AUSTRALIA Law and Practice Contributed by: Mark Grime and George Lukic, Thomsons
Foreign Currency Conversion Section 7–40 of the Competition and Consumer (Noti - fication of Acquisitions) Determination 2025 sets out mandatory, bifurcated rules for converting foreign cur - rency to Australian Dollars (AUD) for both revenue and transaction value. • The “audited financials” rule: If a revenue amount or asset value is derived directly from an entity’s formal financial report, provided that report was prepared in accordance with recognised account - ing standards and properly audited under the Cor - porations Act 2001 (or an equivalent foreign law), the parties must use the specific exchange rates that were utilised in that audited financial report and the entity’s internal accounting systems. • The “average exchange rate” rule: If the figure is not derived from such audited accounts (eg, the forward-looking calculation of the transaction value or consideration at signing), the amount must be translated using an average exchange rate for the period most closely corresponding to the period to which the amount relates, being either the exchange rate published by the Reserve Bank of Australia or a publicly and commercially available market exchange rate. 2.7 Businesses/Corporate Entities Relevant for the Calculation of Jurisdictional Thresholds Acquirer Group Threshold calculations are performed on a consoli - dated group-wide basis, incorporating the gross Aus - tralian revenue (excluding taxes) of the acquirer and all its “connected entities” globally. In broad terms, connectivity is primarily determined by the “practical influence” test, which captures any entity where a party has the capacity to determine financial and operating policies. This includes ultimate holding companies, sister companies under common control, associates, and joint ventures where the acquirer exerts de facto strategic influence. Associate “Minority Shareholder” Carve-Out Relationships and voting power arising solely from standard minority shareholder protection rights should be distinguished from arrangements that confer genu -
ine joint influence over board composition, strategic direction or financial and operating policy. Where an investor holds only defensive rights, such as protec - tions against capital reductions, constitutional amend - ments or other measures directed to preserving the value of its investment, without the capacity to influ - ence core policy decisions, those entities should not ordinarily be treated as associates and their independ - ent portfolios should not be aggregated on that basis alone. That said, the scope of associate aggrega - tion requires careful analysis, particularly in minority investment, consortium and joint venture structures. Target Group and Business Assets For share acquisitions, target revenue is limited to gross annual revenue derived from customers in Aus - tralia specifically attributable to the target entity being acquired. While the seller’s retained annual group revenue is excluded, the calculation must include the consolidated annual revenue of the target and any entities it controls. For asset acquisitions where the assets comprise all or substantially all of the assets of a business, the gross annual Australian revenue attributable to the business is the relevant metric. For acquisitions of dis - crete business assets, the tests look at the transaction value rather than the target’s revenue. Reference Period Adjustments To ensure revenue reflects the business’s current state at the time of notification: • divestments – revenue from businesses or assets disposed of during the reference period must be excluded; • acquisitions – revenue from businesses acquired during the reference period must be that from the point in time at which the business was acquired; and • consolidation – all calculations must eliminate intra-group transactions to avoid double-counting or the artificial inflation of revenue figures. Serial Acquisitions and Aggregation The “three-year look-back” rule requires the aggre - gation of revenue from businesses acquired by the acquirer group in the same industry as the target in
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