Order under Subsection 22(1) - Mohammad Saeid Khorram

Overview

The Foreign Acquisitions and Takeovers Act 1975, enacted to safeguard national security and economic interests, was introduced to address the problem of foreign acquisitions and takeovers that could adversely affect Australia's sovereignty and economic stability. The Act provides the Commonwealth with the authority to regulate and, if necessary, prohibit transactions that could pose a risk to national interests. The Foreign Acquisitions and Takeovers Act 1975 is administered by the Parliament of Australia, with the objective of ensuring that any foreign investment is beneficial and does not compromise the nation’s security or economic well-being. This legislative framework allows the government to scrutinize and intervene in significant foreign acquisitions, thereby maintaining control over critical sectors and assets within the country.

Scope and Application

The Foreign Acquisitions and Takeovers Act 1975 applies to foreign persons who propose to acquire an interest in Australian assets, including urban land, as per section 21A of the Act. In this instance, the Act is invoked in response to Mohammad Saeid Khorram, a foreign person, proposing to acquire an interest in urban land located at 315 – 317 Canterbury Road, Canterbury, Victoria. The Act’s jurisdiction extends across the Commonwealth of Australia, and it applies to various types of acquisitions, including those of urban land, which are of particular national interest. The Act does not explicitly outline exclusions or exemptions, but it does allow for the prohibition of acquisitions that may be contrary to national security or public interest. The application and scope of the Act can be further refined or extended through subordinate instruments, enabling the government to address specific concerns or circumstances surrounding foreign acquisitions.

Key Provisions

The key operative sections of this order involve the prohibition of a foreign acquisition under subsection 22(1) of the Foreign Acquisitions and Takeovers Act 1975 (Act). Specifically, section 22(1) provides the authority for the Principal Advisor of the Foreign Investment and Trade Policy Division of the Treasury to prohibit the acquisition if it is deemed necessary for national security or public interest reasons. In this case, the acquisition of interest in Australian urban land by a foreign person, Mohammad Saeid Khorram, has been temporarily prohibited for up to ninety days from the date of the order, which is 6 August 2015. This prohibition is to allow time for further consideration and assessment of the potential implications of the proposed acquisition under the Act. The Act imposes several obligations on parties involved in foreign acquisitions. Firstly, any foreign person intending to acquire an interest in Australian assets must notify the Treasurer under section 26A of the Act. This notification must include details of the proposed acquisition, including the nature and extent of the interest being acquired. The Act also requires the Treasurer to consider the potential impact of the acquisition on national security and the public interest, and to make a decision within a specified timeframe. Additionally, the Act requires the person making the order to provide reasons for the prohibition, which are outlined in the order itself. Failure to comply with the provisions of the Act can result in significant consequences. Under section 22(2), any person who contravenes an order made under subsection 22(1) is liable for a civil penalty. The maximum penalty for an individual is $504,000, or for a body corporate, $2,520,000. Additionally, if the prohibited acquisition proceeds, the transaction itself may be void under section 23 of the Act, and the acquirer may be required to divest the acquired interest. Furthermore, if the contravention is wilful, the offender may face criminal prosecution, resulting in penalties that include fines and imprisonment, as determined by the court. These stringent measures underscore the seriousness with which the Act treats breaches of its provisions.