Schedule 3 of the Foreign Investment Reform (Protecting Australia’s National Security) Act 2020 (Cth) (Amending Act) amended the Foreign Acquisitions and Takeovers Act 1975 (Cth) (FATA) by incorporating Part 7A into the FATA to expand on a broader range of interests and obligations of a foreign person that require registration and notification.
Part 7A provides a new system of registration of foreign ownership of Australian assets where:
The Registrar administers the Register and is appointed by the Treasurer.
The Register shall record information for 5 years, which, like the previous regime, will not be made public. The foreign person who notified the Register is also obliged to record the information for 5 years.
Information on the Register can be used, recorded or disclosed for any purpose that protected information can be used for under Division 3 of Part 7 of the FATA.
Obligation of a Foreign Person
Pursuant to Schedule 3 of the FATA, a foreign person is obliged to notify the Registrar of the legal interests acquired or disposed of in Australian land, water and of notifiable national security actions which occur from 1 January 2021 within a 30 day period from the registrable event occurring.
Failure to notify of such interest may result in civil penalties (section 130ZV, FATA).
Legal Interests to requiring register notice
The reforms affecting the registration of foreign ownership are expanded to include legal interests in:
Notably, notices for equitable interests are not required, other than equitable interests which arise for leases or licenses of agricultural land referred to in paragraph 12(1)(c) of the FATA.
The new reform still requires foreign investors to notify the acquisitions of such interests, as well as notify disposals of such interests.
The Register shall record the expanded Australian interests mentioned above, as well as acquisitions reviewed under the new “national security test”.
Notifying the Register with a Registrable Circumstance
Once a foreign person has fulfilled their obligation to submit a register notice and the interest is notified to the Registrar, this creates a “registered circumstance”.
A “registered circumstance” in respect of an action is created when these interests are notified to the Registrar.
A foreign person must give their register notice to the Registrar in a manner and form prescribed by the data standards and within 30 days of the applicable “registrable event day” (section 130W(2)(b), FATA).
A “registrable event day” is the day on which a foreign person takes the action which triggers the requirement give a register notice. Therefore, this is the day the person acquired an interest or became a foreign person (sections 130ZA(4), 130ZB(4) and 130ZC(2) and (3), FATA).
A foreign person has an ongoing obligation to notify the Registrar of any changes to the interest and registered circumstance and is required to keep a record of this for 5 years after providing notice to the Registrar.
Failure to provide a register notice in the correct form and within the time period is subject to a civil penalty of 250 penalty units (section 130ZV, FATA). As at the date of this article, each penalty unit is $222.
If a foreign person fails to comply with the registration requirement, they will commit a separate contravention for each day during which the contravention occurs up to the time when the requirement is fulfilled.
If a foreign person becomes aware, or ought to have reasonably been aware,5 that an interest has changed, the person is required to give a register notice about the change in interest. In these circumstances, the ‘registrable event day’ is that day when the person became aware, or ought to have become aware, of the change.
Registrable Events requiring notice to the Registrar
Notice is required to be given for events relating to:
(sections 130ZA – ZU, FATA).
Notification to the Registrar by a Foreign Person / Notifiable National Security Actions
A foreign person must give notice to the Registrar where there has been a change to the registered circumstance arising from a previous register notice. (definition of ‘register notice’ in section 4, section 130W, and Division 3 of Part 7A, FATA).
A foreign person must notify the Registrar within 30 days of the following events occurring: (section 130W(2)(b), FATA)
Notification of events relating to Australian land or exploration tenements
A foreign person is required to give the Registrar notice where:
Notification of events relating to registrable water interests
A foreign person is required to give the Registrar notice where:
These water interest events are to be notified annually on a net basis, meaning the registrable event day for these events is the last day of the financial year.
A “registrable water interest” means a registrable water entitlement or contractual water right under a contract or deed whose term, including any extension or renewal, exceeds 5 years (section 4, FATA).
A “registrable water entitlement” means an irrigation right or a right conferred under State or Territory law to hold or take water from a water resource in Australia (section 4, FATA).
A “contractual water right” means a right under a contract or deed to all or part of another person’s registrable water entitlement, water allocation or right (section 4, FATA).
Notification of events relating to entities and businesses
A foreign person is required to give the Registrar notice where:
(sections 130ZH and 130ZI, FATA).
(sections 130ZL and 130ZM, FATA);
Notice of cessation of registered circumstances and ceasing to be a foreign person
Where a registered circumstance relates to a foreign person, the foreign person is required to give notice to the Registrar where:
Where a person ceases to be a foreign person and notice is provided in accordance with section 130ZR, the registered circumstances relating to the person will cease but no notice is required under section 130ZQ (section 130ZR(2), FATA).
Where a foreign person dies, or is a corporation that is wound up, the notice under section 130ZR is instead required to be given by an executor, administrator or liquidator (sections 130ZR(4) and (6), FATA).
Where an agent of a foreign person is able to give a register notice on the foreign person’s behalf (section 130Y, FATA), the obligation remains with the foreign person to ensure the Registrar is notified (section 130Y, FATA).