Foreign investment update: New ground for FIRB and dealmakers alike

What’s new?

Australia’s foreign investment landscape is in the midst of a transformation with technological and administrative changes introduced from 1 July 2025 to streamline low-risk applications, leaving the higher-risk proposals to sharper scrutiny. The new Foreign Investment Portal is now the single-entry point for all FIRB applications, compliance reports and, from 1 January 2026, merger notifications under the new ACCC regime.

While the Portal’s MyGov Digital ID login has improved security, advisers report frustration with rigid data fields and reduced contact with case officers, making progress on highly complex transactions difficult. Although a long-needed and well-meaning approach, it’s still too early to tell whether these changes have really delivered. Treasury is actively seeking feedback and promises ongoing refinement.

Treasury’s last updated policy (March 2025) announced a new performance target for 50% of proposals to be decided within the 30-day statutory period in anticipation of the Portal changes. In practice, we have seen straightforward applications clear in as little as two weeks, however, complex or sensitive deals still face longer timelines (~60 days). Thresholds have also now been indexed for 1 January 2026, lifting the bar to AUD347 million for most developed commercial land and business investments, and AUD75 million for sensitive land. Active investors should be mindful of these increases and the impact on pending transactions flowing through from 2025.

Scrutiny and enforcement on the rise

In February 2026, the Federal Court ordered AUD14 million in penalties against two foreign investors for failing to comply with a disposal order after acquiring Australian residential property without FIRB approval. This followed repeated non‑compliance, including attempts to divest assets in a manner that did not satisfy the disposal order (e.g. divesting to the director and sole shareholder of an original investor). While this concerned residential property, what this demonstrates is an unmistakable signal that the government is ready to pursue significant penalties for breaches (and will put out a press release about it).

Lessons from Mayne Pharma

The Mayne Pharma/Cosette saga is a cautionary tale for dealmakers. When Cosette’s appetite for the AUD672 million acquisition soured, the FIRB process became a strategic lever, with Cosette threatening to close Mayne’s Adelaide plant and triggering national interest concerns. The Treasurer’s subsequent block of the deal gave Cosette a regulatory exit from its contractual obligations, despite the deal’s prior approval.

This episode has sparked debate about the risk of ‘weaponising’ FIRB approval conditions, particularly where deal dynamics shift after signing. The key lesson for dealmakers is that FIRB condition precedent clauses must be balanced and transparent, with neither party able to unilaterally influence the regulatory process. Open engagement with FIRB and clear allocation of responsibilities and information rights in transaction documents are now essential to prevent regulatory processes from being used as a tactical tool. In exchange for such rights, sellers should be open to sharing the FIRB filing costs (which, depending on the size of the transaction, can be extensive).

So what does this mean for inbound investors? Preparation is everything:

• Negotiate balanced CPs: if a FIRB CP is required, both buyer and seller should have access to the FIRB application and correspondence (with limited carve-outs for redacting genuinely sensitive commercial or shareholder information).
• Engage early, front-load detail: clearly explain the who, what, how; use structure charts and explain any funding. Leverage the new portal with short and concise responses. Repeat investors with clean records benefit most from this approach.
• Get structuring & tax right: FIRB closely examines related-party financing, and tax structuring. Expect tax conditions and ongoing reporting as standard.
• Run the timetable: factor in the statutory clock, potential extensions, and ‘end of year slowdowns’ for complex files.
• Post-completion discipline: register on the ATO-administered asset register and meet all reporting conditions to avoid compliance scrutiny.

Looking ahead, Australia remains open and rules-based, but the bar for compliance and transparency has never been higher. In this environment, savvy preparation and proactive engagement are the decisive differentiators in FIRB-sensitive M&A.

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Authored by:

Faiza Bukhary, Special Counsel