Order under Subsection 68(1) - Wen Deng

Overview

The Foreign Acquisitions and Takeovers Act 1975 was enacted to provide a framework for the regulation of foreign acquisitions of Australian businesses and significant interests in Australian land. The Act was introduced to address the need for the Commonwealth to protect national security and maintain economic stability by scrutinising and, where necessary, preventing foreign acquisitions that could potentially be detrimental to Australia’s interests. Enacted by the Parliament of Australia, the underlying policy objective of the Act is to safeguard Australia’s strategic assets and maintain control over significant foreign investments that might pose a risk to the nation’s security or economic well-being. Under the authority granted by this Act, the Treasurer can prohibit acquisitions that are considered contrary to the national interest, as demonstrated in the recent order issued by Kathryn Dolan, a delegate of the Treasurer, to prohibit Wen Deng from acquiring an interest in Australian land situated in Greenslopes, Queensland.

Scope and Application

The Foreign Acquisitions and Takeovers Act 1975 governs the acquisition of Australian land by foreign persons, aiming to protect Australia's national security and maintain its economic integrity. The Act applies to foreign persons and their proposed acquisitions of Australian land, with the purpose of assessing whether such acquisitions might be detrimental to Australia's interests. The geographic scope of the Act is national, covering all states and territories of Australia. The Act allows for certain exclusions and exemptions, such as acquisitions under specified thresholds, which do not require prior approval. Subordinate instruments can further extend or restrict the application of the Act, providing detailed regulations and guidelines to enforce its provisions. This legislation is enforced by the Treasurer or their delegate, who may issue orders to prohibit acquisitions deemed to be contrary to national interests. In this instance, the delegate, Kathryn Dolan, has issued an order prohibiting Wen Deng's proposed acquisition of an Australian land, effective for 90 days from the date of publication in the Gazette.

Key Provisions

The Foreign Acquisitions and Takeovers Act 1975 (the Act) includes several key sections that govern the acquisition of Australian assets by foreign entities and persons. Section 67 allows the Treasurer to prohibit acquisitions that are contrary to the national security or contrary to the public interest, while Section 68(1) empowers the Treasurer to delegate this authority. Section 68(2) specifies that an order can be made by a delegate of the Treasurer to prohibit an acquisition for up to 90 days, pending further consideration. Section 68(3) provides that such orders are subject to judicial review. The Act imposes specific obligations and requirements on both the foreign person and the Australian entity involved in the proposed acquisition. The foreign person must notify the Treasurer of their intention to acquire an interest in Australian land, as Wen Deng did on 30 November 2015. This notification is a mandatory requirement under Section 5 of the Act. The Treasurer, or their delegate, then has the authority to assess whether the proposed acquisition meets the criteria for prohibition under Section 67. If the Treasurer decides to prohibit the acquisition, they can make an order under Section 68(2), which temporarily halts the acquisition for up to 90 days. The Act also outlines potential offences and penalties for non-compliance or breach of its provisions. While the specific penalties are not detailed in this particular order, Section 116 of the Act generally provides that any person who contravenes an order made under Section 67 or 68 may be liable for penalties. These penalties can include fines and imprisonment, with the exact amount determined by the severity of the offence and the discretion of the court. The Act’s overarching purpose is to protect Australia’s national security and public interest by regulating foreign acquisitions and takeovers.