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A sign of the times? Goldsea’s takeover bid for Alto Metals lapses following extended FIRB review

Corporate News - 26 June 2020

China’s Goldsea Group has announced that Goldsea Australia will let its A$22 million takeover bid for Australian miner Alto Metals lapse following the Foreign Investment Review Board (FIRB) requesting a six month extension to review the deal.
 
Earlier this year, the FIRB had announced temporary changes to the foreign investment framework which included:

the ability to extend review periods to up to six months; and
reducing the monetary threshold for the screening of all foreign investments in Australia to $0 for all agreements entered into after 29 March 2020 regardless of the nature of the investor.

 There were already a range of proposed acquisitions that were subject to $0 thresholds under existing rules (including all acquisitions by foreign government investors, private acquisitions in Australian media businesses, residential land proposals, mining and production tenements, and vacant commercial land proposals), however, the temporary change will affect a number of entities. Importantly for many of our exploration clients, acquisitions of an interest in other types of tenements (exploration, prospecting) may be classed as interests in land if the term of the tenement is reasonably likely to be 5 years or more (including renewals).  Previously there were different monetary thresholds depending on the type of land which the tenement overlaps (for example, agricultural land or commercial land), but as these are now $0, FIRB approval would need to be sought for acquisitions by foreign persons of these types of tenements regardless of value.
 
The monetary threshold change does not, however, alter the meaning of ‘significant action’ or ‘notifiable action’ under the Foreign Acquisitions and Takeovers Act 1975. What this means is that certain acquisitions will still not need FIRB approval if they do not satisfy the other conditions that are required for them to be significant or notifiable actions.
 
The Federal Government is yet to confirm an end date for these temporary changes.  
 
Please contact us in our Perth office on +61 8 9321 4000 or our Melbourne office on +61 3 9111 9400 if you have any queries or require advice in relation to potential foreign investment issues.  Preparation and early engagement would appear to be key.

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