On 1 February 2018, the Treasurer, Scott Morrison MP, announced significant changes to Australia’s foreign investment regime. The changes include:

• the requirement that sales of agricultural land and agribusiness are subject to an open and transparent sale process
• new guidance that clarifies that business exemption certificates are unlikely to be used with respect to acquisitions of interests in agribusiness and 
• the introduction of the ‘open and transparent sale process’ as a condition imposed on land exemption certificates.

The changes to the foreign investment regime were implemented through amendments to three of the Foreign Investment Review Board’s (FIRB) guidance notes, being:

• Agricultural land investments (Guidance Note 17)
• Land exemption certificates (Guidance Note 21)
• Business exemption certificates (Guidance Note 26).

Open and transparent sale process

The new ‘open and transparent sale process’ requirement is the most significant of the changes, and has been introduced to ensure that as part of the ‘national interest’ test, the Treasurer will consider whether Australians are afforded an opportunity to participate in sales involving agricultural land. Under these changes, foreign investors will only be able to acquire agricultural land where they can demonstrate there has been an open and transparent sale process. This requirement applies specifically in relation to acquisitions of agricultural land, but also more generally as a condition of approval by FIRB to a program of acquisitions of any type of land where the applicant is granted an exemption certificate (see Guidance Note 21).

In relation to agricultural land purchases, Guidance Note 17 states that an ‘open and transparent sale process’ requires that:

• public marketing/advertising was undertaken for the sale of the property, using channels that Australian bidders could reasonably access (e.g. advertised on a widely used real estate listing site or large regional/national newspaper)
• the property was marketed/advertised for at least 30 days and 
• there was equal opportunity for bids or offers to be made for the property while still available for sale.

In applying to FIRB, a foreign person may be required to demonstrate that the sale was subject to an open and transparent sale process. In addition, foreign persons may be required to set out in detail how they became aware that the agricultural land or agribusiness was for sale. Although this is expressed as an obligation on applicants, sellers of agricultural land need to ensure that they have marketed their land in accordance with these guidelines or face the likelihood that any foreign purchaser of their land may not obtain FIRB approval.

There are a number of exemptions to the open and transparent sale process requirement for agricultural land purchases, including where:

• the property was the subject of an open and transparent sale process in the previous six months, but did not sell
• the applicant has a substantial Australian ownership (being 50 percent or more) as this constitutes an opportunity for Australian bidders, despite the foreign ownership share and 
• the applicant is required to make the acquisition to comply with state or federal law (for example, to acquire land as a mining buffer zone).