Proposed Changes to Australia’s Foreign Investment Law



On 29 March 2020, the Foreign Investment Review Board (FIRB) thresholds were temporarily reduced to $0.

On 18 September 2020, the Treasury introduced a draft of proposed changes, including:

  • The previous monetary screening thresholds are proposed to be reinstated
  • Passive investment funds with multiple foreign government investors may not be considered as foreign government investors
  • The Treasurer is to be given a new power to ‘call-in’ any investment for screening on national security grounds that would not ordinarily require notification 


From March 2020, proposed foreign investments into Australia subject to the Foreign Acquisitions and Takeovers Act 1975 have required approval from the Treasurer, regardless of value or the nature of the foreign investor.

On 18 September 2020, the Treasury released the exposure drafts of the Foreign Investment Reform (Protecting Australia’s National Security) Regulations 2020 and the Foreign Acquisitions and Takeovers Fees Imposition Regulations 2020 (Exposure Draft Regulations) for public consultation.

Reinstating the monetary thresholds

The exposure draft regulations importantly propose reinstating the monetary thresholds which have been reduced to nil following the temporary COVID-19 measures.

A final decision as to whether the monetary thresholds will be reinstated will depend on the ongoing impact of COVID-19 on the economy and whether ongoing safeguards are required to protect Australia’s national interest.

Investment Funds with State-Owned Investors

The current definition of ‘foreign government investor’ (FGI) under the Foreign Acquisitions and Takeovers Regulation 2015 (Cth) is broad and extends to some private fund management companies (eg, private equity firms) that manage multiple foreign governments’ funds (including funds from state-owned companies). Consequently, these private investment funds are subject to a zero-dollar screening threshold for most investments.

Under the exposure draft regulations, these fund management companies will no longer be considered a FGI if they operate a passive investment fund where multiple FGI investors in the fund are not able to influence any individual investment decisions and no FGI investor has access to any non-public and non-financial sensitive information about investments under the investment fund.

Funds may still be passive if investors have some influence over the broad investment strategy or serve on advisory committees, but are not involved in individual decisions about particular investments. It is also required that FGI investors do not have any other interests in the fund, for instance, holding a position that could allow the investor to control which other entities may join the fund.

This change has great implications for foreign private equity funds’ investment in Australia, especially for those private equity funds where some of the fund investors are state-owned companies from multiple countries. It can be expected that foreign private equity funds will be more active in Australian M&A market.

Other Proposed Changes

The exposure draft regulations, should they become law, will make a number of other amendments to the Foreign Acquisitions and Takeovers Regulation 2015 (Cth), including but not limited to:

  • The Treasurer is to be given a new power to ‘call-in’ any investment for screening on national security grounds that would not ordinarily require notification;
  • The mandatory notification is required in respect of ‘notifiable national security actions’ which are to take a direct investment in a sensitive ‘national security business’, starting such a business and an investment in ‘national security land’;
  • The current moneylending exemption will not apply to acquisitions or enforcements of security interests in ‘national security land’ or ‘national security businesses’ by foreign moneylenders under a moneylending agreement.
  • The definition of ‘Australian media business’ will be updated to capture the operation of electronic services (including via internet) which provide content similar to a newspaper or radio or television broadcast.

Contact Us

MistryFallahi Lawyers & Business Advisors has extensive experience to assist foreign investors and Australian investees to determine whether FIRB approval is required before a proposed transaction is implemented as well as to apply for FIRB approvals.


Joyce Wang

Joyce Wang is a dual-qualified lawyer admitted in Australia and China. Joyce advises Australian and international clients on mergers and acquisitions, foreign investment, capital raisings and other regulatory and corporate governance matters. Joyce leads the China Desk at MistryFallahi.

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