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When Do You Need FIRB Approval in Australia?

Are you considering investing or expanding your business in Australia? While investing in a foreign country can be an exciting endeavour, it’s important to navigate the legal requirements to ensure a smooth and compliant process. For one, understanding when FIRB (Foreign Investment Review Board) approval is required is crucial. FIRB approval plays a vital role in regulating foreign investments in Australia, and knowing when you need it can save you from potential pitfalls and delays.

To help you navigate this complex terrain, we have put together a guide that outlines the circumstances in which FIRB approval is necessary. Read on.

The Role of FIRB: An Overview

The FIRB is an administrative body that advises the Federal Treasurer and the Federal Government on matters relating to foreign investment in Australia. The role of the FIRB is to review and advise the Treasurer as to the national interest implications of the notified proposed foreign investment. 

The FIRB regulates access to the market for foreign investors, rather than the conduct of foreign enterprises operating in Australia. The FIRB carefully assesses foreign investment proposals, considering each one individually, to make sure they align with the best interests of the country. This evaluation process aims to ensure that the investment will not go against Australia’s national interests.

The FIRB also examines proposed investments in Australia that are subject to the Foreign Acquisitions and Takeovers Act 1975 and supporting legislation and covered by the policy. It also makes recommendations to the Treasurer and other Treasury portfolio ministers on these proposals. 

The Board’s functions are advisory only, and responsibility for making decisions about the policy and proposals rests with the Treasurer. The Treasury’s Foreign Investment Division administers Australia’s foreign investment regulatory framework and supports the Board’s work. Therefore, the FIRB plays a crucial role in advising the Australian government on foreign investment proposals and ensuring that they are not contrary to the national interest.

Who Needs FIRB Approval in Australia?

Foreign persons, including temporary residents and foreign non-residents, who are planning to invest in Australian residential real estate, agricultural land or water entitlements, may need to apply for foreign investment approval, as set out in the Foreign Acquisitions and Takeovers Act 1975. Generally, a foreign government investor requires approval in order to acquire a ‘direct interest’ (normally a 10% or greater interest) in an Australian entity. 

Additionally, foreign persons generally require foreign investment approval before acquiring interests in securities or assets or taking other actions in relation to corporations, unit trusts or businesses that have a connection to Australia. They also need this approval before acquiring a substantial interest (generally at least 20 per cent) in an Australian entity that is valued above the relevant monetary threshold. 

On the other hand, the following won’t need approval from the FIRB: Australian citizens, Australian expats, New Zealand citizens and permanent residents (PR). Remember, while FIRB approval may not be necessary for these categories, it’s always advisable to seek professional advice and familiarise yourself with any specific rules or exemptions that may apply to your situation. Compliance with relevant laws and regulations ensures a smooth and lawful investment process in Australia.

What Types of Foreign Investment Require FIRB Approval?

Foreign persons generally require foreign investment approval before acquiring a substantial interest (generally at least 20 per cent) in an Australian business or corporation, including commercial and agricultural land, assets and businesses. FIRB approval is required for a range of acquisitions by foreign persons, including a “substantial interest” in an Australian entity valued at more than AUD310 million (approximately US$216 million as of January 15, 2023). 

In addition, foreign investment approval is required for residential real estate investments, including a new dwelling, vacant residential land, a second-hand or established dwelling and an exemption certificate for residential investment. You can find the list of investments that need FIRB approval here.

Tips and Guidance for Smooth Compliance With the FIRB Approval Process

To help you navigate the FIRB approval process seamlessly while also considering the importance of financial law compliance and the expertise of banking and finance lawyers, here are a few practical tips and guidance:

Understand the FIRB Approval Process

Familiarise Yourself with FIRB Regulations

Start by familiarising yourself with the relevant FIRB regulations, including the Foreign Acquisitions and Takeovers Act 1975. Understanding the key provisions, thresholds and exemptions will help you determine if FIRB approval is required for your specific investment.

Determine the Correct Application Type

Next, identify the appropriate application type based on your investment. FIRB applications include categories, such as residential real estate, commercial property, business acquisitions and agricultural land. Selecting the correct application type is crucial to ensure accurate and efficient processing.

Seek Professional Advice from Banking and Finance Lawyers

Engage the services of experienced banking and finance lawyers who specialise in foreign investment and financial law compliance. They can provide invaluable guidance throughout the FIRB approval process, ensuring adherence to regulations and optimising your chances of a successful outcome.

Prepare and Submit a Comprehensive Application

Gather Required Documentation

Compile all necessary documentation as per the FIRB guidelines. This may include property details, financial statements, investment plans, ownership structure and any other supporting information relevant to your specific investment. Ensure that all documentation is accurate, complete and in the prescribed format.

Engage Professional Advisors

Consider engaging professional advisors, such as banking and finance lawyers, who have expertise in navigating the FIRB approval process. They can assist in preparing the application and ensure compliance with financial law regulations. They can also help address any complexities or challenges that may arise.

Plan Sufficient Time for Application Review

Take into account the processing times for FIRB applications. Timelines can vary depending on the complexity of the investment and the workload of the FIRB. Plan ahead and submit your application well in advance to avoid any delays or time constraints.

Cooperate with FIRB and Respond Promptly

Maintain Open Communication

Maintain open lines of communication with the FIRB throughout the application process. Respond promptly to any requests for additional information or clarification. Cooperation and transparency demonstrate your commitment to compliance and facilitate a smoother approval process.

Address Queries or Concerns

If the FIRB raises any queries or concerns regarding your application, work closely with your professional advisors to address them effectively. Promptly provide any requested information or explanations to resolve any potential issues and ensure a favourable outcome.

How Madison Marcus Can Help You

At Madison Marcus, our dedicated team of banking and finance lawyers is here to support you throughout the FIRB approval process. We offer expert guidance on financial law compliance, ensuring that your investment activities adhere to the requirements of Australian regulations. 

Our lawyers have extensive experience in assisting clients with FIRB approval applications, providing comprehensive assistance with documentation, timelines and compliance obligations. By leveraging our expertise, you can navigate the complex landscape of financial regulations with confidence and then increase the chances of a successful outcome for your investment.

Our banking and finance lawyers at Madison Marcus are committed to delivering tailored solutions to meet your specific needs. We understand the importance of financial law compliance and the nuances of the FIRB approval process. With our guidance and support, you can streamline your application, address any challenges that may arise and ensure compliance with relevant regulations. 

Trust Madison Marcus to be your trusted partner in achieving your investment goals in Australia’s banking and finance sector. For all enquiries, contact us here.


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