Foreign Investments in Australia by MHL Legal & Notary The presentations are intended for general information only and shall not be used as legal advice.
Common Issues with Chinese Investors Investigation of the investment project & business partner Communication with the professional advisory team Understanding of the Australian laws & business culture Set-up of investment vehicle & management team Control of legal liabilities & taxation risks 2
Examples of Investment Vehicles Australian proprietary company limited by liability with ACN Foreign company registered with ASIC with ARBN Trusts (i.e. Unit Trust, Discretionary Trust, Hybrid Trust) Partnership (e.g. JV arrangement) 3
Foreign Investment Reviews The screening process is undertaken by the Foreign Investment Review Board (FIRB). According to FIRB Annual Report, $167.4 billion worth of foreign investments were approved in 2013-2014. China has the highest number of approvals, 14,716. China is now the largest foreign investor in Australia. In the majority of industry sectors, smaller proposals are exempt from notification and larger proposals are approved unless assessed as being inconsistent with Australia s national interest. 4
Foreign Persons Definition of a foreign person under the Foreign Acquisitions and Takeovers Act 1975: a natural person not ordinarily resident in Australia; a corporation in which a natural person not ordinarily resident in Australia or a foreign corporation holds an interest of 15% or more; a corporation in which 2 or more foreign persons hold an aggregate interest totaling 40 % or more; or the trustee of a trust estate in which a foreign person holds 15% or more of the ownership interest, or few foreign persons hold 40% or more in aggregate 5
Mandatory Notifications to FIRB all vacant non-residential land all residential real estate (exemptions excepted) all shares or units in Australian urban land corporations or trusts all direct investments by foreign governments and their related entities, and proposals by them to establish new businesses in Australia or acquire interests in land All other acquisitions (including shares or assets of an Australian business) should be notified if the target is valued at or above $252 million. 6
Exemptions - Business Investments Generally, proposed acquisition of an existing business or establishment of new business valued below $252 million is exempted from notifying FIRB. However, a requirement to notify FIRB may still exist, eg, investments by foreign government agencies, investments in media business, mining tenements. 7
Exemptions - Commercial Real Estate acquisition of an interest in developed commercial property valued below the relevant monetary thresholds OR acquisition of an interest in developed commercial property (of any value) with its current and continuing use being for industrial or non- residential commercial purposes (the acquisition must be wholly incidental to buyer s proposed or existing business activities) Acquisition from the Government $5 million Heritage Listed Exempt if investment is under $54 million Not Heritage Listed 8
Exemptions - Residential Real Estate Buyer is an Australian citizen or a New Zealand citizen or holds an Australian permanent resident visa Foreigner acquires residential property as joint tenants with spouse who is an Australian citizen Acquisition of new dwelling(s) from the developer with FIRB pre-approval to sell those dwellings to foreigners Acquisition of certain residential real estate in an Integrated Tourism Resort (ITR) Acquisition of property from the Government (Commonwealth, State or Territory, or local) By operation of law, eg succession, matrimonial property settlement 9
Consultation Commercial negotiations Contracts and Agreements Business Migration Investment Structuring Due Diligence Legal Representation Lynn Hu Lawyer, Notary Public & Registered Migration Agent Tel/WeChat:+61 413 118 778 Email: LHU@mhlawyers.net.au 10