The new Register of Foreign Ownership of Australian Assets

What is changing?

A new Register of Foreign Ownership of Australian Assets came into effect on 1 July 2023, pursuant to Part 7A of theForeign Acquisitions and Takeovers Act 1975(Cth) (FATA) and related regulations.

新注册将包含现有residential land, agricultural land and water interest registers and will cover a broader range of interests held by foreign investors.

In general, foreign investors will need to notify the new Register within 30 days after they acquire or dispose of an interest or there is a change of at least 5% in the interest in an entity.

This new regime will only apply to new actions taken after 1 July 2023, meaning interests acquired prior to this date do not need to be notified (unless you become a foreign person while holding those interests). Additionally, FIRB's application fees have been updated for the new financial year (and is indexed annually), however there will be no fees payable in respect of notifications for the new Register.

This is anadditional regimeto the existing regime requiring foreign persons to seek foreign investment approval for certain acquisitions and actions.

What types of interests must be notified?

If a foreign investor acquires any of the following types of interests after 1 July 2023, they must notify under the new Register:

1. an interest in Australian land excluding equitable interests (unless the equitable interest is in a lease or licence exceeding 5 years in agricultural land);
2. a legal interest in a share or unit of an Australian land corporation/trust or in the trustee of an Australian land trust;
3. an interest in an exploration tenement;
4. registrable water interests;
5. an action that would constitute a notifiable action under the FATA relating to Australian businesses or entities (eg acquiring shares or assets);
6. an action that would constitute a significant action under the FATA relating to Australian businesses or entities (eg acquiring shares or assets) where a No Objection Notification (NoN)was obtained or where the Treasurer exercised their call-in power; and
7. an action that would constitute a national security action under the FATA relating to Australian businesses or entities.

Notice is required within 30 days of acquiring the interest. Generally, interests acquired prior to 1 July 2023 (and any disposals or changes to those interests) do not need to be notified.

However, if you become a foreign person and you hold any of the above interests listed at (1) to (7) (except in the case of (6), where the interest would not constitute a notifiable action), notice must also be given for each interest that you hold (regardless of when you acquired it).

What subsequent changes must be notified?

After an interest is registered there are ongoing notification obligations – including notification when:

• the "registered circumstance" ceases – eg if you sell the land or securities or the lease ends;
• the nature of the interest changes – eg commercial land becomes residential land;
• in relation to a water interest, the volume of water or share of water resource changes;
• the percentage interest in an entity differs by 5% from the percentage notified (including because of involuntary changes, for example dilution of a securityholding);
• if you cease to be a foreign person; or
• if you cease to be a foreign government investor.

Is the register publicly available?

No.

What must the register notice include?

The type of information that a foreign person needs to provide in the notice includes:

• the identity of the relevant individual, company, agent or foreign person;
• the reason for providing the register notice;
• the date the registrable interest was acquired, or the registered circumstance came or ceased to exist;
• the registrable event day (for example, being the day the person became a foreign person or the day on which the acquisition completed);
• the consideration paid for the registrable interest; and
• the percentage of the registrable interest held or owned.

对于一个registrable interest that isan interest in Australian land, it must also include:

• the land title details;
• the title holding type;
• the nature or type of the land (including whether it is commercial, residential or agricultural land);
• the current and intended use of the land;
• the location of the land;
• the size of the land; and
• information about any relevant lease.

对于一个registrable interest that isan interest in an Australian business or entity, or in the assets of an Australian business or entity, it must also include:

• the business or entity name;
• the business or entity identifier (such as the Australian Business Number or Australian Company Number);
• the relevant ANZSIC code;
• the main location of the business or entity;
• the business structure and the industry sector of the business or entity; and
• the circumstances in which a significant agreement was entered into or terminated, or a constituent document was altered.

For aregistrable water interest, it must also include:

• water entitlement details;
• water licence details;
• the current and intended use of the water; and
• information about any relevant lease.

对于一个registrable interest that is anexploration tenementor amining and production tenement:

• tenement licence details;
• the relevant ANZSIC code;
• the relevant land size;
• the location of the tenement; and
• information about any relevant lease.

What happens if you fail to register a notice?

A civil penalty may apply if a person fails to give a register notice when required. Further, the information provided must be accurate, factual and complete - an offence may be committed if false or misleading information or documents are provided.

How should we prepare?

Review and update your internal procedures

As a practical step, foreign investors should confirm that they have internal procedures in place under which corporate activity is monitored and an assessment made in each case as to whether an action needs to be notified to the new Register.

Any existing procedures should be updated to capture the broader range of circumstances covered by the new Register. Foreign investors which have multiple business divisions may benefit from a centralised system of tracking and maintaining an internal record of corporate activity, investments, and compliance with the reporting requirements.

For changes to an interest, the obligation to notify arises from when the holder of the interest is aware, or ought reasonably to have become aware, of such a change. This provides some comfort to foreign investors who might have passive changes in their assets holdings, as the notice period does not commence immediately as the change arises. It will be necessary however to have procedures in place to reasonably monitor the occurrence of such changes.

Additionally, foreign persons are required to make records relating to register notices and keep those records for 5 years. Failure to do so may constitute an offence. Accordingly, it is necessary to internal procedures provide for appropriate keeping and retention of records.

Review your No Objection Notifications and Exemption Certificates

Foreign investors should be aware that they will still need to report to FIRB on actions taken pursuant to a NoN or Exemption Certificate (EC) in compliance with the relevant conditions of the NoN or EC. We recommend checking that internal procedures include all reporting requirements under NoNs and ECs (whichever is applicable) and the FATA that are likely to arise for the foreign investor in the context of its business.

Does the new register cover actions that are exempt?

The new regime will not apply to some actions that are wholly exempt from the foreign investment regime, such as assets held as security under a moneylending agreement.

What are additional considerations for foreign government investors?

Foreign government investors must also give a register notice if they start an Australian business, acquire a direct interest in any Australian entity or business or acquire a legal or equitable interest in a tenement or an interest of at least 10% in securities in a mining, production or exploration entity.

外国政府投资者不合格all of the exemptions under the FATA available to foreign investors. This broadens both the actions requiring approval under the FATA and the obligation to give a register notice. For example, the FATA only applies to an acquisition of an exploration tenement where the foreign investor is a foreign government investor. In addition, the monetary threshold test does not apply to foreign government investors, meaning a wider number of actions constitute a significant action and a notifiable action for foreign government investors and which will require a register notice to be given.

What are the implications for M&A and restructuring?

Most M&A transactions by foreign persons relating to acquisitions and disposals of interests in companies, assets and land will enliven reporting obligations under the new regime for both the buyer and the seller.

Similarly, restructures which involve the transfer of interests in shares, assets and/or land within a corporate group with foreign ownership will generally require notification to the new Register.

How do we notify?

Foreign investors must provide register notices using the 'Online services for foreign investors' Australian Taxation Office portal. The previous notification of action webform will no longer be available.

You will need to take the following steps:

Step 1 (Set up a myGovID account): Establish a "myGovID", which is a digital identity application used to verify the identity of users who engage with online government services. You will need to download the myGovID app and complete basic details such as your full name, email address and date of birth.

Step 2 (Verify your identity): If you have an ABN, establish a myGovID with at least a 'Standard' or 'Strong' identity strength, and provide at least two of Australian identity documents. Acceptable Australian ID documents include a driver’s licence or learner’s permit, passport (not more than three years expired), birth certificate, visa (using your foreign passport), citizenship certificate, ImmiCard and Medicare card.

If you do not have an ABN, you will only need a "Basic" identity strength and so are not required to provide identity documents.

Step 3 (Register as a foreign investor): Register as a foreign investor by logging into the online services portal and completing the online form. You should be prepared to provide to the ATO:

• whether you have previously interacted with the ATO's online services;
• if the foreign investor is an entity or a business, the entity's registration details;
• the date your entity or business became a foreign investor; and
• contact details, including a primary business contact.

You may appoint an agent to lodge register notices on your behalf.

Authors:Kylie Lane, Partner; Natsuko Ogawa,Partner;Lindy Randall,Partner;Pauline Tan,Partner;Olivia Sun, Lawyer.