Chinese investment opportunities. Australian legal expertise. Your guide to investing in Australia China Practice

Transcription

1 Chinese investment opportunities Australian legal expertise Your guide to investing in Australia China Practice

2 Australia is open for business

3 Australia has been a major beneficiary of the diffusion of global wealth and power with Chinese investment into the lucky country increasing 30 fold during the past seven years. In fact Australia has been the biggest single destination for Chinese outward foreign direct investment (FDI) worldwide during the past six years with investments totaling more than US$36.2 billion. While China s business interests in Australia have been concentrated mainly in the natural resources sector, we believe that the future will be different and now is the time for Chinese investors to take advantage of golden opportunities. McCullough Robertson has been helping our Chinese clients meet the requirements of the Foreign Investment Review Board (FIRB) by engaging openly and strategically with the political dynamics of their investments. During the next 10 years, there is likely to be a large increase in the potential for greater Chinese FDI inflows in areas including agriculture, technology, financial services, infrastructure as well as the traditional resources sector. McCullough Robertson s China practice consists of a dedicated group of lawyers and consultants specialising in advising on these and other investment opportunities. Our team has long been assisting Chinese clients on cross-border transactions and inbound investment strategies. The value difference McCullough Robertson offers is: we have a solid understanding of China s business culture and how this translates to Australia our dedicated China practice is made up of 30 specialist lawyers who are experienced in acting for State Owned Enterprises (SOEs), and we have significant experience in successfully engaging with FIRB. OUR CLIENTS Our Chinese clients include: Ample Source International CCC CG NPC Uranium CHALCO Australia China Coals CITIC Securities CRM Deijin Resources Group Mac mines Orient Raise Shanghong Steel Sinomach SOE Sinsosteel, and Yancoal. We are with you every step of the way, guiding you through the approvals process to realise your Australian investment

4 We are opening up new opportunities Advancing China s interests in Australia is a key strength of the legal services we offer; we help you explore a range of possible investment models and carry the application process through to commercial fruition. We can assist you to seize opportunities in Australia through both mergers and acquisitions and greenfield investments. The complementary nature of the economic relationship between our two countries reflects that Australian resources and energy exports underpin Chinese urbanisation and economic growth. Australia s nonresource exports are also profiting from China s economic growth, in particular from the increased spending power of China s emerging middle class. Increased urbanisation in China is opening up opportunities for Australian exports, not only for raw materials like iron ore and coal but also in the services sector. As China s consuming middle class grows and the urbanisation process continues, more opportunities will open up to invest in Australian companies in areas such as: resources and energy infrastructure agribusiness financial services technology, and and telecommunications. It makes economic sense for China to invest in its future and a significant part of this future will come from Australia. McCullough Robertson has significant experience advising on matters across the full gamut of these sectors. Given these opportunities, it is in Australia s interest to ensure that the trade relationship with China continues to deepen and become more open. However, there are certain legal steps that every foreign investor whether privately owned or related to SOEs must follow before investing in Australia and this is where our expertise plays an integral part of realising your opportunity. These steps include obtaining FIRB approval through the satisfaction of the national interest test. FOREIGN INVESTMENT REVIEW BOARD As a large, resource rich country with relatively high demand for capital, Australia relies heavily on foreign investment to fund significant projects. Inbound investment is regulated by the FIRB which determines whether or not to allow certain foreign acquisitions of interests in Australian companies, assets or businesses. Acquisitions will be prohibited if they are found to be contrary to the Australian national interest. Obtaining FIRB approval for foreign investment is a threshold issue for the structuring and timing of proposed transactions, and is of critical importance for all foreign investors. If you are a foreign investor looking to acquire an interest in an Australian business, company or assets, an understanding of the FIRB notification and approval requirements is vital. Failure to obtain FIRB approval when required could have significant consequences for investors, as well as the company or business in which the investment is made. To guide you through the FIRB application process, our China practice s foreign investment services include: FIRB approval keeping you up-to-date on possible investment opportunities in Australia, and advising on changes to regulation regarding foreign investment. Every state owned enterprise needs FIRB approval FACTS AND FIGURES $135.7 billion worth of investment in 12,731 proposals with none rejected in 2013 China was number one in terms of number of approvals with 6,102 approvals worth $16.2 billion approved in 2013

5 Our experience Our specialist FIRB legal team draws on expertise across mergers and acquisitions, property, finance and taxation to provide practical FIRB advice and assistance. Coupled with this is our industry insight across the most relevant areas of the economy. While Chinese investment has traditionally been concentrated in the resources sector, McCullough Robertson s experience across the depth and breadth of the Australian financial, agricultural and technology landscape means that we are in a prime position to offer expert advice as the key areas for investment diversify. We deal regularly with FIRB in gaining approval for foreign investment and this close contact provides us with a detailed understanding of how the complex rules and regulations are applied in practice. It allows us to consider the relevant issues and work with our clients within the FIRB rules to implement a strategic approach as part of the overall transaction structure and deal timetable. There is never a one size fits all approach and we have demonstrated our ability to work with FIRB to achieve the most efficient outcomes for our clients. We are also experienced in obtaining annual FIRB programs, particularly for large resources projects. This allows projects more flexibility with land acquisitions by not requiring separate approvals for each acquisition. We also provide ongoing strategic advice in relation to approved programs so that it continues to meet the project s requirements. We recommend early engagement with FIRB and clear and open dialogue that addresses any environmental and community issues We are familiar with the key pieces of legislation and policy governing foreign investment: Foreign Acquisitions and Takeovers Act 1975 (Cth) Foreign Acquisitions and Takeovers Regulations 1989 (Cth), and Australia s Foreign Investment Policy. We provide a seamless and integrated approach to the FIRB application to ensure that it has both the best possible chance of success and to make the legal process as simple as possible for you. Analyse target business Engage in early and informal dialogue with FIRB Conduct preliminary and informal dialogue with other Government stakeholders Lodge formal FIRB application

6 National security Competition Impact on the economy and community Consistency with other government policies Character FIRB approval and the National Interest Test For privately owned foreign investors, investment into Australia above a certain threshold amount will require FIRB approval. However these thresholds do not apply for SOEs and foreign government investors which means that SOEs and foreign government investors must obtain FIRB approval regardless of the type or value of the investment. In order to obtain approval, FIRB will subject your application to the national interest test. It is therefore vital that your FIRB application properly address the five national interest criteria (above) that the Treasury will refer to when making an assessment. Our specific focus on the FIRB approval process means that we have extensive experience in dealing with these issues and will be able to ensure your application has the best chance of success. As foreign government investors face more strenuous FIRB notification and approval processes, we are well aware of the need to advise and assist such investors through the process and will be with you every step of the way in order to achieve the most advantageous results within the existing legal and policy framework. Our firm s reputation in the food and agribusiness industry also makes us extremely well placed to be able to advise on the additional considerations required when dealing with investments into Australian agribusiness that have been added by the recent Foreign Investment Policy update. INVESTING IN AGRICULTURE The broad national interest guidelines set out in recent policy changes include the effect of a proposed investment on national security, competition, the economy, the community and other government policies. The Federal Government also considers the nature of an investor and the extent to which the investor operates independently of foreign governments. In addition to these national interest guidelines, the Policy gives further guidance on the areas of consideration for proposals relating to investment in agriculture. In particular, FIRB will also consider: the affect of the proposal on the quality and availability of Australia s agricultural resources (including water) land access and use agricultural production and productivity Australia s capacity to remain a reliable supplier of agricultural production (both to the Australian community and to Australia s trading partners) biodiversity, and employment and prosperity in Australia s local and regional communities. Specialist FIRB advice at an early stage of a proposed acquisition is vital in ensuring that foreign investment red tape does not prevent or delay your transaction.

7 Our China team Dominic McGann Chairman of Partners dmcgann@mccullough.com.au Brett Heading Senior Partner bheading@mccullough.com.au John Kettle Partner jkettle@mccullough.com.au Derek Pocock Partner dpocock@mccullough.com.au Kristen Podagiel Aimee Travis Partner Partner kpodagiel@mccullough.com.au atravis@mccullough.com.au Annie Wang Lawyer awang@mccullough.com.au

8 A bright future The prospects for further growth in the breadth and depth of the commercial relationship between our two countries are excellent. The economic complementarities underpinning rapid growth in trade during the past decade are likely to continue. Importantly, government cooperation on trade issues has grown with the increasing integration of our economies. Chinese investment in Australia is an opportunity; an opportunity to boost jobs and prosperity, build collaborations and strengthen our bilateral relationship. This moment in our history calls for even closer engagement and McCullough Robertson is here to guide you. Our doors are open and so is Australia. Brisbane Level 11, 66 Eagle Street Brisbane QLD 4000 GPO Box 1855, Brisbane QLD 4001 Phone Fax Newcastle Level 4, 251 Wharf Road Newcastle NSW 2300 PO Box 394, Newcastle NSW 2300 Phone Fax Sydney Level 16, 55 Hunter Street Sydney NSW 2000 GPO Box 462, Sydney NSW 2001 Phone Fax enquiries@mccullough.com.au