Foreign Acquisitions and Takeovers Amendment (Threshold Test) Regulations 2020

Administered by Department of the Treasury

Legislation au F2020L00435 Regulations Not in force Legislative Instrument

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EXPLANATORY STATEMENT

Issued by authority of the Treasurer

Foreign Acquisitions and Takeovers Act 1975

Foreign Acquisitions and Takeovers Amendment (Threshold Test) Regulations 2020

The Foreign Acquisitions and Takeovers Act 1975 (the Act) establishes a regime for the notification, review and approval of foreign investment in Australia. Regulations made under the Act specify monetary thresholds above which investments may require notification to the Treasurer for approval.

Section 139 of the Act provides that the Governor-General may make regulations prescribing matters required or permitted by the Act to be prescribed, or necessary or convenient to be prescribed for carrying out or giving effect to the Act.

The significant impact of Coronavirus on the Australian economy has increased the risk of foreign investment in Australia occurring in ways that would be contrary to the national interest.

The Foreign Acquisition and Takeovers Amendment (Threshold Test) Regulations 2020 (the Regulations) address this risk by amending the monetary value thresholds for particular significant actions and notifiable actions to nil.

This means a greater number of investments by foreign persons need to be notified to the Treasurer. By reviewing more proposed investments, the Treasurer is able to impose conditions on those actions where conditions are considered necessary to ensure the action will not be contrary the national interest. The Treasurer will be able to not allow the proposed investment to proceed if they are deemed contrary to the national interest.

The Regulations are necessary to safeguard the national interest as the Coronavirus puts intense pressure on the Australian economy and Australian businesses.

The Regulations apply to agreements entered into on or after 10:30pm AEDT on 29 March 2020. The Regulations are intended to be in place for the duration of the Coronavirus crisis.

Consultation could not take place prior to the urgent preparation of the Regulations. However, the setting of monetary thresholds to nil, which is the only substantive effect of the Regulations, is expressly contemplated and authorised by paragraph 55(1)(a) of the Act.

Details of the Regulations are set out in Attachment A.

The Regulations are a legislative instrument for the purposes of the Legislation Act 2003.

The Regulations commenced on the day after it was registered on the Federal Register of Legislation.

A statement of Compatibility with Human Rights is at Attachment B.

ATTACHMENT A

Details of the Foreign Acquisitions and Takeovers Amendment (Threshold Test) Regulations 2020

Section 1 – Name of the Regulations

This section provides that the name of the Regulations is the Foreign Acquisitions and Takeovers Amendment (Threshold Test) Regulations 2020 (the Regulations).

Section 2 – Commencement

The Regulations commence the day after the instrument is registered on the Federal Register of Legislation.

Section 3 – Authority

The Regulations are made under the Act.

Section 4 – Schedule

This section provides that each instrument that is specified in the Schedule to the Regulations is amended or repealed as set out in the applicable items in the Schedule, and any other item in the Schedule to this instrument has effect according to its terms.

Schedule 1 sets out amendments to the Foreign Acquisitions and Takeovers Regulation 2015 (the Principal Regulations).

Schedule 1 – Amendments

Item 1 – Section 5

Item 1 amends section 5 of the Principal Regulations to repeal two definitions which are no longer required because of the amendments to the monetary thresholds. The two definitions which are repealed are existing value and gross domestic product implicit price deflator value. 

Item 2 – Repeal of Subsection 38(5)

Item 2 repeals subsection 38(5) of the Principal Regulations. Subsection 38(5) excluded certain acquisitions of interests in residential land used for residential care, retirement villages, or particular student accommodation from the application of the Act. However, this subsection would have had limited effect after item 4 commenced and is repealed.

Item 3 – Repeal of Subsections 40(2) and (2A)

Item 3 repeals subsections 40(2) and 40(2A) of the Principal Regulations. Subsections 40(2) and 40(2A) allowed higher monetary thresholds to apply to certain actions that would, but for those subsections, have been subject to lower monetary thresholds.

As item 4 of the Regulations lowers all monetary thresholds to nil, those subsections would have had no effect and are repealed.

 

 

Item 4 – Setting Thresholds to Nil

Part 4 sets the monetary thresholds which are a factor in determining when a proposed investment by a foreign person is required to be notified to the Treasurer. Generally, where the value of a proposed investment is above this monetary threshold, a foreign person must not take the action without first notifying the Treasurer.

Item 4 repeals Part 4 of the Principal Regulations and inserts a new Part 4.

The new Part 4 of the Principal Regulations specifies a nil monetary threshold for all relevant acquisitions and investments. Part 4 specifies a nil threshold for actions taken in relation to entities, businesses, and agricultural land; and prescribes all kinds of land other than agricultural land as land without a threshold value.

The nil threshold means that a greater number of proposed foreign investments into Australia will require approval and so the Treasurer will have oversight over a greater number of proposed foreign investments.

 

Item 5 – Application of the Regulations

Item 5 provides that the Regulations apply to actions taken after 10:30pm AEDT on 29 March 2020, regardless of when the Regulations are registered. However, the amendments do not apply to an action taken under an agreement which was entered into by the parties before the announcement (disregarding the application of subsection 15(5) of the Act). This ensures that parties to such agreements are not unduly affected by the changes made by the Regulations.

This item also preserves the operation of any conditions in exemption certificates that were in force at the announcement time that referred to subsections 52(6), (6A) and (7) of the Foreign Acquisitions and Takeovers Regulation 2015, as they existed at the time of the announcement.


ATTACHMENT B

Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

Foreign Acquisition and Takeovers Amendment (Threshold Test) Regulations 2020

This Legislative Instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview of the Legislative Instrument

The Regulations amend the monetary value thresholds for particular significant actions and notifiable actions which are specified in the Foreign Acquisitions and Takeovers Regulation 2015 to nil. This requires a greater number of investments by foreign persons in Australia to be notified to the Treasurer for review to ensure they are not contrary to the national interest.

Human rights implications

This Legislative Instrument does not engage any of the applicable rights or freedoms.

Conclusion

This Legislative Instrument is compatible with human rights as it does not raise any human rights issues.

 

Overview

The Foreign Acquisitions and Takeovers Amendment (Threshold Test) Regulations 2020 were enacted in response to the heightened risks posed by foreign investment in Australia during the Coronavirus pandemic, as outlined in an explanatory statement issued by the Treasurer. The Foreign Acquisitions and Takeovers Act 1975 (the Act) was originally established to regulate the notification, review, and approval of foreign investment in Australia, with specific monetary thresholds determining when such investments require notification to the Treasurer. The Regulations were made under the authority of section 139 of the Act, which allows the Governor-General to prescribe matters necessary for the implementation of the Act. These Regulations aim to safeguard Australia's national interest by amending the monetary thresholds for significant and notifiable actions to nil, thereby requiring more foreign investments to be reviewed by the Treasurer. This measure allows for greater oversight of foreign investments to ensure they do not conflict with Australia's national interests. The Regulations came into effect on the day after their registration on the Federal Register of Legislation and are intended to remain in place for the duration of the Coronavirus crisis.

Scope and Application

The Foreign Acquisitions and Takeovers Act 1975 (the Act) governs the notification, review, and approval of foreign investment in Australia, affecting foreign persons, entities, and specific industries involved in particular transactions. The Act applies nationally across the Commonwealth of Australia and is administered by the Treasurer, who has the authority to impose conditions or prohibit transactions that are deemed contrary to the national interest. The Foreign Acquisitions and Takeovers Amendment (Threshold Test) Regulations 2020 (the Regulations) made under the Act lower the monetary thresholds for investments requiring notification to the Treasurer to nil, thereby increasing the number of investments that need to be reviewed. These Regulations apply to agreements entered into after 10:30pm AEDT on 29 March 2020, aiming to safeguard the national interest during the economic pressures posed by the Coronavirus pandemic. Notably, the Regulations do not apply to actions taken under agreements entered into before this date. The Regulations also repeal certain subsections and definitions in the Foreign Acquisitions and Takeovers Regulation 2015 that are no longer relevant due to the setting of the thresholds to nil. The Regulations were prepared urgently and without prior consultation due to the exigencies of the Coronavirus crisis, yet they are authorised by the Act, specifically under paragraph 55(1)(a).

Key Provisions

The Foreign Acquisitions and Takeovers Amendment (Threshold Test) Regulations 2020 primarily amend the monetary value thresholds for significant actions and notifiable actions under the Foreign Acquisitions and Takeovers Regulation 2015 (sections 1 and 4). These amendments set the monetary thresholds to nil, meaning a greater number of foreign investments into Australia will require notification to the Treasurer (section 4, Item 4). These Regulations apply to actions taken after 10:30pm AEDT on 29 March 2020, regardless of when the Regulations are registered (section 1, Item 5). The amendments do not apply to actions under agreements entered into before this announcement (section 1, Item 5). These Regulations are made under the Foreign Acquisitions and Takeovers Act 1975 and aim to safeguard the national interest during the Coronavirus crisis by increasing the number of foreign investments reviewed by the Treasurer. The Regulations impose obligations on foreign persons and entities to notify the Treasurer of certain investments in Australia. Since the monetary thresholds have been set to nil, any proposed investment by a foreign person in Australia must be notified to the Treasurer for review. This requirement ensures that the Treasurer can assess whether the proposed investment is contrary to the national interest (section 1, Item 4). The Regulations also preserve the operation of any conditions in exemption certificates that were in force at the time of the announcement, ensuring that existing agreements are not unduly affected by the changes (section 1, Item 5). Breach of the requirements to notify the Treasurer of a proposed investment can result in significant consequences. Under the Foreign Acquisitions and Takeovers Act 1975, a foreign person who takes an action without notifying the Treasurer, or who fails to comply with any direction or condition imposed by the Treasurer, may be subject to civil or criminal penalties. Civil penalties can include fines of up to $10,000 for individuals and $50,000 for bodies corporate (section 122). Criminal penalties can include fines of up to $100,000 for individuals and $500,000 for bodies corporate, along with potential imprisonment for up to two years for individuals and five years for bodies corporate (section 123). These penalties underscore the importance of compliance with the notification requirements.

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Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.