Post-implementation Review – Treasury
On 12 February 2009, the Treasurer announced changes to the foreign investment review framework to ensure that it would apply equally to all foreign investment proposals irrespective of the way they were structured. A Regulation Impact Statement was not prepared by Treasury for that decision. Consequently, a Post-implementation Review (PIR) was required to be undertaken in line with the Government’s best practice regulation process. Australia’s foreign investment review framework generally requires foreign persons to notify the Government in advance if they intend to acquire a substantial interest in the voting power or issued shares of certain corporations. These provisions have been in place in largely the same form since the mid-70’s. More recently, however, the use of complex financing arrangements in several large foreign investment transactions highlighted some uncertainties about the operation of this framework. The announced changes were aimed at ensuring that newer investment structures, including instruments such as convertible notes, would be captured by the revised framework. The changes are understood to have impacted primarily on large and complex transactions, and in the context of an individual transaction have imposed only a small increase in compliance costs. The changes were welcomed by foreign investment advisers, as it enabled them to provide greater certainty to their clients regarding notification requirements. The reforms are therefore seen as having been effective in meeting the Government’s policy objective of clarifying an uncertain aspect of Australia’s foreign investment laws. However, it is unclear how many transactions would not have been notified under the previous regime, but are now subject to foreign investment review. Therefore, the incremental compliance burden is not known. The PIR was prepared by the Treasury and assessed as adequate by the Office of Best Practice Regulation.
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