On 1 February 2018, the Australian government issued a new guidance which provides that foreign investors may only acquire agricultural land in Australia where there has been an "open and transparent sale process".
This means that before agricultural land can be sold to a foreign investor, the land must have been advertised and marketed to Australians, and Australians must have had the opportunity to bid on the sale.
FIRB Approval
Agricultural land is defined in the Foreign Acquisitions and Takeovers Act 1975 (FATA) as land that is used, or could reasonably be used, for a primary production business. Under FATA, investments in agricultural land by foreign persons require prior approval by the Foreign Investment Review Board (FIRB) where:
When considering an application, FIRB will consider whether the proposed investment is in the "national interest".
FIRB will advise the Treasurer, who is responsible for making the final decision. The Treasurer may decide:
Australians First
Under the recent changes, the Treasurer must consider as part of his decision making process whether there was an opportunity for Australians to acquire the relevant agricultural land, having regard to the "openness and transparency" of the sales process.
The foreign investor must demonstrate in its FIRB application that:
The applicant will need to provide evidence to FIRB as to how the land was advertised, how the applicant became aware of its availability for sale, and what constituted the sale process.
Exceptions
The "openness and transparency" requirements do not apply to a foreign investor that:
The threshold rules relating to agricultural land do not apply to:
Exemption Certificates
Foreign investors may apply for an exemption certificate to cover a program of acquisitions of agricultural land, so that the investor will not need to seek a separate approval for each individual acquisition (and, therefore, will not need to go through the "openness and transparency" sales process each time).
The Treasurer may decide to grant an exemption certificate where:
Generally, any exemption that is granted is subject to conditions, including that the maximum value for any single transaction in the program is not more than AUD$10 million (or such lower amount as is set by FIRB), that the investor agrees to certain periodic reporting conditions, and, if an acquisition is for a residential development, that development begins within five years of the acquisition.