Order Under Subsection 22(1) - Mr Zhiqiang Lu

Overview

The Foreign Acquisitions and Takeovers Act 1975 was enacted by the Parliament of Australia to regulate foreign investments and takeovers in Australia, addressing concerns about national security, economic stability, and maintaining public interest. The Act provides the Treasurer with the authority to approve, disallow, or prohibit certain acquisitions by foreign persons, ensuring that such transactions do not jeopardise Australia's interests. The policy objective of the Act is to strike a balance between facilitating beneficial foreign investment and protecting Australia's national security and economic welfare. In this instance, the Act was invoked to prohibit a proposed acquisition by a foreign person, Mr. Zhiqiang Lu, of Australian commercial property in Cape Gloucester, Queensland, for a period not exceeding ninety days, enabling further consideration of the implications of the proposed acquisition on Australia's interests.

Scope and Application

The Foreign Acquisitions and Takeovers Act 1975 applies to foreign persons who propose to acquire an interest in Australian entities, including property. In the case of Mr Zhiqiang Lu, who is a foreign person under the Act, the legislation comes into play when he seeks to acquire an interest in Australian developed commercial property, specifically Sinclair 0 Dingo Beach Road, Cape Gloucester, QLD. The Act has a national jurisdictional reach and is administered by the Commonwealth of Australia, with the authority to impose restrictions on acquisitions that may affect national security, infrastructure, or other critical areas. The Act provides a framework for the Treasurer to review and, if necessary, prohibit acquisitions that do not align with national interests. Subordinate instruments may extend or modify the application of the Act, although in this specific instance, the order is directly issued under the authority granted by the Act itself, and no additional subordinate instruments are referenced. This order is a temporary prohibition for up to ninety days, allowing time for further assessment of the proposed acquisition’s implications.

Key Provisions

The primary operative sections of the Foreign Acquisitions and Takeovers Act 1975 (the Act) relevant to this order include sections 21A, 22(1), and 26A. Section 21A defines the circumstances under which the Treasurer can prohibit a foreign acquisition. Section 22(1) allows the Treasurer to make an order prohibiting a proposed acquisition, and Section 26A requires notification of the proposed acquisition to be given to the Treasurer. Under this order, Section 22(1) has been used to prohibit Mr Zhiqiang Lu's acquisition of an interest in the specified Australian property for a period not exceeding ninety days. This prohibition allows time for the Treasurer to assess whether the acquisition meets the national security or other public interest criteria that would warrant a more permanent prohibition under Section 21A(2). The Act imposes certain obligations on both the parties involved in the acquisition and the Treasurer. For Mr Zhiqiang Lu, the primary obligation is to comply with the notification requirements under Section 26A, which he has done by providing notice on 26 October 2015. The Treasurer, on the other hand, must review the acquisition to determine if it raises any national security or public interest concerns. Kathryn Dolan, as the Manager of the Foreign Investment and Trade Policy Division and authorised to act on behalf of the Treasurer, has exercised this review power by issuing the prohibition order under Section 22(1). Breaches of the Act or non-compliance with its requirements can lead to significant consequences. If an acquisition is made in breach of a prohibition order, the party responsible can face substantial penalties. Under the Act, penalties for contravening a prohibition order can include substantial fines and, in severe cases, imprisonment. The specific maximum penalties are not detailed in this order but are outlined in other sections of the Act. Additionally, civil consequences may include the requirement to divest the acquired interest or face legal action to enforce the prohibition. The prohibition order serves as a deterrent and a means to ensure that the Treasurer has sufficient time to make an informed decision regarding the acquisition's implications for Australia.