In an attempt to tighten policy surrounding approval of agricultural farmland, the Federal Government has released new rules to mandate sellers of agricultural land to advertise and market agricultural land to Australians first.
Current Threshold for Scrutiny
Foreign persons must apply to the Foreign Investment Review Board (FIRB) for approval if the acquisition of an interest in Australian agricultural land meets the threshold test.
The threshold test is met if the aggregate value of the land and all interests in agricultural land held by the foreign person (and associates) is more than $15 million.
FIRB approval will be granted as long as the acquisition is not contrary to national interest.
New Selling Rules
The decision-maker under the new rules will need to consider whether there was an open and transparent opportunity for Australians to acquire the agricultural land.
Factors to consider include whether:
- public marketing/advertising was undertaken for the sale of the property, using channels that Australian bidders could reasonably access (including advertising on real estate listing sites or a large regional/national newspaper);
- it was marketed/advertised for at least 30 days; and
- there is equal opportunity for Australian bidders or offers to be made for the property while still available for sale.
Foreign investors will have to demonstrate how they became aware that the property was advertised for sale and may be requested to provide evidence of the sale process.
Exceptions of the New Advertising Requirements
Applicants will have to demonstrate that:
- the Property was marketed/advertised in the required manner in the last six months but did not sell; or
- there is a substantial Australian ownership share (i.e. 50 per cent or more), despite a foreign ownership share; or
- the acquisition is required to comply with State or Commonwealth law, e.g., mining buffer zones.
When acting for a buyer, legal practitioners will have to consider imposing obligations on the seller to assist and cooperate in this regard. Sellers will need to take into account the additional time and costs of an appropriate advertising campaign.