AUSTRALIA Law and Practice Contributed by: Michael Lawson, Nicole Brown, Lizzie White and Tamaryn Leach, MinterEllison
tions and Takeovers Fees Impositions Act 2015, along with their associated regulations. The legislation generally regulates foreign invest - ment proposals by a “foreign person”. Foreign persons involved in applicable transactions are required to notify FIRB. “Foreign persons” essentially means individuals, offshore compa - nies, or onshore companies in which offshore foreigners hold a substantial interest. It includes private foreign investors and foreign government investors. Changes to the rules applied by FIRB from 1 January 2021 also give the Treasurer “call-in powers” and “last-resort powers”, by which the Treasurer may “call in” investments not notified to FIRB for review and in exceptional circum - stances may exercise “last-resort powers” to impose conditions, vary existing conditions or require divestment of approved investments where national security risks emerge. In addition, a new set of rules applies for screening national security businesses, which include: • communications (including telecommunica - tions, broadcasting and domain name sys - tems); • higher education and research; • data storage and processing; • the defence industry; • energy (including electricity, gas, energy mar - ket operators and liquid fuels); • food and grocery; • financial services and markets (including banking, superannuation, insurance and financial market infrastructure); • healthcare and medical (including hospitals); • space technology; • transport (including ports, freight infrastruc - ture, freight services, public transport and aviation); and
• water and sewerage. The critical infrastructure rules and FIRB’s guid - ance also outline some specific entities (eg, Aus - tralia’s big supermarkets, banks, insurers and superannuation funds) as critical infrastructure assets. 2.3 Regulatory Environment 2.3.1 Regulatory Regime Entities managing alternative funds should: • hold an AFSL with appropriate authorisations; • be appointed as the authorised representative of the holder of an AFSL; or • fall within a relevant licensing exemption under the Corporations Act. Where the fund is a unit trust, the trustee and the manager should have the appropriate authori - sations regarding managing and issuing inter - ests in a managed investment scheme. Where a foreign manager wishes to offer interests in an Australian fund, it is common to appoint a corporate trustee as the trustee of the fund, who would appoint the manager as the investment manager of the fund (see 2.3.3 Local Regulatory Requirements for Non-local Managers regard - ing the regulation of the manager). From a regulatory perspective, alternative funds open to only wholesale clients operate relatively freely. There are very few limitations that apply to alternative funds. Significantly, for private equi - ty funds, there are adverse tax implications if a trust were to control a business such that it would be designated a “trading trust”. In such a case, the trust would potentially not be eligible to qualify as a managed investment trust and could be treated like a company (where the trust
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