Foreign Investment Reform (Protecting Australia's National Security) Act 2020 (114 of 2020)

Schedule 1   Main amendments

Part 1   Amendment of the Foreign Acquisitions and Takeovers Act 1975

Foreign Acquisitions and Takeovers Act 1975

132   At the end of Part 3

Add:

Division 3 - Last resort powers: orders to deal with national security risks arising after an initial assessment

Subdivision A - National security review required

79A National security review required before orders may be made

Bases on which Treasurer may review actions

(1) The Treasurer may review an action if the Treasurer is satisfied that:

(a) any of the following apply:

(i) a no objection notification in relation to the action has been given and has not been revoked under section 76A;

(ii) the action has been taken and, at the time it was taken, the action or the kind of action was specified in an exemption certificate in force under Division 5 of Part 2 or the regulations;

(iii) the action has been taken and, at the time it was taken, the interest or kind of interest to which the action relates was specified in an exemption certificate in force under Division 5 of Part 2 or the regulations;

(iv) an interim order in relation to the action was made and the Treasurer did not make an order under section 67 before the end of the period specified in the interim order;

(v) an order or decision under Division 2 was not made by the Treasurer in relation to the action before the end of the decision period;

(vi) a person was given a notice imposing conditions under section 79H in relation to the action; and

(b) any of the following apply:

(i) the person notified the action to the Treasurer and made a statement, whether orally or in that notification, that was false or misleading in a material particular, or that omitted a matter or thing without which the statement was misleading in a material particular;

(ii) the business, structure or organisation of the person has, or the person's activities have, materially changed since the time paragraph (a) was satisfied;

(iii) the circumstances or market in which the action was, or is proposed to be, taken have materially changed since the time paragraph (a) was satisfied.

Treasurer to decide whether a national security risk exists

(2) When reviewing an action under this section, the Treasurer must decide whether a national security risk relating to the action exists. In doing so, the Treasurer must obtain, and have regard to, advice from an agency in the national intelligence community about national security risks in relation to the action.

Note: A person may apply to the Administrative Appeals Tribunal for review of a decision that a national security risk relating to the action exists: see section 130A.

Treasurer may give notice of review

(3) If the Treasurer reviews an action under this section:

(a) the Treasurer must, unless it would prejudice Australia's national security interests to do so, notify the person, in writing, of the review; and

(b) if the action has not been taken - the giving of the notice prohibits, by force of this paragraph, the taking of the action until the review of the action is completed and:

(i) an order made under this Division is registered under section 79M; or

(ii) a no objection notification is varied under section 79G; or

(iii) a notice imposing conditions is given to the person under section 79H or is varied under section 79J; or

(iv) a notice is given under section 79B advising that a national security risk does not exist in relation to the action; and

(c) if the action has been taken - the Treasurer may:

(i) in the notice - give any direction to the person in relation to the action or a related activity that the Treasurer considers necessary to address the national security risk; and

(ii) in writing and before the review is completed - give any subsequent direction to the person in relation to the action or a related activity that the Treasurer considers necessary to address the national security risk.

(4) For the purposes of paragraph (3)(b) and an exemption certificate, the giving of the notice also prohibits, by force of this subsection, an action in relation to interests or kinds of interests, or the kinds of actions, to which the certificate relates until the review of the action is completed and an event mentioned in any of subparagraphs (3)(b)(i) to (iv) has occurred.

(5) For the purposes of paragraph (3)(c), the Treasurer may not give a direction that would require the person to take action of a kind mentioned in section 79E.

79B When an action creates a national security risk

(1) If the Treasurer reviews an action, as allowed by section 79A, the Treasurer must:

(a) give written notice to the person who proposes to take, or took, the action of the review; and

(b) either:

(i) if the Treasurer decides that a national security risk does not exist in relation to the action - include a statement to that effect in the notice; or

(ii) if the Treasurer decides that a national security risk exists in relation to the action - include the Treasurer's reasons for deciding that the risk exists in the notice.

(2) The Treasurer may redact from the written notice to the person who proposes to take, or took, the action:

(a) any reasons that would disclose the national security risk or result in prejudice to Australia's national security interests; or

(b) any information relied on in carrying out the review of the action on grounds of national security.

(3) To avoid doubt, a written notice to the person who proposes to take, or took, the action may be validly given under subsection (1) even if all the contents of the notice are redacted.

Subdivision B - Orders

79C Considerations required by Treasurer before any order given

If the Treasurer proposes to give an order to a person relating to an action under this Subdivision:

(a) the Treasurer must be satisfied that the action has been reviewed under Subdivision A; and

(b) the Treasurer must be reasonably satisfied that:

(i) in a case in which subparagraph 79A(1)(b)(i) applies - the false or misleading statement or the omission directly relates to the national security risk; or

(ii) in a case in which subparagraph 79A(1)(b)(ii) applies - the national security risk posed by the material change could not have been reasonably foreseen, or could have been reasonably foreseen but was only a remote possibility, at the time paragraph 79A(1)(a) was satisfied; or

(iii) in a case in which subparagraph 79A(1)(b)(iii) applies - the material change alters the nature of the national security risk posed at the time paragraph 79A(1)(a) was satisfied; and

(c) the Treasurer must also be satisfied that:

(i) reasonable steps have been taken to negotiate in good faith with the person to achieve an outcome of eliminating or reducing the national security risk relating to the action that the Treasurer has decided exists so as to avoid an order being given; and

(ii) requiring the person to comply with an order is reasonably necessary for purposes relating to eliminating or reducing the national security risk; and

(iii) the use of existing regulatory systems of the Commonwealth, a State or a Territory would not adequately eliminate or reduce the national security risk.

79D Order prohibiting proposed actions

(1) The Treasurer may, by notifiable instrument, make an order under subsection (2) if the Treasurer is satisfied that:

(a) an action is proposed to be taken; and

(b) taking the action would be contrary to national security.

Note: See also Part 5 (offences and civil penalties).

(2) The Treasurer may make an order in accordance with the following table.

(3) If the Treasurer makes an order under subsection (2), the Treasurer may, by notifiable instrument, also make an order in accordance with the following table.

Automatic revocation of no objection notification or notice imposing conditions

(4) If the Treasurer makes an order under subsection (2), any no objection notification or notice imposing conditions given in relation to the action is revoked by force of this subsection on the day that the order commences.

Note: For when an order commences, see section 79M.

79E Disposal orders

(1) The Treasurer may, by notifiable instrument, make an order under subsection (2) if the Treasurer is satisfied that:

(a) an action has been taken; and

(b) the result of the action is contrary to national security.

Note: See also Part 5 (offences and civil penalties).

(2) The Treasurer may make an order in accordance with the following table.

Orders made under table item 7

(3) Without limiting item 7 of the table in subsection (2):

(a) a foreign person is taken to have acquired an interest in Australian land if the person becomes (with or without the knowledge of the person) a beneficiary in a trust that consists of or includes the interest; and

(b) if the trust is a discretionary trust - a reference to the disposal of the interest of the foreign person is a reference to the disposal of any assignable benefits in relation to that trust that may ultimately vest in that foreign person.

Orders made under table items 2, 3, 4 or 6

(4) Before the end of a period specified in an order made under any of items 2, 3, 4 or 6 of the table in subsection (2) (or that period as extended under a previous application of this subsection), the Treasurer may, in writing, extend the period. The order has effect as if the period as extended had been specified in the order.

Automatic revocation of no objection notification or notice imposing conditions

(5) If the Treasurer makes an order under subsection (2), any no objection notification or notice imposing conditions given in relation to the action is revoked by force of this subsection on the day that the order commences.

Note: For when an order commences, see section 79M.

Subdivision C - Other powers of Treasurer

79F Considerations required by Treasurer before any power exercised

If the Treasurer proposes to exercise powers under this Subdivision in relation to an action taken, or proposed to be taken, by a person:

(a) the Treasurer must be satisfied that the action has been reviewed under Subdivision A; and

(b) the Treasurer must be reasonably satisfied that:

(i) in a case in which subparagraph 79A(1)(b)(i) applies - the false or misleading statement or the omission directly relates to the national security risk; or

(ii) in a case in which subparagraph 79A(1)(b)(ii) applies - the national security risk posed by the material change could not have been reasonably foreseen, or could have been reasonably foreseen but was only a remote possibility, at the time paragraph 79A(1)(a) was satisfied; or

(iii) in a case in which subparagraph 79A(1)(b)(iii) applies - the material change alters the nature of the national security risk posed at the time paragraph 79A(1)(a) was satisfied; and

(c) the Treasurer must also be satisfied that:

(i) reasonable steps have been taken to negotiate in good faith with the person to achieve an outcome of eliminating or reducing the national security risk relating to the action that the Treasurer has decided exists so as to avoid an order being given; and

(ii) requiring the person to comply with an order is reasonably necessary for purposes relating to eliminating or reducing the national security risk; and

(iii) the use of existing regulatory systems of the Commonwealth, a State or a Territory would not adequately eliminate or reduce the national security risk.

79G Varying or revoking conditions of no objection notification

If a person was given a no objection notification in relation to an action, the Treasurer may decide to vary the no objection notification by:

(a) revoking a condition; or

(b) imposing a new condition; or

(c) varying an existing condition; or

(d) varying the information specified under section 76;

if the Treasurer is satisfied that the variation is reasonably necessary for purposes relating to eliminating or reducing the national security risk relating to the action.

79H Notice imposing conditions

Imposition of conditions

(1) If a person was not given a no objection notification in relation to an action, the Treasurer may:

(a) decide that the Commonwealth has no objection to the action if one or more conditions were imposed that the Treasurer is satisfied would be reasonably necessary for purposes relating to eliminating or reducing the national security risk relating to the action; and

(b) notify the person, in writing (the notice imposing conditions ), of the conditions.

(2) The notice imposing conditions:

(a) must be given before the end of 10 days after the decision is made; and

(b) if a notice relating to the action was given - may be given to the person at an address (including an electronic address) specified in that notice as the address for service of notices relating to the action.

Content of notice

(3) A notice imposing conditions must:

(a) specify the following:

(i) the one or more actions to which the notice relates;

(ii) the one or more foreign persons to which the notice relates; and

(b) include the following:

(i) a requirement that the actions to which the notice relates, if taken, must be taken before the end of a specified period after the day the notice is given;

(ii) a statement to the effect that the Treasurer may, in certain circumstances, review the actions to which the notification relates under Division 3 and exercise powers under that Division.

(4) The notice imposing conditions may specify a foreign person by specifying:

(a) a foreign person that:

(i) is not yet incorporated; or

(ii) is a trustee of a trust that is not yet established; and

(b) the way in which the foreign person is to be incorporated or the trust is to be established.

(5) A foreign person is taken not to be specified in a notice imposing conditions if:

(a) the notice specified the foreign person under subsection (4) before the foreign person was incorporated or the trust was established; and

(b) the foreign person is not incorporated or the trust is not established in the way specified in the notice.

(6) The period mentioned in paragraph (3)(b) is:

(a) the period prescribed by the regulations; or

(b) if the Treasurer is satisfied that a longer period is not contrary to national security or the national interest - that longer period.

79J Variation of notice imposing conditions

If a person was given a notice imposing conditions in relation to an action, the Treasurer may decide to vary the notice imposing conditions by:

(a) revoking a condition; or

(b) imposing a new condition; or

(c) varying an existing condition; or

(d) varying the information specified under section 79H;

if the Treasurer is satisfied that the variation is reasonably necessary for purposes relating to eliminating or reducing the national security risk relating to the action.

Note: See also sections 79P (variation with consent or without disadvantage) and 79Q (variation on application).

Subdivision D - Miscellaneous

79K Exercise of powers under this Division

In exercising a power under this Division, the Treasurer:

(a) may have regard to any matter; and

(b) is not required to have regard to a particular matter, unless otherwise required by this Division.

Division 4 - Administrative provisions

Subdivision A - Orders

79L Variation and revocation of orders

Variations or revocations not contrary to the national interest

(1) The Treasurer may vary or revoke an order of a kind mentioned in subsection (2) at any time if:

(a) the Treasurer is satisfied that the variation or revocation is not contrary to the national interest; and

(b) for a variation:

(i) the person consents to the variation; or

(ii) the Treasurer is satisfied that the variation does not disadvantage the person.

(2) Subsection (1) applies in relation to the following kinds of orders:

(a) an order made under subsection 67(2) because the Treasurer was satisfied as mentioned in subsection 67(1);

(b) an order made under section 68 because the Treasurer was considering making an order mentioned in paragraph (a);

(c) an order made under subsection 69(2) because the Treasurer was satisfied as mentioned in subsection 69(1).

Variations or revocations not contrary to the national security

(3) The Treasurer may vary or revoke an order:

(a) made under subsection 67(2) because the Treasurer was satisfied as mentioned in subsection 67(1A); or

(b) made under section 68 because the Treasurer was considering making an order mentioned in paragraph (a); or

(c) made under subsection 69(2) because the Treasurer was satisfied as mentioned in subsection 69(1A); or

(d) made under Division 3;

at any time if the Treasurer is satisfied that the variation or revocation is not contrary to national security.

Subsection 33(3) of the Acts Interpretation Act not to apply

(4) Subsection 33(3) of the Acts Interpretation Act 1901 does not apply in relation to a power under this Part to make an order.

79M Registration and commencement of orders

Registration of orders

(1) An order made by the Treasurer under this Part must be:

(a) in writing; and

(b) registered on the Federal Register of Legislation within 10 days after it is made.

When an order commences

(2) An order under this Part commences:

(a) for an order under subsection 67(3) or 79D(3) (additional orders) or section 69 or 79E (disposal orders) - on the day specified in the order that is at least 30 days after the order is registered; and

(b) for any other order - on the day the order is registered.

79N Actions of more than one kind

If a single action is covered by more than one of the following (because an action is an action of more than one kind):

(a) the definition of notifiable national security action ;

(b) paragraph 40(2)(a), (b), (c), (d) or (e);

(c) paragraph 41(2)(a), (b) or (c);

(d) paragraph 43(a);

(e) a provision of regulations made for the purposes of section 44;

(f) an action in respect of which the Treasurer has given a notice under subsection 66A(4);

the Treasurer may make any of the orders under this Part that the Treasurer could make in relation to the single action.

Subdivision B - Variation of notices imposing conditions

79P Variation with consent or without disadvantage

(1) The Treasurer may, subject to subsection (3), vary a notice imposing conditions by:

(a) revoking a condition; or

(b) imposing a new condition; or

(c) varying an existing condition; or

(d) varying the information specified under section 79H;

if the Treasurer is satisfied that the variation is not contrary to national security.

(2) The variation may be made on the Treasurer's own initiative.

(3) The Treasurer may vary a notice imposing conditions given to a person by imposing a new condition or varying an existing condition only if:

(a) the person consents to the new condition or the variation; or

(b) the Treasurer is satisfied that the new condition or variation does not disadvantage the person.

79Q Variation on application

(1) A person given a notice imposing conditions may apply to the Treasurer for a variation of the notice (including after the action specified in the notice is taken).

Note: See also Part 6 (fees) and section 135 (manner of application).

(2) An application for an extension of a period specified in a notice imposing conditions must be made 2 months before the end of the period.

(3) The Treasurer may vary a notice imposing conditions if the Treasurer is satisfied that the variation is not contrary to national security.

Division 5 - Treasurer directions

Subdivision A - Directions to persons

79R Treasurer may give direction to person

(1) The Treasurer may make a direction under subsection (3) if any of the following conditions are met:

(a) the Treasurer has reason to believe that a person has engaged, or is engaging, in conduct that constitutes a contravention (the relevant contravention ) of a provision of this Act;

(b) the Treasurer has reason to believe that a person will engage in conduct that would constitute a contravention (also the relevant contravention ) of a provision of this Act.

(2) If the conditions in either or both of paragraphs (1)(a) and (b) are met in respect of 2 or more relevant contraventions, the direction may relate to any or all of those relevant contraventions.

(3) The Treasurer may direct the person in writing to engage in conduct specified in the direction in order to:

(a) if paragraph (1)(a) applies - address the relevant contravention; and

(b) if paragraph (1)(b) applies - prevent the relevant contravention; and

(c) in any case - prevent a similar or related contravention.

(4) Without limiting the scope of subsection (3), the direction may direct the person to engage in specified conduct:

(a) during a specified period; or

(b) by or until a specified time; or

(c) until a specified condition is met.

(5) Without limiting the scope of subsections (3) and (4), the conduct to be engaged in as specified in the direction may include any of the following:

(a) to comply with one or more specified provisions of this Act;

(b) if the relevant contravention relates to one or more conditions in a no objection notification or exemption certificate - to comply with those conditions in the no objection notification or exemption certificate;

(c) to engage in specified conduct that is necessary to address or prevent consequences arising from the relevant contravention that the Treasurer is satisfied are contrary to the national interest;

(d) to take specified steps that are ancillary to conduct mentioned in the previous paragraphs of this subsection;

(e) any other conduct of a kind specified in the regulations.

(6) Subsection (7) applies if a consequence or possible consequence arising from the relevant contravention is that the composition of the group of senior officers of a corporation is a composition that the Treasurer is satisfied is contrary to the national interest.

(7) Without limiting the scope of subsections (3) and (4) and paragraph (5)(c), the conduct to be engaged in as specified in the direction may include any of the following, to the extent necessary to address or prevent the consequence or possible consequence mentioned in subsection (6):

(a) to ensure that specified persons cease to be senior officers of the corporation;

(b) to ensure that specified persons do not become senior officers of the corporation;

(c) to ensure that specified kinds of person (such as persons who are not Australian citizens, or who are foreign persons) cease to be senior officers of the corporation;

(d) to ensure that specified kinds of person (such as persons who are not Australian citizens, or who are foreign persons) do not become senior officers of the corporation;

(e) to ensure that a specified proportion of the senior officers of the corporation are not specified kinds of person (such as persons who are not Australian citizens, or who are foreign persons).

(8) Despite section 46AA of the Acts Interpretation Act 1901, a direction under subsection (3) may provide for a matter by applying, adopting or incorporating, with or without modification, any matter contained in an instrument or other writing as in force or existing from time to time.

(9) A direction under subsection (3) is not a legislative instrument.

79S Publication of directions

(1) If the Treasurer makes a direction under subsection 79R(3), the Treasurer must ensure that the direction is published on a website maintained by the Department as soon as practicable after it is made.

(2) If a direction under subsection 79R(3) has not yet been published on a website maintained by the Department, the Treasurer may decide, in writing, that publishing the direction on such a website would be contrary to the national interest.

(3) If the Treasurer makes a decision under subsection (2) in relation to a direction, subsection (1) does not apply to the direction.

(4) The direction is not invalid merely because of a failure to comply with subsection (1).

79T When direction takes effect

A direction under subsection 79R(3) takes effect at the later of the following times:

(a) the time when it is given to the person in respect of which it was made;

(b) the time specified in the direction as the time when it takes effect.

79U Varying and revoking directions

(1) The Treasurer may, by notice in writing to the person in respect of which a direction under subsection 79R(3) was made, vary the direction if, at the time of the variation, the Treasurer considers that the variation is appropriate and is not contrary to the national interest.

(2) The Treasurer may, by notice in writing to the person in respect of which a direction under subsection 79R(3) was made, revoke the direction if, at the time of the revocation, the Treasurer considers that:

(a) the direction is no longer appropriate; and

(b) revoking the direction is not contrary to the national interest.

(3) If the Treasurer makes a variation or revocation under this section, the Treasurer must ensure that the variation or revocation is published on a website maintained by the Department as soon as practicable after it is made.

(4) If a variation or revocation under this section has not yet been published on a website maintained by the Department, the Treasurer may decide, in writing, that publishing the variation or revocation on such a website would be contrary to the national interest.

(5) If the Treasurer makes a decision under subsection (4) in relation to a direction, subsection (3) does not apply to the variation or revocation.

(6) The variation or revocation is not invalid merely because of a failure to comply with subsection (3).

(7) A variation or revocation under this section of a direction takes effect at the later of the following times:

(a) the time when it is given to the person in respect of which the direction was made;

(b) the time specified in the variation or revocation as the time when it takes effect.

Subdivision B - Interim directions to persons

79V Treasurer may give interim direction to person

(1) The Treasurer may make an interim direction under subsection (3) if:

(a) any of the following conditions are met:

(i) the Treasurer has reason to believe that a person has engaged, or is engaging, in conduct that constitutes a contravention (the relevant contravention ) of a provision of this Act;

(ii) the Treasurer has reason to believe that a person will engage in conduct that would constitute a contravention (also the relevant contravention ) of a provision of this Act; and

(b) the Treasurer considers that a delay in making the interim direction would be contrary to the national interest.

(2) If the conditions in either or both of subparagraphs (1)(a)(i) and (ii) are met in respect of 2 or more relevant contraventions, the interim direction may relate to any or all of those relevant contraventions.

(3) The Treasurer may direct the person in writing to engage in conduct specified in the interim direction in order to:

(a) if subparagraph (1)(a)(i) applies - address the relevant contravention; and

(b) if subparagraph (1)(a)(ii) applies - prevent the relevant contravention; and

(c) in any case - prevent a similar or related contravention.

(4) Without limiting the scope of subsection (3), the interim direction may direct the person to engage in specified conduct:

(a) during a specified period; or

(b) by or until a specified time; or

(c) until a specified condition is met.

(5) Without limiting the scope of subsections (3) and (4), the conduct to be engaged in as specified in the interim direction may include any of the following:

(a) to comply with one or more specified provisions of this Act;

(b) if the relevant contravention relates to one or more conditions in a no objection notification or exemption certificate - to comply with those conditions in the no objection notification or exemption certificate;

(c) to engage in specified conduct that is necessary to address or prevent consequences arising from the relevant contravention that the Treasurer is satisfied are contrary to the national interest;

(d) to take specified steps that are ancillary to conduct mentioned in the previous paragraphs of this subsection;

(e) any other conduct of a kind specified in the regulations.

(6) Despite section 46AA of the Acts Interpretation Act 1901, an interim direction under subsection (3) may provide for a matter by applying, adopting or incorporating, with or without modification, any matter contained in an instrument or other writing as in force or existing from time to time.

(7) An interim direction under subsection (3) is not a legislative instrument.

79W When interim direction takes effect

An interim direction under subsection 79V(3) takes effect at the later of the following times:

(a) the time when it is given to the person in respect of which it was made;

(b) the time specified in the interim direction as the time when it takes effect.

79X Expiry of interim direction

(1) Subsection (2) applies if:

(a) the Treasurer makes an interim direction under subsection 79V(3) in respect of a person because a condition in subparagraph 79V(1)(a)(i) or (ii) was met in relation to a relevant contravention of a provision; and

(b) after the day on which the interim direction takes effect, the Treasurer makes a direction under subsection 79R(3) in respect of the person because a condition in paragraph 79R(1)(a) or (b) was met in relation to the relevant contravention.

(2) The interim direction ceases to have effect at the time the direction takes effect.

(3) To avoid doubt, this section does not prevent the Treasurer from revoking the interim direction under section 79Y.

79Y Varying and revoking interim directions

(1) The Treasurer may, by notice in writing to the person in respect of which an interim direction under subsection 79V(3) was made, vary the interim direction if, at the time of the variation, the Treasurer considers that the variation is appropriate and is not contrary to the national interest.

(2) The Treasurer may, by notice in writing to the person in respect of which an interim direction under subsection 79V(3) was made, revoke the interim direction if, at the time of the revocation, the Treasurer considers that:

(a) the interim direction is no longer appropriate; and

(b) revoking the interim direction is not contrary to the national interest.

(3) A variation or revocation under this section of an interim direction takes effect at the later of the following times:

(a) the time when it is given to the person in respect of which the interim direction was made;

(b) the time specified in the variation or revocation as the time when it takes effect.