Govt clarifies foreign ownership rules

The Foreign Investment Review Board （FIRB） has moved to clarify its stance on overseas investment, after releasing a report outlining the framework it applies when considering an application.

The report comes after criticism of the investment rules following state-owned Aluminium Corporation of China Limited's （Chinalco） attempted bid for parts of mining giant Rio Tinto Ltd last year.

In the report, the government says it looks carefully at applications from foreign government entities that are "not operating on a fully arms length and commercial basis".

"The government does not have a policy of prohibiting such investments but it looks at the overall proposal carefully to determine whether such investments may be contrary to the national interest," the report said.

The report said that several mitigating factors were considered in determining whether foreign investment proposals were in the country's best interests.

These included which outside partners or shareholders were part of the investment, the level of ownership interests not associated with the investment and the governance arrangements of the investment.

Also considered are any arrangements which protect the Australian interest from non-commercial dealings, and whether the investment target will be placed on or continue its listing on the Australian Securities Exchange （ASX）.

"The Government will also consider the size, importance and potential impact of such investments in considering whether or not the proposal is contrary to the national interest," the report said.

The report says the 'character' of the investor is also considered, as well as how accessible the entity is to regulation and supervision.

"Proposals by foreign owned or controlled investors that operate on a transparent and commercial basis are less likely to raise national interest concerns than proposals from those that do not," the report said.