G100 to make a submission to the inquiry of on Foreign Investment Proposals

The Group of 100 (G100) will make a submission to the inquiry into the Foreign Investment Proposals. On 4 December 2019, the Senate referred an inquiry into foreign investment proposals to the Senate Economics References Committee for inquiry and report by 7 September 2020.

The submission being proposed by a member and the terms of reference follows. As this submission is due shortly, we would appreciate members getting back to us soon if you have any comments.

In brief, the inquiry into foreign investment proposals will review foreign investment proposals against the national interest test:

• Protection of Australia’s market-based system from manipulation that would benefit proposed foreign investment; 
• The assessment of the impact of proposed foreign investment on market concentration and competition; 
• The imposition of conditions on foreign investors; 
• The extent to which the risk that foreign investment proposals are being used for money laundering is examined; 
• The role of the Foreign Investment Review Board; and 
• any other related matters.

The submission points:

• A number of improvements could be made to the Foreign Acquisitions and Takeovers Act (FATA) to ensure Australian targets get procedural fairness and decision-makers get complete and accurate information; 
• Currently, there is no obligation for the target of a foreign investment proposal to be informed of a FATA application meaning that decisions about the proposal may be made without the benefit of information and submissions from the target; 
• Providing targets with notification of foreign investment applications would allow the Treasurer and the Foreign Investment Review Board (FIRB) to make better-informed decisions and would provide procedural fairness to Australian target companies; 
• The ‘3% creep’ rule in Australia’s takeover provisions is unduly permissive. It can allow control of a target to pass to an acquirer through ‘attrition’ and in a manner which denies shareholders the ability to receive a premium for their shares. 

If you have any comments or views on the inquiry, please let us know. You may contact Stephen Woodhill, CEO of the G100.