Gilbert + tobin - Gilbert and Tobin

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+ + any acquisition of a “substantial interest” or “aggregate substantial interest” (defined above) in an offshore corporation, where the assets of that corporation that are comprised of Australian land, Australian mineral rights or shares in an Australian corporation constitute less than 50% of the assets of that corporation, but those Australian assets are valued at more than $248 million (indexed annually). Notification of the first two types of proposals referred to above is mandatory (failure to notify is a breach of the law). Notification of all other proposals referred to above is not compulsory, but to do so and obtain a statement of no objection from the Treasurer removes the risk that the Treasurer may make adverse orders in respect of the proposed investment. Higher thresholds apply to US investors. Avoid the pitfalls: Although the FATA generally requires transactions involving corporations, the treasurer expects overseas investors to seek approval for acquisitions of other kinds of entities that fall within the above thresholds. In addition, offshore transactions can be caught by Australia’s foreign investment rules. Overseas investors should seek advice any time they are investing in a company that has a business presence in Australia. (c) Foreign government investors Any “direct investment in Australia” by a “foreign government investor” generally requires approval even if it does not fall within any of the categories referred to in section 2.1. A “foreign government investor” is: + + any body politic of a foreign country; + + companies or other entities in which foreign governments, their agencies or related entities from a single country have a 15% or more interest (direct or indirect); + + companies or other entities in which foreign governments, their agencies or related entities from multiple countries have (collectively) a 40% or more interest (direct or indirect); or + + companies or other entities that are otherwise controlled by foreign governments, their agencies or related entities, or their associates, or could be controlled by them including as part of a controlling group. A “direct investment” includes: + + any acquisition of 10% or more of an existing business; and + + any acquisition of less than 10%, if the acquiring entity can use that investment to influence or control the enterprise (e.g. where preferential, special or veto voting rights are concerned, there is the ability to appoint any directors, or there are contractual agreements that could result in influence or control). + + Any acquisition of an interest in land and the establishment of any new business by a foreign government investor also require approval. Any acquisition of an interest in land and the establishment of any new business by a foreign government investor also require approval. 2.2 National interest test Each proposal is examined to determine whether it is contrary to the national interest. The term “national interest” is not defined, but the national interest criteria generally includes: + + the impact of the proposal on national security; + + the impact of the proposal on competition; + + the impact of the proposal on other Australian government policies including tax and the environment; + + the impact of the proposal on the economy and the community; and + + where the investor is a foreign government investor, the character of the investor (in particular, whether it operates on a transparent commercial basis, is subject to adequate and transparent regulation and supervision and adopts good corporate governance practices). 2.3 Timing For any proposal described in section 2.1(b), regardless of whether the investor is privately owned or government related, a statutory 30-day examination period and additional 10-day notification period applies once the proposal is formally lodged with the Foreign Investment Review Board (FIRB). The examination period can be extended formally by up to 90 days or informally by FIRB requesting that a proposal be withdrawn and re-lodged, which has the effect of resetting the examination period. If the sole reason that the investor is required to obtain foreign investment approval is that it is a foreign government related investor, no time limits apply to the Treasurer, although in practice the Treasurer aims to adhere to the usual statutory time period described above. PAGE 6
3. Establishing a business presence in Australia 3.1 Branch offices versus subsidiaries The main ways in which a foreign company may conduct business in Australia are by: + + establishing a branch office by registering the foreign company in Australia; or + + establishing a subsidiary. Some differences between branch offices and subsidiaries are summarised in the following table: Issue Branch office Subsidiary Corporate law issues + + not a separate legal entity (liabilities are those of the foreign company) + + separate legal entity where liabilities remain with subsidiary unless parent / foreign company gives guarantees or subsidiary trades while insolvent + + foreign company must be registered with the Australian Securities and Investments Commission (ASIC) + + assigned Australian Registered Body Number + + annual lodgement of financial reports with ASIC, including financial accounts of foreign company unless relieved by ASIC (note: ASIC usually accepts reports prepared in accordance with laws of the foreign company’s origin) Foreign investment review + + approval may be required before assets/land is acquired Taxation + + taxed as a separate entity in Australia + + taxed on all income sourced from Australia at 30% company tax rate + + may be subject to Goods and Services Tax (GST) obligations and obliged to obtain Australian Business Number (ABN) + + company is registered with ASIC (third parties in Australia are more likely to deal with an Australian company) + + assigned Australian Company Number + + annual lodgement of financial reports with ASIC unless relieved by ASIC (note: small proprietary companies may be relieved but control by a foreign company may exclude such relief) + + approval may be required before assets/land are acquired + + resident for tax purposes + + taxed on all income regardless of source at 30% company tax rate + + may be subject to GST obligations and obliged to obtain ABN PAGE 7
Page 1 and 2: 2013 Gilbert + Tobin Doing business
Page 3 and 4: about gilbert + Tobin Gilbert + Tob
Page 5 and 6: 1. Overview of Australia’s govern
Page 7: 2. Foreign investment review Austra
Page 11 and 12: 4. Acquisitions As part of its entr
Page 13 and 14: Issue Takeover bid Scheme of arrang
Page 15 and 16: 5.2 Protection of minority sharehol
Page 17 and 18: 6. Raising capital Under the Corpor
Page 19 and 20: In some cases, FFSPs are able to re
Page 21 and 22: operation throughout Australia on 1
Page 23 and 24: the DTA to revise down the domestic
Page 25 and 26: 10. Competition law The Competition
Page 27 and 28: (e) Third line forcing (sections 47
Page 29 and 30: 11. Fair dealing and consumer prote
Page 31 and 32: Services Due care and skill: guaran
Page 33 and 34: 12. Employment law Australia’s na
Page 35 and 36: 13. Intellectual property In Austra
Page 37 and 38: 14. environmental law Each Australi
Page 39 and 40: 16. native title and indigenous her
Page 41 and 42: 18. Privacy, spam and the Do Not Ca
Page 43 and 44: The DNCR Act prohibits “telemarke
Page 45 and 46: The legal profession in Australia i
Page 47 and 48: Glossary Regulatory authorities, tr

Gilbert + tobin - Gilbert and Tobin

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