Foreign Investment +/or Doing Business in Australia

Foreign Investment in Australia ➲ An Introduction

The Australian Government welcomes foreign investment that protects national and community interests and contributes to economic growth, innovation, and prosperity.

Certain types of foreign investment proposals are subject to governmental notification or reviewal by the Foreign Investment Review Board (FIRB), who follows guidelines and regulations set out in the Foreign Acquisitions and Takeovers Act 1975 (Cth) (FATA) and the Foreign Investment Policy, to determine whether the proposals are contrary to national interest.

The majority of foreign investment proposals are usually approved, with only 10 out of 108,990 applications being rejected from 2015 to 2018.

Once they are approved, foreign persons are obliged to follow Australia’s laws and regulations.

Who is a "foreign person"?

According to Foreign Acquisitions and Takeovers Act 1975 (Cth) (the FATA), a foreign person includes:

• Any individual who does not ordinarily reside in Australia; or
  ‍
• A corporation or trustee of a trust in which an individual not ordinarily resident in Australia, a foreign corporation or a foreign government, holds a substantial interest (at least 20%); or two or more persons, each of whom is an individual not ordinarily resident in Australia, a foreign corporation or a foreign government, hold an aggregate interest of at least 40%; or
  ‍
• A foreign government.
  

FIRB Approval Regime

Under ordinary (non COVID-19) circumstances, the Australian Government’s foreign investment policy relies on a broad screening regime that evaluates foreign acquisitions exceeding certain monetary thresholds* for both land and non-land investments.

Download PDF of Monetary Thresholds applicable from 1 January 2022

Monetary thresholds are indexed annually on 1 January, except for the $15million (cumulative) agricultural  land threshold for private investors and the $50 million agricultural land threshold for Thailand investors, which are not indexed.

'Notifiable Actions' and 'Significant Actions'

Acquisitions by a “foreign person” can be categorized as:

⚖️ “Significant Actions” or

⚖️ “Notifiable Actions”.

Notifiable Actions always require FIRB approval prior to the transaction.

These include:

• Acquisition of a direct interest in an Australian entity or business that is an agribusiness;
• Acquisition of a substantial interest (at least 20%) in an Australian entity; or
• Acquisition of an interest in Australian land. There does not need to be a change of control.

Significant Actions do not require FIRB approval.

These include an acquisition of interests in securities, assets or Australian land, or otherwise an action in relation to entities and business (e.g. entering into agreements) that:

• Meets the relevant monetary thresholds (adjusted yearly and published on the FIRB website) - during COVID these are all temporarily set to $0;
• Has a connection to Australia; and
• Other than in relation to the acquisition of interest in Australian land, results in a change of control involving a foreign person.

Further Resources:

Foreign Investment +/or Doing Business in Australia ➲ Primer + Quiz^

Intellectual Property [IP] Law ➲ Basic Quiz (Level 1: Australian IP)

Intellectual Property [IP] Law ➲ WIPO Quiz (Level 2: Global IP)

FIRB Guidance Note 35 Significant and Notifiable Actions (Last updated 1 July 2017)

Once you have completed our online Primer + Quizzes, we recommend you contact us with your detailed queries.

Notes:

* Foreign Policy is subject to change at anytime. This link was last accessed on 24 June 2022 (Thresholds noted on the link were applicable from 1 January 2022).

^ Our Foreign Investment +/or Doing Business in Australia Primer + Quiz has not yet been updated to incorporate [post-COVID] FIRB changes.

Credits:

This FAQ was created by James D. Ford GAICD | Principal Solicitor, Blue Ocean Law Group℠.

Important Notice:

This FAQ is intended for general interest + information only.

It is not legal advice, nor should it be relied upon or used as such.

We recommend you always consult a lawyer for legal advice specifically tailored to your needs & circumstances.

Step 1️⃣: Proactively Protect your IP/Brand

We strongly recommend you take preliminary steps to protect your Intellectual Property/Brand or ensure that the IP/Brand of the business in which you are considering investing has a minimum level of protection.

This will assist you in quickly identifying any potentially similar business names which may cause brand confusion and may afford you the opportunity to reconsider your business name so that it is more unique.

This can include quick inexpensive online tasks via the Australian Securities & Investments Commission's (ASIC) website such as:

✅ Checking the availability of a business name; and

✅ Registering for a business name. ; or

✅ Reserving a business name.

‍Reservation period:  A business name is reserved for a period of 2 months from the date of ASIC's approval.

Extension of name reservation: An application for an extension of name reservation for a further period of up to 2 months can be lodged with ASIC prior to the reservation expiry date.

Reasons for the extension must be provided in detail on the form or in an annexure.

An application for an extension will only be granted if ASIC finds your reasons acceptable.

If insufficient reasons are provided the reservation extension will be rejected by ASIC.

Only in very exceptional/extenuating circumstances will ASIC allow more than 2 extensions to be granted.

Step 2️⃣: Secure your .com.au/.net.au + the new .au domain/s

We also recommend that as soon as you qualify (refer below) you take additional steps to protect your Intellectual Property/Brand by securing your Australian web domain (as well as similar web domains).

Am I eligible to register .com.au and .net.au + the new .au domain names?

Important: The law regulating the right to acquire and renew .au domain names has recently been amended.

Until we can review the changes and update this FAQ to reflect the current legal position, we strongly recommend that you contact our legal team for advice.

“In accordance with (recently amended) Australian Domain Name Policy, to be eligible to register .com.au and .net.au domain names, registrants must be classified as one of the following:

✅ An Australian registered company;

✅ Trading under a registered business name in any Australian State or Territory;

✅ An Australian partnership or sole trader;

✅ A foreign company licensed to trade in Australia;

✅ Be an applicant or owner of an Australian Registered Trademark;

✅ An association incorporated in any Australian State or Territory;

✅ An Australian commercial statutory body”

Step 3️⃣: Start to learn about your options and the Australian Regulatory Regime

We strongly recommend that you commence the process of learning + understanding your options regarding doing business in Australia by using our free resources.

For example:

Foreign Investment +/or Doing Business in Australia ➲ Primer + Quiz*

Intellectual Property [IP] Law ➲ Basic Quiz (Level 1: Australian IP)

Intellectual Property [IP] Law ➲ WIPO Quiz (Level 2: Global IP)

Once you have completed our online Primer + Quizzes, we recommend you contact us with your detailed queries.

Note: Australia's Foreign Investment Review Board (FIRB) Regime has been significantly amended as at 1 January 2021

*[our Foreign Investment +/or Doing Business in Australia Primer + Quiz has not yet been updated to incorporate these recent FIRB changes].

Step 4️⃣: Consider making an application for an Australian Registered Trademark

We strongly recommend that you contact us to assist you in engaging the services of a registered trademark attorney.

Step 5️⃣: Seek legal advice regarding what constitutes "carrying on business" in Australia

This is a complex legal question that involves consideration of many factors so it is important to understand that legal advice is always required.

For example:

In 2016 a large foreign e-commerce “services” website was deemed to be “carrying on a business” in Australia in the leading Federal Court of Australia case Australian Competition and Consumer Commission v Valve Corporation (No 3) [2016] FCA 196.

The foreign website had no physical local Australian presence other than a farm of computer servers valued at $1.2 million which the Court considered valuable personal property located in Australia.

The following is an extract of the relevant headnote summary:

CONSUMER LAW

– meaning of “carry on business in Australia” is s 5(1)(g) of the Australian Consumer Law

– whether respondent “carries on business in Australia” when it has 2.2 million Australian subscriber accounts, generates large Australian revenues, has valuable personal property in Australia, has business relationships in Australia, and incurs tens of thousands of dollars of monthly expenses in Australia

The above case involved the sale of "Services".

By their very nature, foreign eCommerce websites selling “Goods” are more likely to be deemed to be carrying on business in Australia as generally the goods are physically delivered to Australia.

Therefore, if your foreign eCommerce website sells "Goods" at a minimum you will need to consider:

• Is there or is there planned to be any local storage/distributors/etc. for the goods?

Step 6️⃣: Goods + Services Tax (GST) Registration for Sales connected with Australia

You may or may not be aware that there is a threshold of $75k AUD for sales to Australian Consumers which may trigger the need to register for our Goods & Services Tax (similar to the VAT in the UK).

This threshold applies whether or not you are carrying on a business in Australia, it may be enough to trigger the obligation if you make sales to Australian Consumers from your foreign eCommerce website.

You also need to be aware of your obligations if you sell imported services, digital products and low-value goods imported into Australia with a customs value of AUD $1,000 AUD or less when the price is first agreed with the consumer (except for tobacco products or alcoholic beverages).

• For consignments of goods imported over AUD $1,000 any GST, customs duty and clearance charges are charged to the importer at the border.

If all of these sales are made through an online marketplace or electronic distribution platform you may not need to register for GST.

For more information about sales made through an electronic distribution platform, see if you are an EDP operator.

For more information and rulings about sales connected to Australia, see:

• GSTR 2017/1 Goods and services tax: making cross-border supplies to Australian customers
• LCR 2018/1 GST on low-value imported goods
• LCR 2018/2 GST on supplies made through electronic distribution platforms
• LCR 2018/3 When is a redeliverer responsible for GST on a supply of low-value imported goods?

Source: ATO website - International tax for business (GST)

Credits:

This FAQ was written by James D. Ford GAICD | Principal Solicitor, Blue Ocean Law Group℠.

Important Notice:

This FAQ is intended for general interest + information only.

It is not legal advice, nor should it be relied upon or used as such.

We recommend you always consult a lawyer for legal advice specifically tailored to your needs & circumstances.

Preliminary Matters

Before taking any decision regarding investing/doing business in Australia, we recommend you take preliminary steps to proactively protect your IP/Brand (if any) and then start reading & learning about the Australian Legal + Regulatory Compliance Environment.

Then we recommend you contact our legal team to discuss your options in detail.

A detailed list of steps can be found in our more detailed FAQ: What Steps do you recommend before doing Business in Australia?

Incorporating a local Australian Company is not a mandatory pre-requisite

The short answer is "No" such as step is not a mandatory prequisite to doing business with Australia.

A foreign company may commence conducting business with Australia from overseas (assuming no physical presence in Australia and a low value sales).

For example, this would typically involve an overseas eCommerce website selling goods or services directly with Australian Consumers.

Important Note: Diligence is required as the business grows in scale and operations as the position is subject to change as soon as you cross thresholds that the local Australian Courts would deem to constitute "carrying on a business" in Australia.

For a more detailed discussion of what may be deemed as "carrying on a business" in Australia please refer to our FAQ: What Steps do you recommend before doing Business in Australia?

Without fully informed legal advice and guidance your new or established foreign business may unknowingly cross the relevant thresholds and become liable for serious breaches of Australian Law.

Alternative Options (non-exhaustive list)

Rather than starting by incorporating a local Australian Company you could alternatively decide to do any of the following:

1️⃣ Acquire or takeover an existing business/property subject to Foreign Investment Review Board (FIRB) approval (if applicable);

2️⃣ Register with ASIC as a foreign company doing business in Australia (once you commence doing business).

You can maintain this status until it is more appropriate to establish a more permanent local presence such as incorporating a subsidiary;

3️⃣ Do nothing further until after your due diligence is completed; and/or

4️⃣ An overseas eCommerce website selling goods or services directly with Australian Consumers.

Credits:

This FAQ was written by James D. Ford GAICD | Principal Solicitor, Blue Ocean Law Group℠.

Important Notice:

This FAQ is intended for general interest + information only.

It is not legal advice, nor should it be relied upon or used as such.

We recommend you always consult a lawyer for legal advice specifically tailored to your needs & circumstances.

What are the ASIC fees for registering a Foreign Company in Australia?

The prescribed ASIC fee for registering a foreign company in Australia is currently AUD $576 (as at April 2024).

As registration fees can vary, you should check the latest fees when completing the ASIC Registration Form 402 on the ASIC website.

Once registered your Foreign Company will be assigned an ARBN, that is, an Australian Registered Business Number.

Required Supporting Documents

A high proportion of foreign company registration applications are delayed or refused because they don’t contain the correct documentation.

You MUST ensure that all your supporting documents meet the requirements.

If any document for lodgement is not in English, you must provide a reasonable translation into English.

When you lodge Form 402, you MUST also include a:

⚖️ Current certified copy of the entity’s certificate of incorporation or registration;

⚖️ Current certified copy of the entity’s constitution;

⚖️ Memorandum of appointment of the local agent or power of attorney in favour of the local agent; and

⚖️ Memorandum stating the powers of certain directors.

Further Reading:

Detailed guidance on registering a foreign company with ASIC is available on the ASIC website: ASIC Foreign Companies Guidance.

Download the ASIC Regulatory Guide 58 for more information: ASIC Regulatory Guide 58.

Credits:

This FAQ was written by James D. Ford GAICD | Principal Solicitor, Blue Ocean Law Group℠.

Important Notice:

This FAQ is intended for general interest + information only.

It is not legal advice, nor should it be relied upon or used as such.

We recommend you always consult a lawyer for legal advice specifically tailored to your needs & circumstances.

What are the Ongoing Annual ASIC Fees for ASIC registered Foreign Corporations?

The prescribed annual ASIC return fee for a registered foreign company in Australia is currently AUD $1,433 (as at April 2024).

What are the Compliance Obligations for ASIC registered Foreign Corporations?

Notified Foreign Passport Fund Operations:

• If your foreign company operates a notified foreign passport fund, ongoing obligations apply, including reporting responsibilities to ASIC. Refer to Regulatory Guide 138 Foreign passport funds (RG 138) for more information.‍

Maintain a Registered Office:

• A registered office in Australia must be maintained, open every business day from 10 am to 12 pm and 2 pm to 4 pm. Notify ASIC if alternative hours apply. A company representative must be present during office hours.

Display Company Name and Details:

• Display the company name outside all public offices. Additional displays required for origin, 'registered office', and member liability notice if applicable.

Display ARBN Correctly:

• Display company name and ARBN on all public documents, including negotiable instruments. Notified foreign passport fund operators must include the Notified Foreign Passport Fund Registration Number (NFPFRN) and unique ASIC-assigned numbers.‍

Use of Abbreviations and Documentation Standards:

• Allowed abbreviations include 'Aust.', 'Regd.', 'No.', 'ARBN', and 'NFPFRN'. Meet paper form requirements for size, quality, text color, and margins.

Engage a Local Agent:

• A registered foreign company must have a local agent responsible for meeting obligations and may appoint multiple agents. Ensure a smooth transition if the agent changes by proper documentation.

Establish Branch Register of Members:

• Registered foreign companies with share capital may need to establish a branch register in Australia upon request by an Australian resident member. Compliance with member requests for registering or transferring shares is mandatory.

Lodge Documents with ASIC:

• Submit financial statements annually, ensuring compliance with reporting requirements. Exemptions and alternative forms are available based on specific circumstances.

Annual Return Filing:

• Lodge an annual return within one month after the annual general meeting. Compliance requirements detailed in Form 406, except for entities relying on specific relief provisions.

Late Fees and Compliance:

• Ensure timely lodgment of required documents to avoid late fees. Refer to INFO 30 for fee details.

Updating Company Details:

• Notify ASIC promptly of any changes in company, director, or local agent details. Utilize Form 406 for notifications unless specified otherwise in the table of changes.

Further Reading:

Detailed guidance on registering a foreign company with ASIC is available on the ASIC website: ASIC Foreign Companies Guidance.

Download the ASIC Regulatory Guide 58 for more information: ASIC Regulatory Guide 58.

Credits:

This FAQ was written by James D. Ford GAICD | Principal Solicitor, Blue Ocean Law Group℠.

Important Notice:

This FAQ is intended for general interest + information only.

It is not legal advice, nor should it be relied upon or used as such.

We recommend you always consult a lawyer for legal advice specifically tailored to your needs & circumstances.