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Foreign Acquisitions and Takeovers Legislation Amendment Act 2015 (150 of 2015)

Schedule 1 Main amendments

Foreign Acquisitions and Takeovers Act 1975

3 Sections 3 to 17

Repeal the sections, substitute:

3 Simplified outline of this Act

This Act deals with certain actions to acquire interests in securities, assets or Australian land, and actions taken in relation to entities (being corporations and unit trusts) and businesses, that have a connection to Australia. These actions are called significant actions. For an action to be a significant action, the action must result in a change in control involving a foreign person or be taken by a foreign person.

If a person proposes to take or has taken a significant action, the Treasurer has power to do one or more of the following:

(a) decide that the Commonwealth has no objection to the action;

(b) impose conditions on the action;

(d) require the action to be undone (for example, by requiring the disposal of an interest that has been acquired).

Offences and civil penalties apply for failing to comply with:

(a) an order made prohibiting an action, or requiring an action to be undone; or

(b) a condition imposed on an action.

Some significant actions (called notifiable actions) must also be notified to the Treasurer before the actions can be taken. Offences and civil penalties may apply if a notifiable action is taken without a notice having been given. If a notice has been given stating that a significant action is proposed to be taken, the action must not be taken before the end of a specified period (generally of 40 days, or an additional period of up to 90 days from the publication of an interim order).

Fees are payable in relation to applications and orders made, and notices and notifications given, under this Act.

A person must make and keep records for the purposes of this Act, including in relation to significant actions and notifiable actions. Information that is obtained for the purposes of this Act (called protected information) may be disclosed only for certain purposes. A person who obtains, uses or discloses protected information other than as authorised by this Act may commit an offence.

Division 2 - Definitions

Subdivision A - Dictionary of definitions

4 Dictionary of definitions

In this Act:

6 month period has the meaning given by subsection 113(3).

acquire an interest of a specified percentage in an entity has the meaning given by section 20.

acquisition of property has the same meaning as in paragraph 51(xxxi) of the Constitution.

aggregate interest of a specified percentage in an entity has the meaning given by subsection 17(2).

aggregate substantial interest : 2 or more persons hold an aggregate substantial interest in an entity or trust if:

(a) for an entity - the persons hold an aggregate interest of at least 40% in the entity; or

(b) for a trust (including a unit trust) - the persons, together with any one or more associates of any of them hold, in the aggregate, beneficial interests in at least 40% of the income or property of the trust.

Note: See also sections 17 (meanings of interest and aggregate interest of a specified percentage in an entity) and 18 (rules relating to determining percentages of interests in entities).

agribusiness : an Australian entity or Australian business is an agribusiness in the circumstances prescribed by the regulations.

agricultural land means land in Australia that is used, or that could reasonably be used, for a primary production business.

Note: The regulations may provide that land of a specified kind is not agricultural land (see subsection 37(3)).

agricultural land corporation has the meaning prescribed by the regulations.

agricultural land trust has the meaning prescribed by the regulations.

asset includes an interest in an asset.

associate has the meaning given by section 6.

Australia , when used in a geographical sense, includes the external Territories.

Australian business has the meaning given by section 8.

Australian corporation means a corporation formed in Australia.

Australian entity means an Australian corporation or an Australian unit trust.

Australian land means agricultural land, commercial land, residential land or a mining or production tenement.

Australian land corporation has the meaning prescribed by the regulations.

Australian land trust has the meaning prescribed by the regulations.

Australian subsidiary of a foreign entity means an Australian entity that is a subsidiary of the foreign entity.

Note: For the definition of subsidiary , see section 21.

Australian unit trust means a unit trust:

(a) the trustee of which holds relevant Australian assets; or

(b) the trustee of which carries on an Australian business; or

(d) in which one or more persons who are ordinarily resident in Australia hold more than 50% of the beneficial interests in the income or property of the unit trust; or

(e) that is listed for quotation in the official list of a stock exchange in Australia.

change in control has the meaning given by section 54.

civil penalty provision has the same meaning as in the Regulatory Powers Act.

commercial land means land in Australia or the seabed of the offshore area, other than land:

(a) used wholly and exclusively for a primary production business; or

(b) on which there is at least one dwelling (except commercial residential premises); or

(c) on which the number of dwellings (except commercial residential premises) that could reasonably be built is less than the number prescribed by the regulations for the purposes of subparagraph (a)(ii) of the definition of residential land in this section.

commercial residential premises has the same meaning as in the A New Tax System (Goods and Services Tax) Act 1999.

Commonwealth entity has the same meaning as in the Public Governance, Performance and Accountability Act 2013.

Commonwealth, State or Territory body includes a Department of State, or an authority or agency, of the Commonwealth, a State or a Territory.

consideration has the meaning prescribed by the regulations.

constituent document of an entity means any rules or other document constituting or establishing the entity or governing its activities, and includes:

(a) for a corporation - the constitution of the corporation; and

(b) for a unit trust - the trust deed for the trust.

controls :

(a) the voting power - has the meaning given by section 23; and

(b) an entity or business - has the meaning given by subsections 54(4) and (5).

debenture includes:

(a) debenture stock, bonds and notes; and

(b) any other document evidencing or acknowledging indebtedness of an entity, whether or not constituting a charge on the assets of the entity.

decision period has the meaning given by subsection 77(5).

determines the policy of a business of exploiting a mining or production tenement has a meaning affected by section 24.

development means one or more multi-storey buildings if:

(a) the buildings will be, are being or have been built; and

(b) the buildings are or were under one development approval; and

(c) the number of independent self-contained dwellings (other than townhouses) that the buildings contain or will contain is at least the number prescribed by the regulations.

direct interest has the meaning prescribed by the regulations.

director includes any person occupying the position of director (however described) of a corporation.

engage in conduct includes fail or refuse to engage in conduct.

enters has a meaning affected by section 25.

entity means a corporation or a unit trust.

established dwelling means a dwelling (except commercial residential premises) on residential landthat is not a new dwelling.

exemption certificate means a certificate given under:

(a) section 57, 58 or 59; or

(b) regulations made for the purposes of section 63.

foreign corporation means a foreign corporation to which paragraph 51(xx) of the Constitution applies.

foreign entity means an entity that is not an Australian entity.

foreign government means an entity (within the ordinary meaning of the term) that is:

(a) a body politic of a foreign country; or

(b) a body politic of part of a foreign country; or

foreign government investor has the meaning prescribed by the regulations.

foreign person means:

(a) an individual not ordinarily resident in Australia; or

(b) a corporation in which an individual not ordinarily resident in Australia, a foreign corporation or a foreign government holds a substantial interest; or

(c) a corporation in which 2 or more persons, each of whom is an individual not ordinarily resident in Australia, a foreign corporation or a foreign government, hold an aggregate substantial interest; or

(d) the trustee of a trust in which an individual not ordinarily resident in Australia, a foreign corporation or a foreign government holds a substantial interest; or

(e) the trustee of a trust in which 2 or more persons, each of whom is an individual not ordinarily resident in Australia, a foreign corporation or a foreign government, hold an aggregate substantial interest; or

(f) a foreign government; or

(g) any other person, or any other person that meets the conditions, prescribed by the regulations.

Note: In certain circumstances, an associate of a foreign person may be taken to be a foreign person even if the associate is not a foreign person (see subsection 54(7)).

general meeting of an entity means:

(a) for a corporation - a general meeting of the corporation; or

(b) for a unit trust - a general meeting of the unit holders of the trust.

holding entity has the meaning given by subsection 21(4).

independent director has the meaning given by section 7.

interest :

(a) in a security - has the meaning given by section 9; and

(b) in an asset - has the meaning given by section 10; and

(d) in Australian land - has the meaning given by section 12; and

(e) of a specified percentage in an entity - has the meaning given by section 17.

Note: For other rules relating to interests in a security, asset, trust or Australian land, see sections 13 to 15.

interim order means an order made under section 68.

just terms has the same meaning as in paragraph 51(xxxi) of the Constitution.

land includes:

(a) a building (including a new dwelling or an established dwelling) or a part of a building; and

(b) subsoil of land.

land register means a register kept under a law of the Commonwealth, a State or a Territory in which interests (within the ordinary meaning of the term) in Australian land are registered.

lease includes a sublease.

long term lease means a lease granted by the Commonwealth, a State or a Territory for a term (including any extension or renewal) that is reasonably likely, at the time the lease is granted, to exceed 20 years.

mining or production tenement means:

(a) a right (however described) under a law of the Commonwealth, a State or a Territory to recover minerals (such as coal or ore), oil or gas in Australia or from the seabed or subsoil of the offshore area,other than a right to recover minerals, oil or gas for the purposes of prospecting or exploring for minerals, oil or gas; or

(b) a right that preserves a right mentioned in paragraph (a); or

(d) an interest in a right mentioned in paragraph (a) or (b) or under a lease mentioned in paragraph (c).

new dwelling means a dwelling (except commercial residential premises)that will be, is being or has been builton residential land and that:

(a) has not been previously sold as a dwelling; and

(b) either:

(i) has not been previously occupied; or

(ii) if the dwelling is contained in a development and the dwelling was sold by the developer of the development - has not been previously occupied for more than 12 months in total.

Note: For when a dwelling is sold, see subsections 15(4) and (5).

new dwelling acquisition has the meaning given by subsection 113(4).

no objection notification has the meaning given by subsections 74(2) and 75(2).

notifiable action has the meaning given by Division 3 of Part 2.

officer of an entity includes the following:

(a) for a corporation - a director of the corporation;

(b) for a unit trust:

(i) the trustee of which is an individual - the trustee; and

(ii) the trustee of which is a corporation - a director of the trustee; and

(iii) in any case - any other individual involved in the central management and control of the trust;

(c) a person who is, or a person in a group of persons who are, in a position to determine the investments or policy of the entity or a trustee of the entity;

(d) a person who makes, or participates in making, decisions that affect the whole, or a substantial part of, the business of the entity;

(e) a person who has the capacity to affect significantly the financial standing of the entity;

(f) a receiver and manager of any part of the business of the entity appointed under a power contained in any instrument;

(g) an administrator of the entity;

(h) an administrator under a deed of company arrangement executed by the entity;

(i) a liquidator of the entity appointed in a voluntary winding up.

offshore area means:

(a) the exclusive economic zone of Australia; or

(b) the continental shelf of Australia.

ordinarily resident has a meaning affected by section 5.

potential voting power has the meaning given by section 22.

primary production business has the same meaning as in the Income Tax Assessment Act 1997.

proposes :

(a) to acquire an interest in securities, assets or Australian land - has a meaning affected by subsection 16(1); and

(b) to enter or terminate an agreement - has a meaning affected by subsection 16(2).

protected information has the meaning given by section 120.

Regulatory Powers Act means the Regulatory Powers (Standard Provisions) Act 2014.

relative has the same meaning as in the Income Tax Assessment Act 1997.

relevant Australian assets means:

(a) Australian land, including legal and equitable interests (within the ordinary meaning of the term) in such land; or

(b) securities in an Australian entity.

relevant entity means any of the following:

(a) an Australian entity;

(b) a foreign corporation:

(i) that holds relevant Australian assets; or

(ii) that is a holding corporation of one or more Australian corporations;

Note: A holding entity mentioned in paragraph (c) may be a foreign corporation of a kind that is not mentioned in paragraph (b).

residential land :

(a) means land in Australia if:

(i) there is at least one dwelling on the land; or

(ii) the number of dwellings that could reasonably be built on the land is less than the number prescribed by the regulations; and

(b) does not include land:

(i) used wholly and exclusively for a primary production business; or

(ii) on which the only dwellings are commercial residential premises.

residential land acquisition means a notifiable action to acquire an interest in residential land.

scheme means:

(a) any agreement, understanding, promise or undertaking:

(i) whether express or implied; and

(ii) whether or not enforceable, or intended to be enforceable, by legal proceedings; and

(b) any scheme, plan, proposal, action, course of action or course of conduct, whether unilateral or otherwise.

Secretary means the Secretary of the Department.

security means a share in a corporation or a unit in a unit trust.

senior officer of an entity means an officer of the entity under any of paragraphs (a) to (e) of the definition of officer in this section, except an independent director of the entity.

sensitive business has the meaning given by section 26.

separate government entity means an individual, corporation or corporation sole that:

(a) is an agency or instrumentality of a foreign country or a part of a foreign country; and

(b) is not part of the body politic of a foreign country or of a part of a foreign country.

share of a corporation means a share in the share capital of the corporation, and includes:

(a) stock into which all or any of the share capital of the corporation has been converted; and

(b) except in section 9, an interest in such a share or in such stock.

significant action has the meaning given by Division 2 of Part 2.

significant agreement with an Australian business is an agreement relating to:

(a) the leasing of, the letting on hire of, or the granting of other rights to use, assets of the business; or

(b) the participation by a person in the profits or central management and control of the business.

subsidiary has the meaning given by subsections 21(1) to (3).

substantial interest : a person holds a substantial interest in an entity or trust if:

(a) for an entity - the person holds an interest of at least 20% in the entity; or

(b) for a trust (including a unit trust) - the person, together with any one or more associates, holds a beneficial interest in at least 20% of the income or property of the trust.

Note 1: See also sections 17 (meanings of interest and aggregate interest of a specified percentage in an entity) and 18 (rules relating to determining percentages of interests in entities).

Note 2: For when a person acquires a substantial interest in an entity, see section 20.

temporary resident means an individual who:

(a) holds a temporary visa under the Migration Act 1958 that allows the individual to remain in Australia for a continuous period of more than 12 months (disregarding the amount of that period remaining); or

(b) meets the following conditions:

(i) the individual is residing in Australia;

(ii) the individual has applied for a permanent visaunder the Migration Act 1958;

(iii) the individual holds a bridging visa under that Act that allows the individual to remain in Australia until the application has been finally determined; or

this Act includes the regulations.

threshold test is met has the meaning given by Subdivision B of Division 4 of Part 2.

tier 1 infringement notice has the meaning given by subsection 101(1).

tier 2 infringement notice has the meaning given by subsection 101(2).

total asset value for an entity has the meaning prescribed by the regulations.

total issued securities value for an entity has the meaning prescribed by the regulations.

voting power has the meaning given by subsection 22(1).

Subdivision B - Some defined terms and rules of interpretation

5 Meaning of ordinarily resident

(1) An individual who is not an Australian citizen is ordinarily resident in Australia at a particular time if and only if:

(a) the individual has actually been in Australia during 200 or more days in the period of 12 months immediately preceding that time; and

(b) at that time:

(i) the individual is in Australia and the individual's continued presence in Australia is not subject to any limitation as to time imposed by law; or

(ii) the individual is not in Australia but, immediately before the individual's most recent departure from Australia, the individual's continued presence in Australia was not subject to any limitation as to time imposed by law.

(2) Without limiting paragraph (1)(b), an individual's continued presence in Australia is subject to a limitation as to time imposed by law if the individual is an unlawful non-citizen within the meaning of the Migration Act 1958.

6 Meaning of associate

(1) Each of the following persons is an associate of a person:

(a) any relative of the person;

(b) any person with whom the person is acting, or proposes to act, in concert in relation to an action to which this Act may apply;

(d) any entity of which the person is a senior officer;

(e) if the person is an entity:

(i) any holding entity of the entity; or

(ii) any senior officer of the entity;

(f) any entity whose senior officers are accustomed or under an obligation (whether formal or informal) to act in accordance with the directions, instructions or wishes of:

(i) the person; or

(ii) if the person is an entity - the senior officers of the person;

(g) an entity if the person is accustomed or under an obligation (whether formal or informal) to act in accordance with the directions, instructions or wishes of:

(i) the entity; or

(ii) the senior officers of the entity;

(h) any corporation in which the person holds a substantial interest;

(i) if the person is a corporation - a person who holds a substantial interest in the corporation;

(j) the trustee of a trust in which the person holds a substantial interest;

(k) if the person is the trustee of a trust - a person who holds a substantial interest in the trust;

(l) if the person is a foreign government, a separate government entity or a foreign government investor in relation to a foreign country (or a part of a foreign country):

(i) any other person that is a foreign government in relation to that country (or any part of that country); or

(ii) any other person that is a separate government entity in relation to that country (or any part of that country); or

(iii) any other foreign government investor in relation to that country (or any part of that country).

Note: A person may be taken to be an associate under section 79.

Additional associates in relation to interests in residential land

(2) For an action taken relating to an interest in residential land (within the meaning of any of the paragraphs of subsection 12(1)), each of the following persons is also an associate of a person:

(a) an entity that is not listed for quotation in the official list of a stock exchange if a relative of the person:

(i) holds a substantial interest in the entity; or

(ii) is a senior officer of the entity;

(b) if the person is an entity (the first entity ) - another entity (the second entity ) if:

(i) an individual holds a substantial interest in the first entity or is a senior officer of the first entity; and

(ii) a relative of the individual holds a substantial interest in the second entity or is a senior officer of the second entity; and

(iii) the first entity and the second entity are not, and are not a subsidiary or trustee of an entity, listed for quotation in the official list of a stock exchange.

Persons who are not associates

(3) Despite subsections (1) and (2), a person is not an associate of another person merely because:

(a) one gives advice to the other, or acts on the other's behalf, in the proper performance of the functions attaching to a professional capacity or a business relationship; or

(b) one, a client, gives specific instructions to the other, whose ordinary business includes dealing in financial products (within the meaning of the Corporations Act 2001), to acquire financial products on the client's behalf in the ordinary course of that business; or

(c) one had sent, or proposes to send, to the other an offer under a takeover bid (within the meaning of that Act) for securities held by the other; or

(d) one has appointed the other, otherwise than for valuable consideration (within the ordinary meaning of the term) given by the other or by an associate of the other, to vote as a proxy or representative; or

(e) both of the following apply:

(i) one provides independent services as a trustee of a trust to the other who is a beneficiary of the trust;

(ii) the trustee is licensed to provide those services under a law of the Commonwealth, a State, a Territory, a foreign country or a part of a foreign country; or

(f) one holds a substantial interest in a managed investment scheme (within the meaning of the Corporations Act 2001) and the other is the responsible entity of the scheme; or

(g) both are partners of one of the following kinds of partnerships:

(i) a partnership of actuaries or accountants;

(ii) a partnership of medical practitioners;

(iii) a partnership of patent attorneys;

(iv) a partnership of sharebrokers or stockbrokers;

(v) a partnership of trade mark attorneys;

(vi) a partnership that has as its primary purpose collaborative scientific research, and includes at least one university and one private sector participant (whether or not it also includes government agencies or publicly funded research bodies);

(vii) a partnership of architects;

(viii) a partnership of pharmaceutical chemists or veterinary surgeons;

(ix) a partnership of legal practitioners.

7 Meaning of independent director

Listed entities

(1) A person is an independent director of an entity if:

(a) the person is:

(i) a director of the entity; or

(ii) for a unit trust - a director of a trustee of the entity; and

(b) the entity is listed for quotation in the official list of a stock exchange (whether or not in Australia); and

(c) the director meets the criteria of that stock exchange for a director to be independent (whether or not the criteria are binding).

Note: If the stock exchange does not have criteria for a director to be independent, a director of an entity listed for quotation in the official list of the stock exchange is not an independent director.

Entities whose securities are stapled

(2) A person is an independent director of an entity (the first entity ) if:

(a) the person is a director of the first entity and another entity; and

(b) the securities in the first entity can only be transferred together with securities in the other entity; and

(c) the first entity is not listed for quotation in the official list of a stock exchange, but the other entity is (whether or not in Australia); and

(d) the director meets the criteria of that stock exchange for a director to be independent (whether or not the criteria are binding).

8 Meaning of Australian business

(1) An Australian business is a business that is carried on wholly or partly in Australia in anticipation of profit or gain.

(2) For the purposes of this Act, a person who has an interest in a mining or production tenement is, as a result of having that interest, taken to carry on a business in Australia of exploiting that tenement in anticipation of profit or gain. The tenement is taken to be an asset of that business.

9 Meaning of interest in a security

(1) A person holds or acquiresan interest in a security if he or she has any legal or equitable interest in that security.

Note 1: For other rules relating to interests in securities, see sections 13 to 15.

Note 2: See also section 19 (tracing of substantial interests in corporations and trusts).

(2) Without limiting subsection (1), a person holds or acquires an interest in a security in an entity if:

(a) the person is not the registered holder of the security; and

(b) the person is entitled to exercise or control the exercise of a right attached to the security (other than because he or she was appointed as a proxy or representative).

(3) In determining whether a person holds or acquires an interest in a security, it is immaterial that the interest cannot be related to a particular security.

Issued shares in a corporation

(4) A person holds or acquires an interest in the issued shares in a corporation if:

(a) all or part of the share capital of the corporation consists of stock; and

(b) the person holds an interest in that stock.

(5) For the purposes of this Act, the issued shares are taken to have:

(a) the same nominal amount as the amount of that stock; and

(b) the same rights attached to them as are attached to that stock.

10 Meaning of interest in an asset

A person holds or acquiresan interest in an asset if he or she has any legal or equitable interest in that asset.

Note 1: For other rules relating to interests in assets, see sections 13 to 15.

Note 2: See also section 19 (tracing of substantial interests in corporations and trusts).

11 Meaning of interest in a trust

A person holds or acquires an interest in a trust if:

(a) the person holds or acquires a beneficial interest in the income or property of the trust; or

(b) the person holds or acquires an interest in a unit in a unit trust.

Note 1: For other rules relating to interests in trusts, see sections 13 to 15.

Note 2: See also section 19 (tracing of substantial interests in corporations and trusts).

12 Meaning of interest in Australian land

(1) An interest in Australian land (however described) is:

(a) a legal or equitable interest in Australian land, other than:

(i) an interest under a lease or licence or in a unit in a unit trust; or

(ii) an interest in an agreement giving a right (known as a profit à prendre) to take something off another person's land, or to take something out of the soil of that land; or

(iii) an interest in an agreement involving the sharing of profits or income from the use of, or dealings in, Australian land; or

(b) an interest in a security in an entity that owns Australian land, being a security that entitles the holder to a right to occupy a dwelling of a kind known as a flat or home unit situated on the land; or

(c) an interest as lessee or licensee in a lease or licence giving rights to occupy Australian land if the term of the lease or licence (including any extension or renewal) is reasonably likely, at the time the interest is acquired, to exceed 5 years; or

(d) an interest in an agreement giving a right of a kind mentioned in subparagraph (a)(ii) if the term of the agreement (including any extension or renewal) is reasonably likely, at the time the interest in the agreement is acquired, to exceed 5 years; or

(e) an interest in an agreement involving the sharing of profits or income from the use of, or dealings in, Australian land if the term of the agreement (including any extension or renewal) is reasonably likely, at the time the interest in the agreement is acquired, to exceed 5 years; or

(f) an interest in a share in an Australian land corporation or agricultural land corporation; or

(g) an interest in a unit in an Australian land trust or agricultural land trust; or

(h) if the trustee of an Australian land trust or agricultural land trust is a corporation - an interest in a share in that corporation.

Note 1: For other rules relating to interests in Australian land, see sections 13 to 15.

Note 2: Australian land may be described as "residential land", "agricultural land" or "commercial land", or as "a new dwelling" or "an established dwelling".

(2) An interest is an interest in Australian land even if it is the only interest that exists in the land or other thing concerned.

(3) A person acquires an interest in Australian land even if:

(a) the person has previously acquired an interest in Australian land; or

(b) the interest is an increase in the amount of an existing interest of the person in Australian land.

13 Interests that are remote or subject to restraint etc.

A person holdsor acquiresan interest in a security, asset, trust or Australian land despite:

(a) its remoteness; or

(b) the manner in which it arose; or

(c) the fact that the exercise of a right conferred by the interest is, or is capable of being made, subject to restraint or restriction.

14 Interests held or acquired jointly

A person holds or acquires an interest in a security, asset, trust or Australian land even if the person holds or acquires the interest jointly with one or more other persons.

15 Interests acquired by entering agreements or acquiring options

(1) For the purposes of this Act, a person is taken (except as provided by subsections (4) and (5)) to acquire an interest in a security, asset, trust or Australian land if the person:

(a) enters an agreement to acquire the interest; or

(b) either:

(i) for an interest in a security, asset or trust - has a right to acquire such an interest under an option; or

(ii) for an interest in Australian land - acquires an option to acquire such an interest; or

(c) has a right, other than by reason of having an interest under a trust, to have such an interest transferred to himself or herself or to his or her associate.

Note: For the definition of enters , see section 25.

(2) To avoid doubt, a right mentioned in paragraph (1)(b) or (c) includes a right under an instrument or agreement.

(3) Subsections (1) and (2) apply whether or not:

(a) the right or option is presently exercisable or exercisable in the future; or

(b) the agreement, right or option requires the fulfilment of a condition.

Provisions of agreements that are not currently binding

(4) Subsection (5) applies for the purposes of the following provisions:

(a) Part 4 (notice of notifiable action);

(b) Part 5 (offences and civil penalties) to the extent that it relates to Part 4;

(d) the definition of new dwelling in section 4 (including to the extent that the definition affects the definition of established dwelling in that section), except in section 95 (acquisition of interests in established dwellings).

(5) If:

(a) a person proposes to take an action to acquire or sell an interest in a security, asset, trust or Australian land; and

(b) the provisions of the agreement to acquire or sell the interest do not become binding on the person until one or more conditions are met;

the person takes the action to acquire or sell the interest, and enters the agreement, only when the provisions become binding.

Note: As a result of this subsection, the person acquires or sells the interest only when the provisions become binding.

16 Meaning of proposes to take certain action

(1) A person proposes to acquire an interest in securities, assets or Australian land if:

(a) the person makes an offer to acquire the interest; or

(b) the person makes or publishes a statement (however expressed) that expressly or impliedly invites a holder of an interest in securities, assets or Australian land to offer to dispose of an interest in securities, assets or Australian land; or

(c) the person takes part in, or proposes to take part in, negotiations with a view to acquiring an interest in securities, assets or Australian land.

(2) A person proposes to enter or terminate an agreement if the person takes part in, or proposes to take part in, negotiations with a view to entering or terminating the agreement.

(3) This section does not limit the meaning of propose .

17 Meanings of interest and aggregate interest of a specified percentage in an entity

Meaning of interest of a specified percentage in an entity

(1) A person holds an interest of a specified percentage in an entity if the person, alone or together with one or more associates of the person:

(a) is in a position to control at least that percentage of the voting power or potential voting power in the entity; or

(b) holds interests in at least that percentage of the issued securities in the entity; or

(c) would hold interests in at least that percentage of the issued securities in the entity if securities in the entity were issued or transferred as the result of the exercise of rights of a kind mentioned in paragraph 15(1)(b) or (c).

Note 1: See also section 18 (rules relating to determining percentages of interests in entities) and the definition of acquire in section 20.

Note 2: A percentage may be specified by referring to:

(a) "20%"; or

(b) "any percentage"; or

(d) a percentage that a person holds in another entity.

Meaning of aggregate interest of a specified percentage in an entity

(2) Two or more persons (who are not associates of each other) hold an aggregate interest of a specified percentage in an entity if they, together with any one or more associates of any of them:

(a) are in a position to control at least that percentage of the voting power or potential voting power in the entity; or

(b) hold interests in at least that percentage of the issued securities in the entity; or

Proxies and representatives

(3) In determining the percentage of voting power or potential voting power that a person is in a position to control in an entity, disregard any votes that he or she controls as a proxy or representative.

18 Rules relating to determining percentages of interests in entities

Exercise of future rights

(1) Subsection (2) applies if:

(a) a person has a right that, if exercised, would result in the person holding an interest in an issued security in the entity; and

(b) it cannot be determined at that time (from the right itself or from the circumstances existing at that time) whether the right would be exercised.

(2) For the purposes of this Act, in determining the percentage of the interests in the issued securities in the entity that the person holds, or would hold, at a particular time, assume that the right were exercised at that time.

Discretionary trusts

(3) For the purposes of this Act, if, under the terms of a trust, a trustee has a power or discretion to distribute the income or property of the trust to one or more beneficiaries, each beneficiary is taken to hold a beneficial interest in the maximum percentage of income or property of the trust that the trustee may distribute to that beneficiary.

19 Tracing of substantial interests in corporations and trusts

(1) This section applies (subject to subsection (3)) if:

(a) either:

(i) a person holds a substantial interest in a corporation or trust (the higher entity ); or

(ii) 2 or more persons hold an aggregate substantial interest in a corporation (the higher entity ); or

(iii) 2 or more persons hold an aggregate substantial interest in a trust (the trustee of which is a higher entity );

including because of one or more applications of this section; and

(b) the higher entity:

(i) is in a position to control all or any of the voting power or potential voting power in a corporation (the lower entity ); or

(ii) holds interests in all or any of the shares in a corporation (the lower entity ); or

(iii) holds an interest in a trust (the lower entity ).

(2) For the purposes of this Act:

(a) if subparagraph (1)(b)(i) applies - the person or persons are taken to be in a position to control the voting power or potential voting power of the lower entity that the higher entity is in a position to control; or

(b) if subparagraph (1)(b)(ii) applies - the person or persons are taken to hold the interests in the shares in the lower entity that the higher entity holds; or

(c) if subparagraph (1)(b)(iii) applies - the person or persons are taken to hold the interest in the lower entity that the higher entity holds.

(3) This section does not apply for the purpose of:

(a) determining under any of the following whether a foreign person acquires a direct interest in an Australian entity or Australian business that is an agribusiness:

(i) paragraph 40(2)(a) (meaning of significant action - entities);

(ii) paragraph 41(2)(a) (meaning of significant action - businesses);

(iii) paragraph 47(2)(a) (meaning of notifiable action - general); or

(b) determining under paragraph 47(2)(b) (meaning of notifiable action - general) whether a foreign person acquires a substantial interest in an Australian entity.

20 Meaning of acquire an interest of a specified percentage in an entity

(1) A person acquires an interest of a specified percentage in an entity if the person:

(a) starts to hold an interest of that percentage in the entity; or

(b) would start to hold an interest of that percentage in the entity on the assumption that the person:

(i) held interests in securities that are interests that he or she has offered to acquire; or

(ii) held rights to votes that might be cast at a general meeting of the entity that are rights that he or she has offered to acquire; or

(i) becomes in a position to control more of the voting power or potential voting power in the entity; or

(ii) starts to hold additional interests in the issued securities in the entity; or

(iii) would start to hold additional interests in the issued securities in the entity if securities in the entity were issued or transferred as the result of the exercise of rights of a kind mentioned in paragraph 15(1)(b) or (c).

Note 1: For the definition of general meeting , see section 4.

Note 2: A percentage may be specified by referring to:

(a) "20%"; or

(b) "any percentage"; or

(d) a percentage that a person holds in another entity.

(2) For the purposes of subsection (1), a reference to a person offering to acquire interests in securities or rights includes a reference to a person making or publishing a statement (however expressed) that expressly or impliedly invites a holder of interests in securities or rights to offer to dispose of interests in securities or rights.

21 Meanings of subsidiary and holding entity

Meaning of subsidiary

(1) An entity (the lower entity ) is a subsidiary of another entity (the higher entity ) if:

(a) the higher entity:

(i) is in a position to control more than half the voting power in the lower entity; or

(ii) holds more than half the issued securities in the lower entity (disregarding any securities that carry no right to participate beyond a specified amount in a distribution of either profits or capital); or

(b) the lower entity is a subsidiary of an entity that is the higher entity's subsidiary (including because of one or more applications of this subsection).

Note: The lower entity need not be the immediate subsidiary of the higher entity under paragraph (1)(a) (see section 23 which provides that a person may control the voting power in an entity directly or indirectly, and section 19 which provides that a person is taken to hold interests in securities that are traced through a chain of corporations or trusts).

(2) In determining whether a lower entity is a subsidiary of a higher entity, disregard any securities held or power exercisable by:

(a) the higher entity in a fiduciary capacity; or

(b) any person as a result of a debenture of the lower entity; or

(3) In determining whether a lower entity is a subsidiary of a higher entity, any securities held or power exercisable:

(a) by any person as a nominee for the higher entity; or

(b) by, or by a nominee for, a subsidiary of the higher entity;

are taken to be held or exercisable by the higher entity.

Meaning of holding entity

(4) An entity (the higher entity ) is a holding entity of another entity (the lower entity ) if the lower entity is a subsidiary of the higher entity.

22 Meanings of voting power and potential voting power

Meaning of voting power

(1) The voting power in an entity is the maximum number of votes that might be cast at a general meeting of the entity.

Note: For the definition of general meeting , see section 4.

Meaning of potential voting power

(2) The potential voting power in an entity is the voting power in the entity, on the assumption that the votes that might be cast at a general meeting of the entity included each vote that:

(a) because of the exercise of a right might come into existence in the future (whether or not the right is exercisable presently or in the future or on the fulfilment of a condition); and

(b) if it came into existence, might be cast at a general meeting of the entity.

Note: Different voting rights might attach to different classes of securities in an entity.

Exercise of future rights

(3) In determining how much of the potential voting power in an entity a person is in a position to control at a particular time, if:

(a) a right exists that, if exercised, would result in the person being in a position to control more of the potential voting power in the entity than the person would be in a position to control if the right were not exercised; and

(b) it cannot be determined at that time (whether from the right itself or from the circumstances existing at that time) whether the right would be exercised;

assume that the right were exercised at that time.

Veto power

(4) If a person is in a position to veto any resolution of the board, central management or general meeting of an entity, then for the purposes of this Act (except paragraph 47(2)(b) (meaning of notifiable action ) and subsection 54(4) (meaning of control )) the person is taken to be in a position to control 20% of the potential voting power in the entity.

23 Meaning of controls the voting power

A person controls the voting power in an entity if the person controls the power directly or indirectly, including as a result or by means of agreements or practices, whether or not the agreements or practices:

(a) have legal or equitable force; or

(b) are based on legal or equitable rights.

24 Meaning of determines the policy of a business of exploiting a mining or production tenement

(1) A person determines the policy of a business of exploiting a mining or production tenement if the person determines questions relating to the disposal of an interest in the tenement.

(2) This section does not limit the meaning of determines the policy of a business of exploiting a mining or production tenement.

25 Meaning of enters an agreement

(1) A person enters an agreement if:

(a) the person enters into any formal or informal scheme, including by:

(i) creating a trust (whether express or implied); or

(ii) entering into a transaction; or

(iii) acquiring an interest in a security, asset, trust or Australian land; or

(b) the agreement is materially altered or varied.

Note 1: For the definition of scheme , see section 4.

Note 2: A variation of an agreement that increases the percentage that a person holds in an entity is material. A variation to the way the consideration for an acquisition of an interest is worked out is not material.

(2) This section does not limit the meaning of enters .

26 Meaning of sensitive business

(1) A business is a sensitive business if the business meets the conditions specified in the regulations.

(2) Without limiting subsection (1) or subsection 33(3A) of the Acts Interpretation Act 1901, the regulations may prescribe:

(a) sensitive businesses generally, or different sensitive businesses for different kinds of foreign persons; and

(b) different conditions for different sensitive businesses.

27 Regulations to provide in relation to valuing assets

The regulations may provide in relation to valuing the assets of an entity, trust or business.

28 Acts done by agents

An act done or proposed to be done by an agent on behalf of his or her principal is taken to be done or proposed to be done by his or her principal.

Division 3 - Application of this Act

29 Application of this Act to individuals and entities

This Act applies to:

(a) all individuals, whether or not resident in Australia or Australian citizens; and

(b) all corporations, whether or not formed or carrying on business in Australia; and

30 Extension to external Territories

This Act extends to every external Territory.

31 Extraterritoriality

This Act applies both within and outside Australia.

32 Extension to exclusive economic zone and continental shelf

This Act extends to a matter relating to the exercise of Australia's sovereign rights in the exclusive economic zone or the continental shelf.

33 This Act binds the Crown

(1) This Act binds the Crown in each of its capacities.

(2) This Act does not make the Crown liable to a pecuniary penalty or to be prosecuted for an offence.

34 Concurrent operation of State and Territory laws

This Act is not intended to exclude or limit the operation of a law of a State or Territory to the extent that it is capable of operating concurrently with this Act.

35 General severability

Application of this section

(1) This section applies in relation to each of the following persons:

(a) a foreign person;

(b) a corporation;

(i) section 57 (certificates for new dwellings); or

(ii) regulations made for the purposes of section 63;

(d) an individual who holds a substantial interest, or who, as one of 2 or more persons, holds an aggregate substantial interest in a corporation or trust.

Effect of this Act

(2) Without limiting the effect of this Act apart from this section, this Act also has effect as provided by this section.

(3) To avoid doubt, no subsection of this section limits the operation of any other subsection of this section.

External affairs power

(4) This Act has the effect it would have if each reference to a person mentioned in subsection (1) were expressly confined to a person outside Australia.

Corporations power

(5) This Act has the effect it would have if each reference to a person mentioned in subsection (1) were expressly confined to a corporation to which paragraph 51(xx) of the Constitution applies.

Aliens power

(6) This Act has the effect it would have if each reference to a person mentioned in subsection (1) were expressly confined to an alien (within the meaning of paragraph 51(xix) of the Constitution).

Trade and commerce power

(7) This Act has the effect it would have if each reference to a person mentioned in subsection (1) were expressly confined to a person engaged in:

(a) trade or commerce between Australia and places outside Australia; or

(b) trade or commerce among the States; or

Territories and Commonwealth places power

(8) This Act has the effect it would have if each reference to a person mentioned in subsection (1) were expressly confined to a person in, or a person taking an action in relation to:

(a) a Territory; or

(b) a Commonwealth place (within the meaning of the Commonwealth Places (Application of Laws) Act 1970).

36 Severability relating to Australian businesses

Without limiting the effect of this Act apart from this section, this Act also has the effect it would have if each reference to an Australian business were expressly confined to a reference to an Australian business being carried on by a corporation.

Note: The reference to a corporation in this section is affected by section 35 (general severability).

37 Regulations providing for exemptions

(1) The regulations may provide that this Act, or specified provisions of this Act, do not apply in relation to any of, or any combination of, the following:

(a) acquisitions of the kind or in the circumstances prescribed by the regulations;

(b) interests of the kind or in the circumstances prescribed by the regulations;

(d) foreign persons of the kind or in the circumstances prescribed by the regulations.

Note: Provisions may be specified by referring to:

(a) a particular provision; or

(b) this Act, other than specified provisions.

(2) Without limiting subsection (1), the regulations may provide that specified provisions of the Act do not apply to a specified extent.

(3) Without limiting subsection (1), the regulations may provide that land of a specified kind is not agricultural land.

(4) The regulations may provide that specified foreign persons who take action in relation to interests in Australian land may disregard the fact that the land is agricultural land for all or specified purposes.

(5) Regulations providing as mentioned in paragraph (4)(a) do not affect the operation of this Act to the extent that the action is otherwise a significant action or notifiable action.

(6) Regulations made for the purposes of this section have effect according to their terms.

(7) This Act does not limit the regulations that may be made for the purposes of this section.

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