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Foreign Investment in Australian Company

Discussion in 'Accounting, Tax & Legal' started by goldminer, 20th Aug, 2011.

  1. goldminer

    goldminer New Member

    Joined:
    20th Aug, 2011
    Posts:
    3
    Location:
    Sydney, NSW
    I fully understand the restrictions about capital raising for Australian Companies for raising capital by issuing share equity in return for an investment IN AUSTRALIA; Corporations Act Section 708 applies and in most cases (unless exempted under this section) a disclosure document like a prospectus or offer information statement is required.

    However, what if an offer was received outside Australia (foreign investor) wanting to invest in an Australian Company?

    * Corporations Act Section 708(5) says that basically an exemption applies to the requirement for a disclosure document if an offer was received outside Australia. Under the Corporations Act There is nothing else (what what I can see) preventing a foreign investment and the amount of capital to be received and equity to be issued.

    * The Foreign Investment Review Board (FIRB) is the Australian regulator for all foreign investment in Australia. Most restrictions apply to real estate requiring approval and certain monetary limits generally > $231 million requires approval for an investment in an Australian Company.

    For a foreign investment into an Australian Company, can the Company rely on the exemption under Section 708(5) and the investment would be well under the monetary limit required by FIRB approval?

    cheers
     
  2. goldminer

    goldminer New Member

    Joined:
    20th Aug, 2011
    Posts:
    3
    Location:
    Sydney, NSW
    It appears that foreign investment in Australian Companies is permitted and may require FIRB approval if the value and equity is over the specified limits. FIRB regulates all foreign investment and with foreign investment into an Australian Company the following limits apply requiring approval (these amounts being for non-us and non-NZ countries which have higher limits to below). FIRB approval required if:

    1. Investment amount > AUD $281 million
    2. Investment results in or greater than 15% equity to be issued to the foreign investor

    In (2.) approval in this case is only required if the company is valued at more than AUD $100 million or the investment amount results in the company being re-valued at more than AUD $100 million.

    Anyone have any views on that?