Earlier this year, Consolidated Pastoral Company (CPC), Australia’s largest privately owned cattle enterprise, hit the market sparking the all-to-often heard debate of whether this Australian agricultural gem will be snapped up by a Foreign Investor. In February 2018, the possibility of CPC being acquired by a Foreign Investor was made potentially harder when the Australian Government announced their new formal policy and guidelines to be applied by Australia’s Foreign Investment Review Board (FIRB) to proposed acquisitions of agricultural land by a foreign investor.
The Government indicated that these new rules were implemented in order to enable more opportunity for Australians to invest in agricultural land. However, the pending question is whether any domestic investors can compete against the wealth of the foreign bidders.
The new policy implements strict requirements that the proposed sale of agricultural land is to be part of an open and transparent public sales process. The FIRB must be satisfied that the sale was widely market to potential Australian bidders for a minimum of 30 days and that it can be shown there was equal opportunity for Australian bidders to make an offer for the property. If the agricultural land is subsequently acquired by a foreign investor, the purchaser will be required to demonstrate to the FIRB how they became aware of the property for sale and show that the acquisition was the result of an open and transparent sales process.
There is a handy exception to this requirement in that if the property has previously been marketed in an open and transparent matter over the last six months but has failed to sell, then a foreign investor can acquire it no strings attached.
It will be interesting to observe the sale process of CPC and its adherence to the new policy and guidelines. The first round of bidding opened in April 2018 and there is yet to be any announcements as whether a successful bid was offered.
If you have any queries relating to the government’s new policy on foreign investment, contact Everingham Solomons because Helping You is Our Business.
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