Australia releases new draft regulations for foreign ownership register

Currently, foreign persons are required to register their interests in Australian water entitlements and agricultural land.

Australia introduced additional obligations to register interests in the 2021 reforms to its foreign investment laws. The 2021 reforms will require registration of foreign interests in other types of land, exploration tenements, registrable water interests and interests resulting from ‘significant actions’ and ‘notifiable actions’ taken in respect of Australian businesses and entities, and certain ‘national security’ actions. The new draft regulations (11-page / 290KB PDF) add further registration requirements for media investments, foreign government investments and receipt of exemption certificates.

The 2021 reform changes and these additional interests must be registered once the Register is in effect, which is expected to be on 1 July 2023.

Who will have access to the foreign ownership register?

As with the current water and land registers, the new register will not be publicly available.   

What are the additional registration requirements? 

The draft regulations introduce the following additional registration requirements:

Australian media investments

Registration is required when a foreign person acquires a direct interest in an entity or business that wholly or partly carries on an Australian media business.

Foreign government investments

Registration will be required if a foreign government investor acquires a direct interest in an Australian entity or Australian business; starts an Australian business; acquires an interest in a tenement; or acquires an interest of at least 10% in securities in a mining, production, or exploration entity.

Exemption certificates

A foreign person will be required to provide a register notice where they have received an exemption certificate related to an action that would otherwise be a significant action, notifiable action, notifiable national security action or reviewable national security action.

When must interests be registered?

A register notice must be provided within 30 days of the applicable registerable event day. This will generally be the day on which the foreign person takes the action that triggers the registration requirement. However, if a foreign government investor starts a business, the relevant registrable event day will be the date on which the business receives notice of its Australian Business Number (ABN) or certificate with its Australian Company Number (ACN).

There are ongoing obligations to register certain changes in registered interests. For example, there is an obligation to register if an interest changes to another interest (for example, if agricultural land becomes residential land) or if an interest in an Australian entity changes by 5% or more.

The interest will remain registered until the foreign person no longer holds the interest or when the entity or business related to the interest no longer exists.

How should asset interest holders register?

The Australian Taxation Office (ATO) is planning to launch an online services portal. The online services portal is due to be available from 26 June and will allow foreign investors to manage their registration obligations. Further information on the planned online services is available on the ATO website.

What fees are payable?

No fees are payable for giving a registration notice.

What are the penalties for non-compliance?

If a foreign person does not comply with a registration obligation, a civil penalty of up to 250 penalty units may be imposed. The current penalty unit amount is AU$275, which makes the maximum penalty amount AU$68,750.

Relationship with other notification requirements

The draft regulations enable a foreign person to satisfy existing requirements to notify the Treasurer under ‘no objection’ or exemption certificate conditions that they have taken certain actions by submitting a single notice to the Registrar. This is intended to reduce the regulatory burden by removing duplication of notification requirements.

New exemptions for certain interests in Australian land

The notification requirements are intended to apply only to the most important and sensitive interests. The draft regulations exclude certain interests in Australian land because they do not meet this threshold. Registration obligations will not apply to an interest in Australian land which is not:

• a freehold interest in Australian land; or
• an interest as a lessee in a lease giving rights to occupy Australian land if the term of the lease is reasonably likely to exceed 5 years at the time the interest is acquired; or
• an interest in a mining or production tenement.

The Treasury is currently considering submissions received as part of its consultation process on the draft regulations.

Co-written by Kaitlin Pert of Pinsent Masons.