The Australian Government has announced a package of extensive reforms to further streamline and strengthen its Foreign Investment Review Board (FIRB) framework. The reforms cut in two directions: streamlining the process for straightforward low-risk investments, whilst equipping the regulator with stronger, more flexible tools to address medium- and high-risk investments.
So far, the Australian Treasurer (responsible for foreign investment decisions) has released an overview of the reforms, with draft legislation and timings still awaited. We cover some of the key proposals in our blog post below. For a more detailed overview of all the reforms, see this Allens Insight.
Making Life Easier for Low-Risk Investors
1. A 30-Day Clock for Low-Risk Decisions
From 1 January 2027, the Government will have a target of 30 days for reaching a decision on all low-risk applications — meaning an applicant will either receive a decision clearing the transaction or be informed as to why a further assessment is required, within 30 days of submitting a completed application.
To be considered “low-risk”, and therefore benefit from this accelerated timetable, the applicant must have received a foreign investment approval within the last two years, cannot be subject to extrajudicial direction, and must have a clean compliance record. In addition, the transaction itself cannot be in a sensitive sector, or raise any national interest sensitivities, and must involve a “straightforward and transparent” transaction structure.
2. Fewer Applications Through Broader Exemption Certificates
Under the proposed changes, the Treasurer will gain enhanced powers to issue Exemption Certificates (where certain types of transaction undertaken by a named party over a specified period will not give rise to FIRB approval requirements and/or be subject to call-in) on a case-by-case basis, which will “switch off” or adjust the broad application of certain concepts within the regime, such as Foreign Government Investor status, tracing, or associate rules — reducing regulatory burdens. This will only apply to investors that have repeatedly demonstrated they pose little risk in Australia, and conditions can still be applied to manage any risks, where necessary.
While there are clear benefits to this expansion, such as fewer applications to lodge and less time waiting, the fee structure will be adjusted accordingly to reflect these benefits — including the reduced number of applications that will need to be made.
3. More Transactions Exempt Altogether
Certain low-risk transactions will no longer require mandatory notification and approval, including those involving small percentage increases in existing holdings where there is no change of control. Other exemptions will be expanded, such as the current inter-funding exemption to unregistered schemes, and current exemptions for professional trustees. The monetary threshold (currently AUD 347 million) will also be raised, provided the transaction does not involve: (i) a free trade agreement, (ii) government investors, and (iii) a sensitive sector.
4. Longer and More Flexible Validity
The default validity period for approved transactions (i.e. the time in which a transaction must occur once approved by FIRB) will increase from 12 to 24 months, with flexibility to vary periods on a case-by-case basis. The overview recognises that the current 12-month period is often insufficient for large or complex transactions with multi-year timelines. Doubling the default period reduces the need for extension applications.
5. A Lighter Touch on Reporting
Investors will also benefit from reduced reporting obligations. The requirement to separately report acquisitions of interests in commercial land, businesses, or entities to the Register of Foreign Ownership of Australian Assets will be removed, with the information submitted in the original investment screening application used instead – avoiding the need to re-enter information. Reporting obligations will be retained, however, for acquisitions of interests in residential land, agricultural land, water interests, and certain mining tenements.
Strengthened Tools for Higher-Risk Investments
1. Expanding the Sensitive Sectors
A “new legislative tool” will give the Treasurer the ability to adjust mandatory notification requirements for investments in sensitive sectors more rapidly, in response to emerging or changing risks — currently, the sensitive sectors can only be expanded by amending legislation.
The Government also intends to expand mandatory notification requirements for certain (yet unannounced) investments in both existing and emerging sensitive sectors of the Australian economy. The details of the expanded sensitive sectors will be consulted on in due course. Mandatory notification requirements will also be extended to cover a broader range of mining tenement acquisitions.
2. A More Effective Suite of Tools for the Treasurer
The announced reforms state that the Treasurer will gain the ability to impose more effective and flexible conditions in both “no objection” notifications and Exemption Certificates. These will now be imposable before the investment is made, not just at the point of completion or afterwards. The Treasurer will also be able to accept statutory undertakings from applicants or third parties as a supplementary mechanism for mitigating identified risks, alongside the strengthened conditions power. Taken together, these new powers are expected to make certain investments, that would otherwise be prohibited, capable of proceeding.
In addition, the Government will enhance the Treasurer’s powers to issue orders and directions, making them more targeted and flexible than they are under the current framework. For example, disposal orders will be able to exclude particular entities from acquiring the disposed interests, and prohibition orders will be capable of taking effect more rapidly in high-risk situations.
3. Non-Ownership Control Now in Scope
Commercial arrangements that could pose national security risks through foreign control without ownership — such as offtake agreements and lending arrangements — will be given greater oversight. The Government has said that in limited circumstances, the Treasurer will be able to call-in for review non-ownership commercial arrangements that could be used to exert foreign control.
4. Expanding the “Associate” Definition
The definition of who qualifies as an “associate” of a foreign investor under the FIRB regime will be broadened. Under the current associate definition, certain third parties capable of exercising influence could fall outside of the regime’s reach. The Government intends to close this gap by bringing additional roles within the definition, including direct interest holders or persons with debt arrangements that allow the exercise of influence.
5. Cracking Down on Avoidance
Currently, investors are only considered to have avoided the framework if avoidance is the “sole or dominant purpose” of their behaviour — a relatively high threshold — and even then, the Treasurer has limited ability to impose penalties on investors or advisers. The reformed rules will draw on approaches taken in other anti-avoidance frameworks to “appropriately penalise avoidance conduct”, making it easier to identify avoidance, while (according to the overview) ensuring that legitimate commercial structuring and professional advice remain protected.
What’s Next
The reforms represent a genuine shift to Australia’s FIRB regime. Stakeholders will have an opportunity to comment on the details of the reforms through a consultation on the exposure draft legislation, once this has been made available — although, given the breadth of the reforms, this is not expected until late 2026 at the earliest.
For further information, please contact:
Stephanie Coleman, Linklaters
stephanie.coleman@linklaters.com
