Order of intention to acquire 100 per cent interest in GrainCorp Limited - Archer Daniels Midland Company

Overview

The Foreign Acquisitions and Takeovers Act 1975 was enacted to safeguard Australia's national security and economic interests by regulating foreign acquisitions and takeovers of Australian businesses. This Act was introduced to address the gap in legislative measures to protect the nation from potential threats posed by foreign control over critical sectors and assets. The enacting body was the Commonwealth Parliament, with the policy objective of ensuring that significant foreign acquisitions and takeovers are assessed for their potential impact on national security and the broader economy. In this particular instance, the Treasurer, the Hon J. B. Hockey MP, exercised his authority under the Act to prohibit the proposed acquisition by Archer Daniels Midland Company and its subsidiaries of GrainCorp Limited, a decision based on the finding that the acquisition would be contrary to the national interest. This prohibition took effect upon its publication in the Commonwealth Gazette on 29 November 2013.

Scope and Application

The Foreign Acquisitions and Takeovers Act 1975 governs transactions where foreign persons propose to acquire Australian entities, with the overarching goal of protecting national security and economic interests. The Act applies to both foreign persons and Australian entities, and it encompasses a broad range of transactions that might result in foreign control over significant Australian assets. Geographically, the Act operates on a national level, extending its jurisdiction across the Commonwealth of Australia, including states and territories. The Act does not apply to all acquisitions indiscriminately; certain exclusions and thresholds are established to determine when the Treasurer must be notified or when an acquisition is subject to scrutiny. The Act also allows for the extension or restriction of its application through subordinate instruments, enabling the Treasurer to respond to specific circumstances that may not have been fully anticipated in the primary legislation. This flexibility ensures that the Act can adapt to new forms of foreign investment and takeover activity that might pose a risk to national interests.

Key Provisions

The Foreign Acquisitions and Takeovers Act 1975 (the Act) contains several key sections that govern foreign acquisitions and takeovers in Australia. Section 18(2) is particularly pertinent in this context as it allows the Treasurer to prohibit a proposed acquisition if it is contrary to the national interest. In this instance, section 18(2) has been invoked by the Hon J. B. HOCKEY MP, Treasurer, to prohibit the proposed acquisition of GrainCorp Limited by Archer Daniels Midland Company and its subsidiaries, including Amber Australia Holdings II Pty Limited. Under section 18 of the Act, a corporation like GrainCorp Limited, which is an Australian entity, can be subject to scrutiny if a foreign person or entity proposes to acquire a significant interest that results in a change of control. Section 18(2) specifically empowers the Treasurer to intervene if the proposed acquisition is deemed contrary to the national interest, which is precisely what has been done here. The notification under section 26 of the Act was issued on 9 September 2013, and the subsequent order prohibiting the acquisition was made on 29 November 2013. The Act imposes various obligations on parties involved in such acquisitions. For instance, section 26 requires that a notice be furnished to the Treasurer of any proposed acquisition that might trigger the provisions of the Act. This notice must include details of the proposed acquisition and be submitted before the acquisition is completed. Additionally, the Treasurer must be given a reasonable opportunity to review the acquisition and determine whether it is contrary to the national interest, as per section 18(2). These provisions ensure that the Treasurer has sufficient information to make an informed decision. Failure to comply with the Act's requirements can lead to significant consequences. While the specific offences and penalties are not detailed in the provided text, generally, the Act allows for both civil and criminal penalties for non-compliance. Civil penalties may include fines, and in severe cases, criminal penalties such as imprisonment may be imposed. The maximum penalties can vary depending on the nature and severity of the breach, but they are intended to enforce compliance and protect Australia's national interests. The prohibition order itself is a direct application of these powers, reflecting the seriousness with which the government treats acquisitions that may threaten national security or economic stability.