Foreign Acquisitions and Takeovers Act 1975
ORDER UNDER SUBSECTION 22(1)
WHEREAS —
Archer Daniels Midland Company and its direct and indirect wholly-owned subsidiaries, including Amber Australia Holdings II Pty Limited have given notice under section 26 of the Foreign Acquisitions and Takeovers Act 1975 (‘the Act’) that they intend to enter into an agreement by virtue of which they are proposing to increase their substantial shareholding in GrainCorp Limited ABN 60 057 186 035.
NOW THEREFORE, I, the HON J. B. HOCKEY MP, Treasurer of the Commonwealth of Australia, PROHIBIT, pursuant to subsection 22(1) of the Act, for the purpose of enabling due consideration as to whether an order should be made under subsection 18(2) of the Act, the proposed acquisition for a period of seventy days after the date this interim order comes into operation, or the date on which notice is given that the Commonwealth Government does not object to the proposed acquisition, whichever occurs first.
Dated this 4th day of October 2013
The HON J. B. HOCKEY MP
Treasurer
Commonwealth of Australia
Overview
The Foreign Acquisitions and Takeovers Act 1975 was enacted to safeguard Australia’s national security and economic interests by regulating significant acquisitions of Australian businesses by foreign entities. This Act was designed to fill the gap in existing legislation by providing a mechanism for the Australian Government to review and, if necessary, intervene in acquisitions or takeovers that could potentially harm national interests. The Foreign Acquisitions and Takeovers Act 1975 is administered by the Australian Parliament, with the primary policy objective of ensuring that acquisitions by foreign entities are assessed against criteria that protect Australia's economic and strategic interests. In this context, the Treasurer of the Commonwealth, J. B. Hockey MP, has exercised the authority under subsection 22(1) of the Act to temporarily prohibit a proposed acquisition to allow for thorough evaluation and due consideration of its implications for national security and economic well-being.
Scope and Application
The Foreign Acquisitions and Takeovers Act 1975 applies to acquisitions and takeovers by foreign persons, encompassing any individual, partnership, corporation, or other entity that is not an Australian entity, with a focus on substantial shareholdings or control of Australian businesses. The Act operates at the Commonwealth level, thus extending its reach across the entire nation, impacting various industries and types of transactions that involve foreign entities seeking to acquire Australian businesses. The Act includes provisions for exemptions and exclusions, such as transactions below certain thresholds, but in this case, Archer Daniels Midland Company and its subsidiaries' proposed increase in shareholding in GrainCorp Limited has triggered the application of the Act. The Treasurer, under the authority granted by the Act, has the power to issue interim prohibition orders, such as the one made here, to allow time for the Commonwealth Government to assess the implications of the proposed acquisition. This interim order effectively restricts the acquisition for a period of seventy days or until the Commonwealth Government communicates its decision, whichever comes first. Subordinate instruments may further define specific application details or procedural aspects of the Act.
Key Provisions
The Foreign Acquisitions and Takeovers Act 1975 (the Act) provides mechanisms for the Australian Government to review and potentially regulate substantial foreign acquisitions or takeovers of Australian entities. Section 22(1) of the Act allows the Treasurer to prohibit an acquisition for up to seventy days to facilitate a thorough review by the Foreign Investment Review Board (FIRB). In the provided order, section 22(1) is invoked to temporarily halt the proposed increase in shareholding by Archer Daniels Midland Company and its subsidiaries in GrainCorp Limited, allowing the government sufficient time to assess the implications of this acquisition.
Under the Act, Archer Daniels Midland Company and its subsidiaries are required to notify the Treasurer of their intention to increase their shareholding in GrainCorp Limited, as mandated by section 26. This notification triggers the review process, during which the Treasurer may issue an interim prohibition order under section 22(1). The obligations imposed on the parties in this instance include providing all necessary documentation and information to the FIRB to enable a comprehensive evaluation of the proposed acquisition. The companies must also comply with any further directives issued by the Treasurer during the review period.
Failure to comply with the provisions of the Act or the terms of the interim prohibition order may result in significant legal consequences. Under the Act, breaches can lead to civil penalties, including fines up to 10,000 penalty units (currently AUD 1.89 million) for corporations and 2,000 penalty units (currently AUD 378,000) for individuals, as stipulated in section 137. Additionally, if the prohibited action proceeds without authorisation, it may result in criminal penalties. The maximum penalty for contravening a prohibition order is a fine of 100,000 penalty units (currently AUD 18.9 million) for corporations and 20,000 penalty units (currently AUD 3.78 million) for individuals, as outlined in section 139. These stringent penalties underscore the importance of adhering to the Act's requirements and the significant ramifications of non-compliance.