Australia's foreign investment policy (the Policy) is designed to encourage investment consistent with the interests of the Australian community. The Government recognises the substantial contribution foreign investment has made, and will continue to make, to the development of Australia's industries and resources.
The Policy, together with the Foreign Acquisitions and Takeovers Act 1975 (FATA), provides a framework for Government review of foreign investment proposals.
The FATA and the Policy apply to Australian companies and business assets across all industry sectors, including the petroleum sector.
Foreign investment proposals are normally approved subject to them not being considered contrary to the national interest.
Foreign companies do not need to seek approval under either FATA or the Policy before lodging an application for the award of petroleum exploration acreage.
Foreign Investment Review Board (FIRB) approval is not required for the grant of exploration acreage and the subsequent development of any petroleum discovery. However, foreign companies should notify FIRB in relation to the establishment of a new business after an exploration permit is granted where the investment exceeds A$10 million. For all farm-in/farm-out activity, equity changes, or acquisition of existing interests in exploration permits, production licences and retention leases and/or production facilities, notification may be required subject to the thresholds mentioned below.
Foreign Acquisitions and Takeovers Act 1975
The FATA applies to all companies in which a foreign company or natural person and their associates hold a substantial interest, being 15% or more, or where two or more foreign entities and their associates hold 40% or more.
Proposals by foreign controlled companies to invest in Australia which require prior approval under the FATA include:
- proposals to acquire a controlling interest (via shares or assets) in existing Australian businesses, where assets exceed A$100 million or the proposal values the business at over A$100 million (A$105 million for US investors in 2008);
- proposals to acquire a substantial interest in an offshore company that holds Australian assets or conducts a business in Australia, where the Australian assets or businesses of the target company are valued at less than 50% of its global assets, and these Australian assets or businesses exceed A$200 million (the general A$100 million threshold applies if the Australian assets or businesses are valued at/above 50% of global assets) (A$210 million for US investors in 2008); and
- proposals to acquire land, or acquire a lease or licence over land for a period of greater than five years. This does not include proposals involving:
- land acquired directly from the Commonwealth, a State or Territory government;
- developed commercial real estate valued at less than A$5 million for heritage listed - property or A$50 million for non‑heritage listed property; or
- land that is being used wholly and exclusively for a primary production business.
Australia's Foreign Investment Policy
Some proposals by foreign controlled companies to invest in Australia should be notified under the Policy even though the FATA does not apply, including:
- proposals to establish a new business (for example investing in a petroleum development project) involving a total investment of A$10 million or more; and
- proposals for any direct investment in Australia by foreign governments or their agencies (including companies owned or controlled by governments), irrespective of size.
The Australia United States Free Trade Agreement
The Australia-United States Free Trade Agreement, which came into effect on 1 January 2005, introduced new annually indexed monetary exemption thresholds applicable only to defined 'US investors', namely A$913 million for the calendar year 2008 (excluding acquisitions involving a US government or in prescribed sensitive sectors, in which case the general thresholds outlined above will apply). Proposals by US investors to establish new businesses do not require notification.
Further information on the Australian Government's foreign investment policy may be obtained from the Foreign Investment Review Board:
The Executive Member
Foreign Investment Review Board
c/- The Treasury
PARKES ACT 2600
Telephone: +61 2 6263 3795
Facsimile: +61 2 6263 2940