Australia’s FIRB regime overhaul: Major reforms for foreign investors

On 19 May 2026, the Australian Treasurer announced a significant package of reforms to Australia’s foreign investment regime, continuing the Government’s broader push to both streamline lower risk investment pathways and strengthen oversight of transactions considered sensitive or high risk from a national security perspective.

The reforms, which build on changes introduced in May 2024, are extensive and will require legislative amendment. Timing for implementation remains uncertain, although the Government has indicated a staged rollout from July 2026.

Stakeholders will have an opportunity to consult with Treasury on the reforms through draft legislation and Hamilton Locke intends to participate in this process including by making submissions to Treasury. If there are matters of interest to you in these reforms, please get in touch to discuss their practical operation and be a part of our submissions on draft legislation.

Broadly, the reforms reflect two parallel policy objectives:

• streamlining the FIRB process for low risk investors and transactions; and
• strengthening the Government’s oversight, enforcement and intervention powers in relation to investments that are considered high risk or sensitive from a national security perspective.

Taken together, the reforms are likely to result in increased scrutiny of investments in sectors considered sensitive from a national security perspective. While the scope of those sectors is yet to be formally defined, early indications suggest they will include critical infrastructure, critical minerals, critical technologies (including AI infrastructure) and sensitive data businesses.

Key takeaways

Streamlining

• a 30-day decision target for ‘low-risk’ investments: From 1 January 2027, the Government will implement a new target for deciding all ‘low-risk’ FIRB applications within 30 days. While this is a welcome development in principle, caution should be exercised around the proposed clock stoppers – see details below.
• Exempting certain lower risk investments from approval requirements: The reforms contemplate removing mandatory notification and approval requirements for selected low-risk, minor or incremental acquisitions that do not have significant control implications and generally present low risks.
• Broadening of Exemption Certificate (EC) powers: The Treasurer’s powers in respect of EC’s will be broadened, allowing certain legislative concepts to be adjusted or ‘switched off’ for eligible low-risk investors (such as the application of the foreign person, foreign government investor, associate and tracing provisions). Treasury has also flagged that application fees for ECs will take into account the value of the benefit conferred, suggesting that ECs may become increasingly expensive. We expect the cost vs time benefit of EC’s to be front of mind for investors weighing up an EC pathway.
• Other: other streamlining measures include (1) amending the tracing rules to ensure they only capture entities with material interests or control; (2) increasing the general validity period for which actions can be taken from 12 months to 24 months; (3) reviewing ineffective conditions on existing approvals; and (4) removing the requirement for investors to register their interests for commercial land, businesses or entities on the Register of Foreign Ownership of Australian Assets.

Strengthening

• Expanded approval requirements in sensitive sectors: The Government proposes a new legislative mechanism enabling the Treasurer to respond more quickly to emerging or changing risks by adjusting mandatory notification requirements for investments in sensitive sectors. This appears to be a reaction to recent world events and the rapid impact they have on global risks and economies. This will be one to watch.In addition, mandatory notification requirements will also be expanded for certain investments in current and emerging sensitive sectors of the Australian economy where investment is strategically important but carries higher national security risk. These sectors have not yet been named, however existing policy suggests likely areas of focus will include critical infrastructure, critical minerals, critical technology (including AI infrastructure), any business involving sensitive data, and any investments in proximity to sensitive Australian Government facilities to be on the list.
• Capture of non-ownership forms of control: Treasury proposes to extend oversight to commercial arrangements capable of conferring foreign influence or control without traditional ownership rights, such as certain offtake agreements and lending arrangements.
• Stronger anti avoidance measures and penalties: The reforms will strengthen anti-avoidance laws, including by lowering the current ‘sole or dominant purpose’ anti avoidance threshold and expanding the Treasurer’s ability to impose penalties on persons involved in avoidance conduct. This appears to be off the back of the recent Federal Court case brought by the Treasurer against Indian Ocean International Shipping and Service Company Ltd and its former associate in relation to their investment in Northern Minerals Limited.
• Other: other strengthening measures include (1) broadening the scope of conditions that can be imposed on investors; (2) enhancing the Treasurer’s scope to issue orders, directions and infringement notices; (3) enhancing the Treasurer’s last resort power and call in power; (4) broadening the definition of ‘associate’; (5) increasing the ability of the Treasurer to share protected information it has collected as part of a FIRB assessment.

Introduction

The Government’s plans to reform the FIRB legislative framework were foreshadowed on 31 October 2025 with the release of a Discussion Paper seeking stakeholder views. Hamilton Locke participated in that consultation process and made a range of submissions to FIRB. Stakeholders overwhelmingly supported streamlining reforms for low-risk investments, faster assessments, simpler rules and fewer duplicative obligations. They also supported strengthening reforms that are proportionate to risk and predictable in application.

The package announced in the Budget is, in broad terms, consistent with that feedback.

We examine the key reforms below, together with next steps.

Streamlining of policy and practice 

Key Changes

New 30-day decision target for low-risk applications

From 1 January 2027, the Government will implement a new target for deciding all ‘low-risk’ FIRB applications within 30 calendar days of receiving a complete application. The applicant will either receive a decision within 30 calendar days or be informed why further assessment of their proposal is required. It will be interesting to see if this follows our experience with the ACCC, where the “complete application” requirement becomes a tool for the regulator to manipulate the review deadline. To qualify as low risk:

1. The applicant:
   • must have received a FIRB approval in the past 24 months;
   • must not be subject to extrajudicial direction (which appears to rule out some state-owned entities); and
   • must have no record of non-compliance or character concerns.
2. The proposed transaction itself:
   • must not be in a sensitive sector or business (i.e. cannot be a national security business or a ‘sensitive business’ such as media, telecommunications, transport, security technologies, defence or uranium);
   • must have no national interest sensitivities (a term yet to be defined); and
   • must have a straightforward and transparent corporate transaction structure.

The 30-day target applies to no objection applications only. Where a transaction also requires ACCC merger clearance, FIRB will hold off issuing its approval until ACCC approval has been granted, consistent with current practice – which further inhibits the practical use of the 30-day decision target.

The Government will also formally exclude the Christmas/New Year shutdown period from statutory decision-making timeframes across the framework, formalising existing practice. This target, together with the new exemptions discussed below, appears to be the Government’s answer to the notification-only pathway proposed in the October 2025 Discussion Paper — under which low-risk investors could notify and proceed without awaiting approval. Hamilton Locke actively supported that pathway through industry submissions, along with many other market participants. Disappointingly, the Government has not adopted that model. Instead, the current system has largely been retained for the majority of foreign investors.

Broadening Exemption Certificate (EC) powers

The Government will broaden the existing EC powers to allow the Treasurer, where appropriate, to issue ECs that switch off or adjust the operation of concepts such as FGI status, foreign personhood, tracing, associate rules and reporting obligations. Decisions to grant these extended ECs will be made on a case-by-case basis, taking into account the investor’s governance arrangements, character, compliance history and the sensitivity of the proposed investments. The Government states that low-risk investors currently caught by the broad application of tracing rules and FGI test will be the primary beneficiaries.

This is arguably the most significant structural reform in the package for repeat investors, private equity firms and foreign government investors, including sovereign wealth funds. While the current EC regime can be useful, it has real practical limitations. We have advocated for this reform through industry submissions and welcome its inclusion.

That said, two issues warrant close attention. First, the Government has indicated that EC application fees will be set to reflect the benefit to investors, implying that they are likely to be expensive. We anticipate the combination of higher fees and uncertainty around processing timeframes and validity periods may deter some investors from pursuing this pathway, unless they have a strong active acquisition pipeline to justify the upfront cost and effort. Second, the question of whether the new EC regime will address the structural issues faced by investment fund structures — in particular, the FGI classification of fund vehicles that include passive sovereign wealth investors as limited partners — will depend entirely on how ‘low-risk investor’ is defined in the draft legislation.

Exempting certain lower-risk investments from approval requirements

The Government will remove mandatory notification and approval requirements for selected low-risk, minor or incremental acquisitions that do not have significant control implications. Key changes will include:

• Exempting small percentage increases in existing holdings with no change of control. No indication has been given as to what will constitute a “small percentage” increase;
• Raising of the monetary threshold (currently A$347 million) for non-FTA non-FGI investors in non-sensitive sectors;
• Expanding exemptions for professional trustees and expansion of the interfunding exemption to unregistered managed investment schemes;
• Exempting land subdivisions or amalgamations where ownership does not change; and
• Exempting acquisitions of Australian Carbon Credit Units under defined conditions.

Notably, there is no mention of any broader exemption for internal reorganisations (i.e., where the ultimate upstream ownership of the asset does not change as a result of the transaction), which many industry participants had hoped would be included as part of the reforms.

Some actions in sensitive sectors may instead become reviewable national security actions, while actions in non-sensitive sectors may be excluded from the framework entirely.

Other

• Review of ineffective conditions: From 1 July 2026, Treasury will review conditions on existing FIRB approvals to update or remove ineffective conditions, focusing initially on tax conditions. Conditions may be removed where they overlap with other regulatory regimes or where their reporting burden far outweighs their value. Treasury will provide further information about the review in July 2026, including details on opportunities for investors to engage.
• Operation of the tracing rules: The Government will amend the tracing provisions to focus screening on circumstances where upstream entities may have material interests or control, making the rules more proportionate to actual risk. The amendments will also allow screening of acquisitions where an upstream entity materially increases their level of control or influence by acquiring interests directly, despite having previously received approval through traced interests. This is a very welcome change, for PE in particular, as the current tracing rules are a persistent source of disproportionate compliance burden: passive FGI investors in a fund vehicle can trigger traced interests across the entire fund portfolio in circumstances that bear no relationship to those investors’ actual influence over the underlying Australian assets.
• Increasing the standard FIRB approval validity period from 12 to 24 months: The Government will increase the default validity period for no objection notifications from 12 to 24 months, with flexibility to vary periods on a case-by-case basis. This is a practical and welcome reform that the industry has consistently advocated for, and it reflects the realities of modern cross-border M&A — where regulatory approvals across multiple jurisdictions, syndicated financing arrangements and commercial conditions precedent can extend timelines well beyond twelve months.
• Streamlined reporting to the Register of Foreign Ownership of Australian Assets: The requirement to separately report acquisitions of interests in commercial land, businesses and entities to the Register will be removed (being the vast majority of acquisitions from a volume perspective). Instead, investors will be required to register realised acquisitions that were approved by Treasury through Treasury’s system for investment proposals, thereby avoiding the need to re-enter information already included in their application. Acquisitions of water interests, agricultural land and residential land, as well as certain mining tenements, will still need to be recorded on the Register.
• More flexible no objection notification powers: The Government will empower the Treasurer to issue and vary no objection notifications more flexibly. The Government will also enable no objection notifications and ECs to incorporate non-legislative standards, such as those issued by Standards Australia. The stated purpose is to ensure that conditions imposed on investors do not become outdated over time and to provide greater clarity about investors’ obligations.
• EC applications will no longer have statutory decision deadlines: Government will remove the statutory time limit that currently applies to the Treasurer’s consideration of EC applications, reflecting their complexity and the time required for detailed assessment. No objection notification applications will retain their statutory timeframes, preserving the time-sensitive pathway for transactional approvals.

Strengthening of FIRB legislation

A new power to rapidly adjust screening requirements for sensitive sectors

The Government will introduce a new legislative tool enabling the Treasurer to quickly adjust mandatory notification requirements for investments in sensitive sectors in response to changing risk settings. The stated objective is to allow screening requirements to be adjusted in a timely manner as new risks emerge. We expect this proposal is, at least in part, a response to recent world events and the speed at which global security and economic risks can evolve. While the Government has indicated that the new power will be accompanied by safeguards to provide investors with clarity and certainty regarding screening requirements, this is a reform we will be watching closely, as it has the potential to introduce an additional layer of regulatory uncertainty for investors operating in sensitive sectors.

In addition, the Government will initially expand mandatory notification requirements for certain investments in current and emerging sensitive sectors of the Australian economy, where investment is strategically important but also carries higher national security risks. Treasury will consult across government and industry on the details of the expanded approval requirements including definitions for investments in the relevant sectors and the criteria that will trigger screening requirements – we look forward to being a part of this discussion. Based on existing policy, we expect critical infrastructure, critical minerals, critical technology (including AI infrastructure), any business involving sensitive data, and any investments in proximity to sensitive Australian Government facilities data centres and AI infrastructure to be on the list.

The government will also expand mandatory notification requirements for mining tenement acquisitions.

Capture of non-ownership forms of control

The Government will extend oversight and review of commercial arrangements capable of conferring influence or control without traditional ownership rights, such as certain offtake agreements and lending arrangements (for example, through board representation or veto rights, and other governance rights).

Bolstering anti-avoidance provisions and penalties

Currently, investors are only considered to have avoided the application of the foreign investment framework and engaged in anti-avoidance if avoidance is the ‘sole or dominant purpose’ of their conduct — a threshold the Government considers too high.

The reforms will lower the avoidance threshold and align the provision with other modern anti-avoidance frameworks. The reforms will also allow the Treasurer to impose penalties on investors or advisors who tried to avoid legal obligations under the framework.

Other:

• Expanding the associate definition: The Government will expand the definition of ‘associate’ to include additional roles capable of exercising influence, including direct interest holders (i.e., interests of 10% or more) and persons with debt arrangements that allow the exercise of influence. The stated purpose is to allow better identification and management of risks from third parties linked to a foreign investor via relationships of obligation or control that fall outside the current definition. We expect this reform will have a big impact for certain foreign investors.
• Expanding conditions to the pre-acquisition period and introducing statutory undertakings: Under the current legislation, conditions imposed in a FIRB approval or EC only operate once the relevant foreign person actually undertakes an action in reliance on the approval. The Government will expand the Treasurer’s ability to impose conditions so that they can apply before, at the time of, or after an acquisition, with requirements tailored to the risks and circumstances of medium- or high-risk transactions. It will be interesting to see what FIRB is thinking in terms of the scope to enforce conditions before an investor has taken any investment action. The Government will also enable the Treasurer to accept statutory undertakings from applicants or third parties to mitigate identified risks as a supplement to the conditions power.  We wonder if this is a reaction to the Mayne Pharma transaction to give the Treasurer more levers to pull to prevent a foreign buyer from weaponising FIRB to achieve a commercial outcome.
• Expanding the Treasurer’s power to make orders, directions and infringement notices: The Government will enable the Treasurer to issue more targeted and flexible orders and directions. For example, disposal orders might specifically exclude particular entities from acquiring of disposed interests, and prohibition orders might take effect more quickly in high-risk situations. A single infringement notice will also be able to cover multiple alleged breaches, and the range of contraventions to which tiers of infringement notices can apply will be expanded.
• Improving the utility of the last resort power and call-in power: The last resort power allows the Treasurer to reopen for review an investment that has already received FIRB approval in certain limited circumstances, whereas the call in power allows the Treasurer to review an investment that otherwise did not require mandatory FIRB approval.The Government will modify the last resort power by lowering the threshold that applies where the Treasurer seeks to impose new conditions, prohibit an acquisition or partially unwind a transaction. The existing, higher threshold will however be retained where the Treasurer seeks to issue a disposal order. According to the Government, the current uniformly high bar prevents it’s ability to respond to national security risks that emerge after approval has been granted. We expect this aspect of the reforms to attract significant attention from foreign investors, who understandably place substantial value on certainty of outcome once FIRB approval has been obtained. Any increase in the risk of a transaction being reopened for review after approval should be met with caution. The Government will also extend the call-in power to cover notifiable actions under the framework. This will address existing situations where actions that are notifiable but not significant cannot be subject to powers that apply to significant actions or reviewable national security actions.
• Sharing protected information for regulatory purposes: The Government will reduce limitations on circumstances where protected information collected in the assessment of foreign investment applications can be shared. This is said to support compliance activities relating to high-risk investments, avoidance, national security and national interest objectives. This will also enable information sharing, in specified limited circumstances, with non-government third parties for compliance and investigation purposes, such as legal advisers and financial institutions. The reforms will also permit limited public sharing of narrowly defined subsets of protected information for targeted educational and deterrence processes, while the reforms state these will be subject to safeguards – this is one we will monitor closely, as it risks eroding the comfort that foreign investors take when making full and frank disclosure to FIRB that the process is completely confidential.

What happens next?

The reforms will be implemented through a combination of policy and practice changes, legislative amendments to the Foreign Acquisitions and Takeovers Act 1975 (Cth) and related legislation, and updates to the Policy. The key milestones are:

• 1 July 2026: Treasury commences its review of existing FIRB approval conditions, focusing initially on tax conditions. Further details and investor engagement opportunities to be provided in July 2026.
• 1 January 2027: The 30-day decision target for low-risk FIRB applications commences.
• 30 June 2029: Extended deadline for the temporary ban on foreign purchases of established dwellings.
• Release of draft legislation: No timeframe specified. We do not expect this before late 2026 at the earliest. Stakeholders will have the opportunity to comment on the detail of the reforms through consultation on draft legislation.

Hamilton Locke will continue to monitor these developments and will provide further analysis as the draft legislation and additional Treasury guidance is released.