Australia still open for business, but greater certainty needed – FIRB and other issues

On 16 October 2013, Treasurer Joe Hockey stated in a speech to the American Australian Association that “Australia is open for business, open for investment and is going for growth1. Just over a month since making that bold statement, the Treasurer has created uncertainty over Australia’s foreign investment policy by blocking Archer Daniels Midland’s (ADM) proposed AUD$3.4 billion takeover of GrainCorp Limited (GrainCorp). This uncertainty is compounded by proposed changes to Australia’s foreign investment laws which have been announced and which have not yet been legislated.

While the Treasurer noted in the announcement of this decision that of the 131 significant foreign investment applications received for his approval, the bid by ADM was the only one which had not been approved, the decision has been criticised as being a purely political decision. The takeover bid, the political pressures that led up to the controversial decision and the reasons for blocking the bid which were referred to by the Treasurer, have given Australian businesses and international investors much food for thought.
ADM commenced its bid for GrainCorp over a year ago, acquiring a 10 per cent interest in GrainCorp in late October 2012. Between October 2012 to December 2012, ADM made 2 takeover offers which were rejected by the GrainCorp board. However, on 2 May 2013, ADM confirmed a new takeover bid for GrainCorp at $13.20 per share. Around the same time, ADM lodged its proposal with the Foreign Investment Review Board (FIRB). The offer was backed by the GrainCorp board and was approved by the Australian Competition and Consumer Commission on 27 June 2013.Over the following months, ADM withdrew and re-submitted its application to FIRB a number of times against a backdrop of political criticism of the proposed takeover and strong opposition from the National Party (the junior partner in the current Australian conservative Government which has a strong farmer constituency), some sections of which expressed concern about control of the Australian grain industry being in foreign hands. Key players in the agribusiness industry were also vocal about the takeover, with grain growers arguing that the takeover would limit their access to grain silos.On 4 October 2013 the Treasurer signed an interim order extending the time period for a decision on the bid to 17 December 2013. In the meantime, the industry stakeholders continued to voice their concerns about the takeover, including that the takeover would limit access for grain growers to grain infrastructure. In response, on 26 November 2013, ADM announced a package of additional commitments which were aimed at addressing these concerns. These commitments included an additional investment of AUD$200 million to strengthen Australian agricultural infrastructure, “price caps on grain handling charges at silos and ports2” and a commitment to an “open access” regime for port services. However, the sweetened offer failed to placate the stakeholders or came too late, and the Treasurer announced on 29 November 2013 that he had blocked the bid on the basis that it would be contrary to the national interest.

Australia’s foreign investment regulations

Foreign investment in Australia is primarily regulated under the Foreign Acquisitions and Takeovers Act 1975 (Cth) (FATA) and the Foreign Investment Policy (Policy). FIRB is the arm of the Australian Treasury which is responsible for reviewing foreign investment notifications. Decisions on whether to oppose foreign investment proposals are made by the Treasurer on advice from FIRB. If a foreign investment proposal falls within the scope of the FATA, the Treasurer (through FIRB) must be notified of the investment proposal. The Treasurer has a fixed time (30 days for consideration plus 10 days for notification) in which to consider the investment proposal. Unless the Treasurer decides to reject the proposal or to impose conditions and notice is given to the foreign investor to this effect, the proposed acquisition may proceed without any further notification or approval from the Treasurer. If the Treasurer requires more time to consider an investment proposal, the Treasurer can issue an interim order which prohibits the investment for a period of up to 90 days. Foreign investors will usually seek to withdraw and resubmit their investment proposal rather than have the Treasurer issue an interim order. If a proposal does not fall within the scope of the FATA but is within the scope of the Policy (for example, where the investment is made by an entity in which a foreign government has a substantial interest), the proposal must be approved by the Treasurer and there are no formal time limits which apply to consideration of the transaction.

Broadly, acquisitions of assets must be notified to the Treasurer (through FIRB) if the value of the target is valued at or above a specified monetary threshold (currently AUD$1.078 billion for New Zealand investors and US investors (where the target is not in a sensitive sector) and AUD$248 million for other foreign investors (as well as New Zealand and US investors where the target is in a sensitive sector)). Separate value thresholds apply for investment in Australian urban land, and investments of 5 per cent or more in the media sector must be notified regardless of value.

The overarching theme of the foreign investment approval process is whether the proposed investment is contrary to the national interest. There is no definition of what constitutes the “national interest”, however the Policy sets out certain factors typically considered when assessing whether a proposal is contrary to national interest. These factors are:

  1. national security – the extent to which the investment will affect Australia’s ability to protect its strategic and security interests;
  2. competition;
  3. other Government policies;
  4. the impact of the investment on the general economy and the community; and
  5. the investor. In particular, whether the investor “operates on a transparent commercial basis and is subject to adequate and transparent regulation and supervision”.

Given the political sensitivity of foreign investment into Australian agriculture, the Policy also sets out certain factors which will be considered when assessing whether a proposed investment in Australia’s agricultural sector will be contrary to the national interest. In assessing foreign investment proposals for an agricultural investment, the Treasurer will consider the effect of the proposal on:

  1. the quality and availability of Australia’s agricultural resources, including water;
  2. land access and use;
  3. agricultural production and productivity;
  4. Australia’s capacity to remain a reliable supplier of agricultural production, both to the Australian community and our trading partners;
  5. biodiversity; and
  6. employment and prosperity in Australia’s local and regional communities.

The current Australian Government was elected during September 2013. In the lead up to its election, it announced a number of changes to Australia’s foreign investment laws, including lowering the monetary thresholds from AUD$248 million to AUD$15 million for certain acquisitions in the agricultural sector. Further, there have been calls for the introduction for a spatial threshold for agricultural land, similar to the five hectare threshold that applies in New Zealand, as well as the development of a national foreign ownership register for agricultural land (similar to the system which currently applies in the United States).

The decision

The Treasurer cited various reasons for his decision to block ADM’s takeover bid, including that the Australian grain industry is still in a transition phase following deregulation and the move away from the single wheat exports desk (which was abolished in 2008). The Treasurer noted the concerns of industry participants that the acquisition by ADM could reduce competition and hinder growers’ access to GrainCorp’s grain storage, logistics and distribution network, which handles approximately 85 per cent of eastern Australia’s bulk grain exports.

The Treasurer referred to the criticism of ADM’s proposed takeover from stakeholders and the broader community, and his resultant decision that allowing the takeover to proceed “could risk undermining public support for the foreign investment regime and ongoing foreign investment more generally3. The Treasurer further stated that such an outcome would not be in the national interest.

Still open for business but greater certainty needed

The decision to block ADM’s takeover bid has led to some commentators stating that the decision sends a message to foreign investors that Australia is not open for business. Interestingly, the US State Department has expressed its disappointment with the Treasurer’s decision to reject ADM’s proposed acquisition of GrainCorp, noting that the United States “is the largest foreign direct investor in Australia”.

In our view, foreign investors should not be concerned that Australia is closed for business. The decision needs to be interpreted in the context of its unique facts, in particular, the significant role played by GrainCorp in eastern Australia’s bulk grain exports. It also needs to be remembered that the Australian Treasurer only recently waved through the bid by Saputo, a Canadian dairy processor, to acquire a local dairy processor. This decision was made in the face of significant pressure from local counter bidders and within the initial 40 day review window. Accordingly, while there is greater sensitivity around agribusiness assets, foreign investors are not blocked from acquiring them.

The decision does however highlight the need for greater certainty in Australia’s foreign investment approval process, in particular, the matters that are likely to lead to the Treasurer forming the view that a proposed acquisition will not be in Australia’s national interest. The Government should also move quickly to legislate the changes to the foreign investment approval process relating to acquisitions in the agricultural sector which were announced prior to its election in September 2013.

Minimising deal risk – FIRB approval no longer an afterthought

The decision also highlights how important it is for foreign investors to manage the foreign investment approval process to minimise deal risk. Foreign investment approval should not be considered to be a “rubber stamp” approval.

Norton Rose Fulbright has extensive experience in navigating the foreign investment regulatory landscape and in formulating and implementing strategic processes to obtain foreign investment approval.

Our approach to the foreign investment approval process recognises the need for:

  • Early engagement: Engaging with FIRB as early as possible in the acquisition process. Foreign investors should not wait until due diligence and acquisition terms are well advanced before turning their attention to foreign investment approvals.
  • Engagement with non-government stakeholders: Engaging with industry stakeholders as soon as possible so that industry and community concerns can be addressed earlier in the process. We are able to assist with this process given our networks and industry knowledge in the key sectors in which foreign investors are active.
  • Fallback options: Formulating multiple fallback options at an early stage in the acquisition process in the event foreign investment approvals are unlikely to be forthcoming. This could include offering to spin-off those parts of the target’s Australian business that may result in the approvals being denied or teaming up with an Australian partner to acquire the target or parts of the target’s business.
  • Collaborative approach: Ensuring that financial and legal advisers work closely with media and other consultants to address industry and community concerns. This includes formulating and offering undertakings to mitigate industry and community concerns, even if they are not legally required.

Norton Rose Fulbright has successfully adopted this approach to obtain foreign investment approvals for a number of foreign investors, including in relation to the high-profile acquisition of Cubbie Station by Shandong RuYi Scientific & Technology Group Co. Ltd and Lempriere Pty Ltd.

Source :The above article was produced by Norton Rose Fulbright Sydney. Authors :Con BoulougourisShane BilardiAnthony LatimerCrystal Png


BoxRED Corporate are a specialist Australian and New Zealand Agribusiness private equity manager and boutique corporate services and advisory firm with a proven track record in successful Australian and New Zealand Agribusiness project development, operation, and investments and deep linkages to Asian and Pacific markets

We are a specialist Australian and New Zealand Agribusiness private equity manager whose team has a proven track record in the three dimensions critical to achieving superior returns:

Successful Australian and New Zealand Agribusiness sourcing, development, operation and commercialisation

Deep linkages to Asian and Pacific markets – in particular, with commodity purchasers and end users, Australian and New Zealand Agribusiness companies, investors and governments

Private equity investment management

We are majority owned by The Merkin Group (The Rothsey Family Office) in Australia with shareholdings expected to be held by Business Succession Partners Hong Kong , other stakeholders, and we are in discussions with potential joint venture partners which provides to opportunity to accumulate in specie assets, structures and additional core competencies.

BoxRED Corporate has offices in Noosa and Hong Kong with representatives in Melbourne, Sydney, Brisbane Adelaide, Bahamas, Cayman Island and networks across the globe.

Most pertinently we have an array of strategic relationships with legal, financial, technical, operational, political, research, financial services, capital and debt markets, asset and property managers, industry advisors and managers and other professionals


Our team has a proven track record in:

  • Successful development, over 30 years, of Australian and New Zealand Agribusiness projects and companies across a wide range of commodities and countries, advancing early stage projects through the development stages into high quality producing agribusinesses (including deal sourcing , capital raising, pooling of capital, aggregation and divestments);
  • Achievement of superior investment returns in the Australian and New Zealand Agribusiness sector; and
  • Building successful partnerships, joint ventures and linkages in Asia and Pacific, emerging markets and new frontiers for Australian and New Zealand Agribusiness, with investors, Australian and New Zealand Agribusiness companies, commodity end users and government in those markets, who are the key drivers of global commodity markets and prices, and key buyers of agribusiness assets.



The Merkin Group (BoxRED Corporate’s parent) is a corporate member of the Australian Chamber of Commerce Hong Kong and Macau  since 2011.

BoxRED is a reciprocal member of all Australian Chambers throughout Asia, including mainland China.

Since  2012 Sean Rothsey has been a Committee Member  of   the Australian Chamber of Commerce Hong Kong and Macau ’s  Finance , Legal and Taxation Committee whose  missions include

▪   to communicate to AustCham members relevant financial, legal and tax issues that will impact Australian-related companies doing business in Hong Kong and China and those that will impact their situation as expatriate Australians living in Hong Kong.

▪    to provide networking opportunities for members employed in the financial services industry and to gain greater exposure for Australian businesses with financial service regulators and government agencies in order to enhance the business and regulatory environment.

▪   to provide AustCham members with a series of events that updates them on financial services, legal and tax issues.

Current projects of the Committee  include lobbying and awareness for a Double Taxation Treaty between Hong Kong and Australia and mutual funds management recognition.

BoxRED  can facilitate introductions to the Chamber , Government , business or professionals in Hong Kong and as a consultant can assist you in an unregulated and unlicensed capacity in a buy sell or other transaction and makes no legal warranties or representations of any kind as to the Buyer, Seller or Transaction. We can also facilitate introductions to licensed entities in a regulated regime where required and can both represent and assist any party in those regimes. Additionally the Finance, Legal and Taxation Committee organizes an annual senior Australians in Finance cocktail party in Hong Kong which ensures excellent networking and market awareness capabilities year round.


Norton Rose Fulbright is a leading global legal practice offering a full business law service to many of the world’s pre-eminent corporations and financialinstitutions. They have more than 3800 lawyers based in over 50 cities across Europe, the United States, Canada, Latin America, Asia, Australia, Africa, the Middle East and Central Asia.They are the authors of the above piece.

With over 600 lawyers in five offices in Brisbane, Canberra, Melbourne, Perth and Sydney, Norton Rose Fulbright  is the largest international legal practice in Australia. Its international reach, and in particular its  significant presence in the Asia-Pacific region, sets Norton Rose  apart from its competitors. Specialising in the legal needs of financial insitutions and services, energy, infrastructure, mining and commodities, technology companies and innovation; and life sciences and health care. Banking, finance, M&A,PERegulatory , Agribusiness and Property cross over.

Norton Rose Fulbright  are  part of the hand-picked legal panel for  many of our clients.

We  have found a point of difference above their core competencies and key strengths in  that they like to know how their clients’ businesses work and understanding what drives their industries is fundamental to them. Their lawyers share industry knowledge and sector expertise acrossborders, enabling them to support their clients anywhere in the world.

They are particularly strong in financial institutions; energy; infrastructure, mining and commodities; transport; technology and innovation; and life sciences and health care. Banking, finance, M&A, Equity Capital Markets, Private Equity, Regulatory , Agribusiness and Property cross over.

We both use and recommend Anthony Latimer for our transactions.

Anthony is a corporate partner based in Sydney.

Anthony advises national and international clients and has a particular focus on clients in Asia Pacific (in particular China and Papua New Guinea). Specifically, Anthony has been advising Government enterprises and non-Government enterprises on various transactions and projects mainly in the energy, mining, agriculture and transport sectors.

Anthony’s role has involved advising clients on corporate and commercial matters, including advising on acquisition and merger laws, corporate law including corporate governance, foreign ownership, shareholder arrangements, shareholding issues including buy-backs and reductions, and corporate restructures. Anthony’s roles have included managing complex transactions for clients in respect of the provision of legal services and other professional services.

We have known Anthony for nearly 30  years. In addition to those listed above he has also specifically  assisted on many transactions that have included pre IPO investment, property, agricultural and beef cattle  in the past, and the knowledge from his family’s own agricultural background is a key strength that underpins his own legal expertise.

Every one that we know  has found Anthony extremely diligent and totally committed to his clients, he is in Hong Kong and China regularly, and draws on the Hong Kong office as and when required

1“Australia: Open for Business”. Speech by Treasurer Joe Hockey to the American Australian Association on 16 October 2013. Available at: Australia: Open for Business

2“ADM Announces Package of Enhanced Commitments for GrainCorp Acquisition”, Press Release by Archer Daniels Midland Company on 26 November 2013. Available at: ADM Press Release
3Foreign Investment Application: Archer Daniels Midland Company’s proposed acquisition of GrainCorp Limited. Media Release by Treasurer Joe Hockey on 29 November 2013. Available at: Treasury media release


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