COMMONWEALTH OF AUSTRALIA
Foreign Acquisitions and Takeovers Act 1975
ORDER UNDER SUBSECTION 22(1)
WHEREAS —
(A) FIRSTFOLIO LIMITED (ACN 002 612 991) is a corporation that carries on an Australian business for the purposes of section 18 of the Foreign Acquisitions and Takeovers Act 1975 (‘the Act’); and
(B) RESIMAC LIMITED (ACN 002 997 935) proposes to acquire shares in FIRSTFOLIO LIMITED (ACN 002 612 991), where the proposed acquisition would have the result that the corporation would be controlled by foreign persons as described in the notice furnished on 18 November 2013 under section 26 of the Act.
NOW THEREFORE, I, Karen Dunn, Acting Senior Adviser, Foreign Investment and Trade Policy Division of the Treasury and authorised to make this order for and on behalf of the Treasurer, PROHIBIT, pursuant to subsection 22(1) of the Act, the proposed acquisition for a period not exceeding ninety 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, for the purpose of enabling consideration to be given as to whether an order should be made under subsection 18(2) of the Act in respect of the proposed acquisition.
Dated this 18th day of December 2013
Karen Dunn
Acting Senior Adviser
Overview
The Foreign Acquisitions and Takeovers Act 1975 was enacted to address national security concerns and the economic impact of foreign acquisitions and takeovers in Australia. This legislation was introduced to ensure that significant foreign investments in Australian businesses are assessed to determine whether they pose a risk to Australia's national security or economic interests. The Act empowers the Australian Government to review and, if necessary, block or impose conditions on acquisitions by foreign persons or entities. The Act was passed by the Australian Parliament with the policy objective of safeguarding Australia’s critical assets and infrastructure from foreign control that could threaten national security or economic stability. In this particular case, the interim order made by Karen Dunn, Acting Senior Adviser under the Act, prohibits a proposed acquisition by a foreign entity in a company that conducts an Australian business, pending further review by the Commonwealth Government.
Scope and Application
The Foreign Acquisitions and Takeovers Act 1975 applies to acquisitions of Australian businesses by foreign persons, including corporations, partnerships, associations, and individual persons that are not Australian citizens or permanent residents. This Act governs the control of Australian businesses by foreign entities and oversees transactions involving foreign acquisitions of shares or assets of Australian companies. The Act has a national reach, operating across the Commonwealth of Australia and extending to all states and territories. The Act includes certain exclusions and exemptions, such as acquisitions under a threshold amount determined by the Treasurer, which are not subject to the Act’s requirements. Additionally, the Act's application can be extended or restricted through subordinate instruments, such as regulations and notices, which may specify particular industries or types of transactions that are subject to scrutiny or approval. In this instance, the Act is applied to a proposed acquisition where the acquisition would result in control by foreign persons, necessitating an interim order to prohibit the acquisition pending further review by the Commonwealth Government.
Key Provisions
The Foreign Acquisitions and Takeovers Act 1975 (the Act) contains several key provisions relevant to the proposed acquisition of shares in Firstfolio Limited by Resimac Limited. Section 22(1) of the Act empowers the Treasurer to make an interim order prohibiting an acquisition for a period of up to ninety days, which is precisely what has been done in this instance (subsection 22(1)). This interim order is designed to allow time for the Commonwealth Government to consider whether a more permanent prohibition should be imposed under section 18(2) of the Act.
The Act imposes specific obligations and requirements on entities involved in foreign acquisitions. Section 18 of the Act requires that any corporation carrying on an Australian business must notify the Treasurer if it becomes, or is likely to become, controlled by foreign persons. In this case, Firstfolio Limited is required to notify the Treasurer under this section (section 18). Additionally, section 26 of the Act mandates that parties furnish a notice when proposing an acquisition that would result in foreign control. Resimac Limited is required to comply with this notice provision (section 26).
There are potential consequences for failing to comply with the requirements and prohibitions of the Act. Section 32 of the Act specifies that contravening an order made under section 22 is an offence. This means that if the proposed acquisition proceeds without the necessary approval or during the interim prohibition period, it could result in legal penalties. Additionally, section 33 of the Act stipulates that any person who contravenes a provision of the Act is liable to a penalty. The maximum penalty for individuals can be up to 500 penalty units, and for corporations, it can be up to 2,500 penalty units (section 33). These penalties underscore the seriousness with which the Act treats non-compliance and unauthorised acquisitions that could lead to foreign control of Australian businesses.