John Griffiths

Business Migration

Find a business or an investment in Australia

Whilst there are many businesses advertised for sale, many are not. Also many business advertised for sale are through brokers – many of whom have little interest in adding value to the purchaser – they act for the seller and want to get the business sold so that they can earn a commission. Whilst we do not begrudge anyone for earning a living, John Griffiths & Co has a strong interest in ensuring that the buyer gets the best deal (and not only by performing a due diligence) because we are concerned to have a client relationship in the long term.

Often a business is not advertised for sale. It will be known to specialist financiers, advisors and possibly bankers or lawyers. The present owners may not even have the business on the market but if a positive approach is made, a deal may be able to be formulated particularly where the incoming person injects capital or expertise that the business currently needs.

Also it may be possible to find a business to invest in and structure the investment so that particular requirements can be met for the purposes of immigration to Australia.

Comments on inward investment into Australia

Australia actively welcomes and encourages foreign investment. There are few bars to this inflow and there are a number of incentive schemes etc to make foreign investment more attractive. These background notes are more orientated to individuals or SME’s (Small to Medium Enterprises) wanting to invest in Australia.

Foreign investors are generally:

  • A natural person not ordinarily resident in Australia
  • Any corporation, business or trust in which there is substantial foreign interest, regardless of whether such an entity is foreign controlled.

Reasons for investing in Australia

There are a many reasons for investing in Australia:

  • Long term political stability
  • Sound economic management and growth
  • Low rates of inflation
  • Favourable location within the Asia Pacific region – geographically and time zone
  • Skilled, diverse workforce in ability but also language and attitude
  • Technologically advanced society with a rapid uptake of communications technology
  • Innovative culture with a high proportion of R&D expenditure – formal and informal
  • Open and efficient regulatory systems.
  • Encouragement via Migration for business people to enter the country

Foreign investor options

In order to transact business in Australia a foreign investor can:

  • Register as a foreign company or a branch
  • Enter into a joint venture via an entity in Australia
  • Purchase all or an interest in an Australian company
  • Establish a new business.

Registering as a foreign company

A foreign company or similar entity is able to carry on a business on its own account (i.e. as a branch or subsidiary) provided it has registered in Australia.

Registering generally involves:

  • Appointing and authorising at least one local agent to act on it’s behalf
  • Maintaining a registered office in Australia
  • Lodging specific documents and financial statements with ASIC
  • Identifying the business as a foreign company in written contracts and correspondence.

Joint ventures/Partnerships

  • Foreign investors may also enter into a joint venture/partnership with an Australian business or organisation.
  • The investor should however create a joint venture agreement with the other party. The participants are generally taxed on an individual basis.

Acquiring an Australian company or business

Alternatively, investors can acquire the shares in, or assets of, an existing Australian company. This has to be undertaken in accordance with both takeover legislation, relevant Company legislation as well as be in accordance with Australia’s foreign investment policy (for larger or sensitive investments)

Establishing a new business

This is generally a quite straightforward process but in certain activities (eg food or drug manufacture) there are also health and quality assurance matters to be aware of.

Legislation affecting foreign investment

Australia’s foreign investment policy is designed to:

  • Encourage foreign investment
  • Ensure that foreign investment enhances Australia’s economic development
  • Ensure that foreign investment is consistent with Australia’s needs.

These policies are administered by the Foreign Investment Review Board (FIRB) and it generally only becomes involved when the investment is over $50m, new investment of over $10m, investments in real estate and also investment in sensitive areas affecting national defence, energy, media etc.

In most industry sectors smaller proposals are exempt from investigation contrary by the FIRB.

Government assistance and incentives for foreign investment

Invest Australia

The Australian Government has established Invest Australia, a national investment agency, to encourage and assist investors wishing to establish their operations in Australia.

This organisation:

  • Provides information on how to establish a business in Australia
  • Can arrange site visits and help the investor find a joint venture partner
  • Offers expert advice from a range of industry specialists and helps identify potential investments
  • Provides information on the availability and cost of labour, R&D, transport and establishment costs, as well as taxation and incentives
  • Provides contacts with government agencies and advice on investment regulations
  • Facilitates major projects through targeted programmes.

Additionally the Government provides incentives including grants, tax relief and the provision of infrastructure services to further encourage foreign investment. These incentives are both Federal and State-based and are aimed at promoting and encouraging economic and innovative development.

Also, most states have Trade Offices in Australia and overseas who can be of great assistance. These Trade Offices are usually also tied to State Trade/Economic Development Departments who, again, can be extremely helpful at little or no cost.

All investment proposals for these Government incentives are individually assessed and have to meet set eligibility criteria.

Austrade

The Australian Trade Commission (Austrade) encourages foreign investment by helping to provide practical advice, market intelligence and continuing support in the development of export markets. This includes putting overseas investors in contact with Australian businesses as well as providing advice and guidance for joint venture opportunities.