Order under subsection 69(2) - Disposal of Interest - 11 Dunoon Street, Doncaster, Victoria

Overview

The Foreign Acquisitions and Takeovers Act 1975 (FATA) was enacted to provide a framework for the regulation of foreign acquisitions of Australian entities, with a particular focus on ensuring that such acquisitions do not adversely affect national security or the economy. This Act was introduced by the Australian Parliament to address the problem of foreign control over significant Australian assets and to safeguard national interests against potentially harmful acquisitions by foreign entities. The specific problem or gap identified was the need for a legislative mechanism to review and control significant foreign acquisitions, particularly those that could pose a risk to national security or the economy. The policy objective of the Act is to maintain the integrity of Australia's national security and economic interests by regulating and, where necessary, preventing foreign acquisitions that are deemed contrary to the national interest. The notifiable instrument F2016N00040 exemplifies the application of this Act, where an order was made under the authority granted by the FATA to address a specific instance of a foreign acquisition deemed to be contrary to national interests.

Scope and Application

The Foreign Acquisitions and Takeovers Act 1975 (FATA) applies to the acquisition of interests in Australian land by foreign persons and entities, and governs transactions that may be considered contrary to the national interest. This legislation extends to individuals such as Mr Bicheng Sun, who, as a foreign person, acquired an interest in Australian urban land before 1 December 2015. The Act’s jurisdiction is national, applying across the Commonwealth of Australia, and its scope encompasses significant actions taken by foreign entities that may impact national security or economic interests. Exclusions or exemptions are typically outlined in subordinate instruments, which may provide specific criteria or thresholds for what constitutes a significant action. The Act’s application can be extended or restricted through legislative amendments or regulations, allowing for adjustments based on evolving national interests and foreign investment trends.

Key Provisions

The main operative sections of this notifiable instrument, pursuant to the Foreign Acquisitions and Takeovers Act 1975 (FATA), are sections 69(2) and 21A(4). Section 69(2) empowers the Assistant Commissioner to make an order directing the disposal of an interest in Australian land if certain conditions are met, such as the acquisition being a significant action taken before a specified date and contrary to the national interest. Section 21A(4) allows for an order to be made when a foreign person acquires an interest in Australian urban land, and the acquisition is deemed to be contrary to the national interest. In this case, the Assistant Commissioner has exercised these powers to order Mr Bicheng Sun to dispose of his interest in the land located at 11 Dunoon Street, Doncaster, Victoria, within a specified timeframe. The obligations imposed by this Act on Mr Sun are clear and specific. Firstly, he must dispose of his interest in the Australian land within three months from the date the order commences. The disposal must be to one or more persons who are not his associates, as defined under the Act. This requirement ensures that the interest in the land does not remain within a connected entity or group that could still potentially influence the national interest negatively. Additionally, the disposal must be completed by midnight (Canberra time) on the specified date, leaving no room for ambiguity regarding the timeframe. Failure to comply with the provisions of this order can lead to significant legal consequences. Although the notifiable instrument itself does not specify penalties for non-compliance, the FATA provides a framework for addressing breaches. Generally, the Act allows for civil penalties for non-compliance, which can include fines up to the greater of $525,000 or three times the value of the benefit obtained from the contravention. Additionally, criminal penalties may apply, including fines of up to $31,500 for individuals and higher amounts for corporations, alongside potential imprisonment terms. These stringent measures underscore the importance of adhering to the directives issued under the Act.