Foreign Investment Update
As you may be aware, proposed investments by foreign persons in agricultural land will generally require approval by the Foreign Investment Review Board (FIRB) where the cumulative value of a foreign person’s agricultural land holdings within Australia exceeds $15 million. There is an exception to this threshold which applies to investors from Australia’s free trade agreement partners (i.e. Chile, New Zealand, Singapore, Thailand and the United States).
On 1st February 2018, the Federal Treasurer announced amendments to the regulations applying to foreign investors acquiring interests in Australian agricultural land. As a part of their application to FIRB for approval, foreign investors must now be able to demonstrate that the sales process was open and transparent. The Federal Treasurer has indicated the purpose of this is to ensure that Australians have had sufficient opportunity to participate in the sales process of agricultural land.
To effect an open and transparent sales process, FIRB has indicated that approval will not be granted for any acquisition of agricultural land that was not offered for sale publically and “marketed widely” for a minimum of 30 days. “Marketed widely” means that the agricultural property must have been listed or advertised on widely used real estate listing websites or in other regional and national media.
What this means for vendors of agricultural land
Whilst it is the responsibility of a foreign investor to satisfy the FIRB requirements, this new requirement could now impact on the vendors of agricultural land who may potentially looking to sell their land to a foreign purchaser as they will have to ensure that they and their agents comply with an open and transparent sales process.
In order for a vendor to satisfy this requirement they must ensure the sale process is “open and transparent” as defined in the FIRB guidance note which outlines that:
* the property must be marketed widely (as defined above) for at least 30 days; and
* there is equal opportunity for bids or offers to be made for the property while still available for sale.
Are there exemptions to this requirement?
FIRB has also provided that there will be the following exceptions to the “open and transparent” requirement where the foreign investor:
* is acquiring a property that was marketed/advertised in an open and transparent sale process in the last six months however did not sell or the sale did
not go through;
* has a substantial Australian ownership share being 50% or more, as this constitutes an opportunity for Australian bidders; or
* is required to make the acquisition to comply with state or commonwealth law.
By Andrew Carter (Senior Associate) and Georgina Michael (Solicitor)
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