Proposed FIRB changes to boost business investment

9th Mar 17

Thursday, 9 March 2017: The Australian Private Equity & Venture Capital Association Limited (AVCAL) welcomes the Government’s latest consultation paper on foreign investment, given its importance to the Australian economy.

Noting it as a positive step towards a more streamlined and efficient process, AVCAL said the introduction of a pre-approval “exemption certificate” mechanism for low sensitivity business investments would help Australian businesses receive the capital they need in a timely manner.

“We are glad to see consideration is being given to reforming the framework implemented in December 2015, which has led to many small transactions requiring Foreign Investment Review Board approval despite posing minimal national interest concerns. If the right mechanism can be put in place, the proposed reforms could have a real and positive impact on our economy,” said AVCAL CEO, Yasser El-Ansary.

This model would remove the current need for private equity funds with passive foreign government investors in their investor base from seeking approval of all acquisitions of 10% or more in an Australian entity, regardless of the dollar value of the deal.

The introduction of an exemption certificate model has the potential to save millions of dollars in application fees and compliance costs each year, as well as reducing regulatory delays which can stifle investment from taking place.

“Foreign investment, as a contributor to Australian private equity and venture capital funds, is an important factor in building and supporting Australian businesses.”

“In 2016 alone, around $3 billion was invested in Australian businesses by private equity and venture capital,” Mr El-Ansary said.

AVCAL will continue to work with the Government and other stakeholders towards the goal of a strong and efficient foreign investment framework that appropriately balances national interest concerns with the need to support much-needed investment into Australia.