FIRB announces new streamlined exemption certificates

On 10 July 2020, the Foreign Investment Review Board (FIRB) updated Guidance Note 53 (Temporary measures in response to the coronavirus) (Guidance) to introduce three new types of streamlined exemption certificates (ECs).  This aims to streamline the foreign investment application process following the Australian government’s decision in March 2020 to temporarily reduce all monetary screening thresholds to $0, which resulted in a huge increase in the number of foreign persons having to obtain exemption certificates to invest in Australian business or land.  For an overview of the temporary COVID-19 changes introduced see our earlier article Restrictions on foreign investment in business and property tightened.

New Streamlined ECs

The three new Streamlined ECS are set out here:

The new Streamlined ECs are available to foreign investors for as long as the temporary measures taken in response to COVID-19 are still in place.

Why should you apply?

The new Streamlined ECs will assist many foreign investors and business owners who have invested in Australia previously, and who want to either expand their Australian portfolios, or are needing to inject further capital into existing operations by giving them the ability to obtain pre-approval on a much faster basis than a standard EC or applying for FIRB approval.  This is invaluable to those local operations given business demands can frequently be time sensitive and the regime offers a reasonable amount of flexibility in view of the temporary changes to the FIRB regime.

Foreign investors holding existing standard exemption certificates will also welcome the change which will enable them to effectively ’refresh’ the limits under those exemption certificates without necessarily going through a full application process.

Conclusion

While the impact of COVID cannot be understated, the temporary changes that were introduced in March 2020 to counter certain behaviours and protect national interests imposed a significant burden and created bottlenecks for foreign investment in Australia.  The introduction of the Streamlined ECs offers Australian businesses who are foreign-owned or who are seeking further capital from foreign investors some relief and greater flexibility in how they manage their affairs.

Authors: Michael Cossetto, Eric Kwan and Lucinda Borg