Order under Subsection 68(1) - mingdong Li

Overview

The Foreign Acquisitions and Takeovers Act 1975 was enacted by the Commonwealth Parliament to regulate and control foreign acquisitions of Australian land and interests in Australian businesses. The Act aims to ensure that foreign investment is beneficial to Australia by addressing national security concerns and maintaining economic stability. The Act provides the Treasurer with the authority to prohibit or impose conditions on foreign acquisitions that might be against the national interest. In this particular case, the Act was invoked by a delegate of the Treasurer to prohibit a proposed acquisition of Australian land by Mingdong Li, a foreign person, to prevent any potential adverse effects on Australia's national security or economic interests. The prohibition order is effective for 90 days, during which the Treasurer may further investigate and decide whether to make a final order under the Act.

Scope and Application

The Foreign Acquisitions and Takeovers Act 1975 applies to foreign persons who wish to acquire an interest in Australian land, businesses, or other assets. This Act is a Commonwealth law and therefore has a national reach, regulating transactions across all states and territories of Australia. The Act aims to ensure that foreign acquisitions are in the national interest by allowing the Treasurer to prohibit or impose conditions on certain acquisitions. In this instance, the Act applies to mingdong Li, a foreign person, who has proposed to acquire an interest in Australian land located at 34 Cypress Avenue, Glen Waverley, VIC, 3150. The application of the Act is triggered by the notice given by the foreign person under the Act, and in this case, mingdong Li gave such notice on 30 November 2015. The Act does not apply to all foreign acquisitions indiscriminately; there are specific exclusions and exemptions, such as acquisitions by entities from countries with which Australia has a foreign investment treaty that provides for more liberal investment regimes. The Act can also be extended or restricted through subordinate instruments, which allow for more detailed regulation of foreign investment in specific sectors or circumstances. In this case, the order made by Kathryn Dolan, as a delegate of the Treasurer, prohibits the proposed acquisition by mingdong Li for a period of 90 days from the date of publication in the Gazette.

Key Provisions

The Foreign Acquisitions and Takeovers Act 1975 (the "Act") governs the acquisition of interests in Australian land by foreign persons, and in this particular instance, it pertains to the proposed acquisition of land at 34 Cypress Avenue, Glen Waverley, VIC, 3150 by mingdong Li, a foreign person as defined under the Act (subsection 6(1)). The Act is triggered when a foreign person gives notice of an intended acquisition (section 5). In this case, mingdong Li provided such notice on 30 November 2015 (subsection 68(1)). Under section 67 of the Act, the Treasurer has the authority to make an order prohibiting the acquisition if certain conditions are met. The order must be made within 90 days of the notice being given (section 68(2)). Under this particular order, Kathryn Dolan, as a delegate of the Treasurer, has prohibited mingdong Li from acquiring an interest in the specified Australian land for a period of 90 days starting from the date of publication in the Gazette, which is 24 December 2015 (subsection 68(1)). This prohibition is a temporary measure to allow time for the Treasurer to consider whether to make a final order under section 67 of the Act. The Act imposes certain obligations on the foreign person, such as providing notice of the intended acquisition to the Treasurer (section 6), and on the Treasurer, who must then consider the application and decide whether to prohibit the acquisition (section 67). Breach of the Act's provisions can lead to significant consequences. Under section 135, any person who contravenes an order made under section 67 of the Act is guilty of an offence and may be liable to a penalty of up to 7,500 penalty units, which as of 2023 equates to approximately AUD 1,350,000. Additionally, if the Treasurer is of the opinion that the acquisition, if it proceeds, would be contrary to the national security or contrary to the national interest, a final order can be made under section 67, effectively prohibiting the acquisition (subsection 67(2)). Such an order would have legal force and could be enforced in the courts. The Act provides for civil and criminal penalties to ensure compliance and protect Australian interests.