The Register of Foreign Ownership of Australian Assets

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 Register of Foreign Ownership of Water Entitlements and the Register of Foreign Ownership of Agricultural Land is merged into the new Register of Foreign Ownership of Australian Assets (Register); and
• foreign persons are obliged to notify the Registrar of their interest in Australian water, land, entities or businesses by giving a “register notice” pursuant to Part 7A, Division 3, Subdivision A of the fata.

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:

1. Australian land;
2. water entitlements and contractual water rights; and
3. business acquisitions that require foreign investment approval.

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:

• a notifiable national security action;
• Australian land or exploration tenements;
• registrable water interests;
• entities and businesses;
• the regulations outlining further circumstances for notification; and
• cessation of registered circumstances and ceasing to be a foreign person,

(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)

• a foreign person acquires or ceases to hold an interest (excluding an equitable interest) in Australian land or exploration tenement (mining, oil or gas), irrespective of whether Foreign Investment Review Board approval was required for the acquisition of the interest;
• a foreign person acquires or ceases to hold and interest in Australian water entitlement;
• a foreign person takes a notifiable action, notifiable national security action or a significant action relating to an entity or business that has been notified or called in for review by the Treasurer;
• a foreign person ceases to be a foreign person;
• a person becomes a foreign person whilst holding an interest of the above type or resulting from an action of the above type; and
• any change of 5% or more in a previously disclosed interest in an Australian entity or business.

Notification of events relating to Australian land or exploration tenements

A foreign person is required to give the Registrar notice where:

• the foreign person acquires an interest in Australian land (section 130ZA, FATA);
• the foreign person acquires an exploration tenement (section 130ZB, FATA); or
• the person became a foreign person while holding interests in Australian land or an exploration tenement (section 130ZC, FATA).

Notification of events relating to registrable water interests

A foreign person is required to give the Registrar notice where:

• the foreign person acquires a registrable water interest (section 130ZE, fata); or
• the person became a foreign person while holding a registrable water interest (section 130ZF, FATA).

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:

• The foreign person takes an action that is a significant action under sections 40 or 41 of the FATA:
  • that was taken when covered by a no objection notification or a notice imposing conditions;
  • that was notified to the Treasurer before being taken (this includes where no decision was made by the Treasurer during the relevant decision period);
  • that was reviewed by the Treasurer under the national security call-in powers, and for which the Treasurer has given a notice under those powers; or
  • for which a no objection notification or a notice imposing conditions was given after the action was taken

(sections 130ZH and 130ZI, FATA).

• A foreign person takes an action that is a notifiable action relating to an entity or business; (section 130ZJ, FATA);
• A foreign person takes a notifiable national security action about an entity or business; (section 130ZK, FATA);
• A foreign person takes reviewable national security action in relation to an entity or business:
  • that was taken when covered by a no objection notification or a notice imposing conditions;
  • that was notified to the Treasurer before being taken;
  • that was reviewed by the Treasurer under the national security call-in powers, and for which the Treasurer has given a notice under those powers; or
  • for which a no objection notification or a notice imposing conditions was given after the action was taken

(sections 130ZL and 130ZM, FATA);

• A person becomes a foreign person while holding an interest in an entity or business, where the action taken to acquire that interest would have constituted a notifiable action or a notifiable national security action if taken immediately after becoming a foreign person (sections 130ZO and 130ZP, 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:

• the foreign person is aware, or ought to reasonably have been aware, that the registered circumstance has ceased (section 130ZQ, FATA); or
• a foreign person ceases to be a foreign person (section 130ZR, FATA).

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).