Board members and operational
location of the enterprise.
Airports
22. Foreign investment proposals for acquisitions
of interests in Australian airports are subject to case by case examination in accordance
with the standard notification requirements. In relation to the airports to be offered for
sale by the Commonwealth, the Airports Act 1996 stipulates a 49 per cent foreign ownership
limit, a 5 per cent airline ownership limit and cross ownership limits between Sydney
airport (together with Sydney West) and Melbourne, Brisbane and Perth airports.
Shipping
23. The Ship Registration Act 1981 requires that,
for a ship to be registered in Australia, it must be majority Australian-owned (ie., owned
by an Australian citizen, a body corporate established by or under law of the Commonwealth
or of a State or Territory of Australia), unless the ship is designated chartered by an
Australian operator.
Media
24. All non-portfolio proposals to invest in the
media sector irrespective of size are subject to prior approval under the Government's
foreign investment policy. Proposals involving portfolio Shareholdings of 5 per cent or
more must also be submitted for examination.
Broadcasting
25. Whilst proposals for a foreign person to
acquire an interest in or establish a new broadcasting service would be subject to a case
by case examination under foreign investment policy, the following criteria also must be
satisfied. A broadcasting regulatory regime, enacted through the Broadcasting Services Act
1992 (BSA), stipulates that:
