Changes to Australia’s foreign investment regime were driven by economic and national interest considerations. Foreign investment in Australia has historically supported growth, employment and infrastructure development.
However, economic volatility exposed risks around undervalued asset sales and distressed acquisitions. This was particularly relevant for business owners considering selling a business during periods of market uncertainty. National interest concerns expanded beyond defence into data, energy and critical infrastructure.
Regulatory reform strengthened the Foreign Investment Review Board's screening powers and enforcement mechanisms. From January 2021, permanent amendments introduced a standalone national security test and enhanced Treasurer call-in powers. These reforms increased oversight of sensitive transactions while maintaining Australia’s openness to credible foreign investors.
The framework now reflects a more precautionary approach to foreign ownership in strategic sectors.
COVID-19 changes to the FIRB regime
The COVID-19 response triggered temporary and permanent FIRB regime changes. In March 2020, the Australian Government introduced a temporary zero-dollar screening threshold. This meant all foreign investment in Australia in 2020 required FIRB approval, regardless of transaction value.
The statutory review period was also extended from 30 days to up to six months. These temporary measures aimed to protect distressed Australian businesses during economic disruption. From January 2021, permanent amendments to the FIRB regime were enacted. The reforms introduced a new national security test and stronger compliance and enforcement powers.
While monetary thresholds were later restored, national security screening remains a permanent feature.
How FIRB approval thresholds were affected
FIRB approval thresholds were lowered to increase scrutiny of foreign investment. A FIRB approval threshold determines when a foreign investor must seek approval before acquiring an Australian asset.
Under Australia’s foreign investment rules, screening thresholds vary by investor type and asset classification. Private investors from certain treaty countries may benefit from higher monetary screening thresholds for non-sensitive businesses. Foreign government investors are generally subject to a zero-dollar FIRB approval threshold.
Sensitive businesses, including those in defence, telecommunications and critical infrastructure, attract lower screening thresholds. Following reform, a separate national security test applies regardless of monetary value. This means some transactions below traditional screening thresholds may still require FIRB approval.
What the changes mean for foreign buyers
Foreign buyers face increased approval requirements and longer review timelines under Australia’s reformed foreign investment framework. In most transactions, FIRB approval must now be secured before completion, making regulatory clearance a critical path item in deal execution.
Foreign investment applications require detailed disclosure of ownership structures, funding sources and governance arrangements. Treasury assesses whether each proposal aligns with Australia’s national interest and broader economic stability. For more complex M&A transactions, review processes can extend beyond the standard statutory period, particularly where sensitive sectors or data assets are involved.
Where competition issues arise, ACCC clearance may also be required in parallel. These layered review processes can affect finance commitments, transaction documentation and overall deal certainty.
Australia remains an attractive and stable destination that welcomes foreign investment. However, foreign buyers must plan early and structure applications carefully to navigate approval requirements efficiently. Engaging experienced foreign investment advisory Australia specialists can help manage regulatory engagement and improve execution certainty.
What the changes mean for Australian sellers
Australian sellers experience longer deal timelines and reduced certainty under the expanded foreign investment framework. In many M&A transactions involving offshore capital, completion is now conditional on FIRB approval, which can extend beyond traditional expectations.
For business owners preparing a sale, this changes how processes are structured and negotiated. Buyers may seek longer exclusivity periods or conditional contracts to manage approval risk. Where sensitive assets are involved, additional reporting and legislative scrutiny can further affect timing.
Reduced deal certainty can influence valuation discussions, funding structures and transaction strategy. Some buyers may request price adjustments or revised completion mechanics to reflect regulatory exposure. In competitive sale processes, domestic buyers may appear more attractive where foreign approval is uncertain.
Australian sellers must factor regulatory timelines into their broader exit planning. Early insight into the scope of potential approval requirements helps ensure realistic transaction schedules. Clear guidance from an experienced adviser can help streamline documentation and position the business appropriately.
While Australia welcomes foreign investment and remains a stable economy, the legislative environment now requires more comprehensive preparation. With structured advice and careful process design, sellers can maintain deal certainty and achieve efficient outcomes.
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Increased focus on data security and privacy
An emerging trend is greater scrutiny by FIRB regarding data protection and privacy. FIRB is increasing its focus on any investment proposals that have the potential to:
- Give foreign buyers access to the personal data of Australian citizens; or
- Involve the potential for transfer of personal information offshore.
As a consequence, for any business that has access to personal information of Australian individuals or businesses, we expect greater scrutiny from FIRB in respect of the nature, location and security of personal data. In the absence of national security concerns, it does not appear that FIRB intends to block transactions; however, FIRB may impose conditions on the approval, which:
- Restrict the storage of data to onshore Australian facilities
- Restrict the ability of certain data to be accessed from overseas, or by upstream investors or personnel
- Require service providers to have certain certifications and safeguards in place to protect data
- Require the acquirer to provide FIRB access to the data upon request
- Require businesses to maintain records of offshore access to data
- Apply governance or physical access restrictions to support the above undertakings
How these changes affect M&A deal timelines and certainty
FIRB changes extend M&A timelines and increase execution risk across transactions involving foreign capital. The FIRB approval process is now a central condition in many deals, often sitting on the critical path to completion. Extended review periods and information requests can delay signing, funding and settlement milestones. As a result, M&A deal timelines are less predictable than under the previous framework.
To manage this risk, parties should assess FIRB exposure at the outset and build realistic approval timeframes into transaction documents. Clear allocation of regulatory risk through conditions precedent and sunset clauses helps protect deal certainty. Preparing a comprehensive application package can streamline the FIRB approval process and reduce follow-up queries. With early planning and structured advice, execution risk can be managed more efficiently.
Key takeaways for businesses and investors
Businesses and investors must consider regulatory risk in transaction planning under Australia’s expanded foreign investment framework. Key considerations include:
- Assess FIRB exposure early to determine whether approval is required or whether an exemption may apply.
- Evaluate the target carefully, including ownership structure, data sensitivity and national security considerations.
- Build realistic timelines into transaction documents to reflect approval risk and review processes.
- Align funding structures with expected FIRB approval milestones to protect deal certainty.
- Rely on verified Treasury guidance and published statistics, rather than assumptions about processing timeframes.
- Engage experienced advisers to support foreign investment planning and manage regulatory risk on behalf of the client.
With structured preparation and informed insight, investors can manage regulatory risk while maintaining strategic momentum.
Getting the right advice on FIRB from Nash Advisory
Nash Advisory provides guidance on FIRB and foreign investment compliance for mid-market transactions involving offshore capital. As a specialist in foreign investment advisory in Australia, the firm serves as a client partner navigating approval requirements with clear, structured FIRB advice.
Regulatory risk is assessed early within the broader transaction strategy, including M&A, capital raising and business sales. Where approval is required, advisers coordinate application preparation and manage engagement with Treasury throughout the review process. Early commercial guidance helps protect deal certainty and minimise disruption to transaction timelines. Talk to us about our business advisory services today.
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