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New limits proposed for foreign takeovers of primary producers.

10/02/2011

Under the Foreign Acquisitions and Takeovers Act 1975, the Australian Government can block foreigners acquiring control of Australian primary production businesses or rural real estate. Proposed acquisitions of equity, or derivatives that may be converted to equity, or other positions in Australian primary production businesses must be notified  to the Foreign Investment Review Board unless:

  • the total assets of the business are less than $50 million, or $953 million for a US investor; and
  • more than 50 per cent of the total assets is attributable to ‘Australian Rural Land’.

A “foreign person” includes a natural person not ordinarily resident in Australia as well as a corporation or trust in which:

  • one natural person not ordinarily resident in Australia or a foreign corporation holds 15% of the voting equity.
  • several natural persons not ordinarily resident in Australia or a foreign corporation together hold 40% of the voting equity.

Rural land is land used ‘wholly and exclusively for carrying on a business of primary production’.  Primary production is production resulting directly from the cultivation of land, the maintenance of animals or poultry for the purpose of selling them, their produce or progeny, fishing, forestry, horticulture and some dairy produce .  Hobby farms, land used for agisting livestock and unproductive land zoned for rural purposes are not treated as rural land.

Proposals  are normally approved unless they are contrary to the national interest (whatever that means).

An independent and the Greens have introduced the Foreign Acquisitions Amendment (Agricultural Land) Bill 2010 into Parliament which allows the Treasurer to prohibit foreign persons from acquiring an interest in Australian agricultural land greater than five hectares. Read more …

 

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