FIRB Compliance After Acquisition: What Investors Miss

Written By Michael Wong

Australia remains a top destination for foreign investment in property, especially residential development, commercial real estate, and land banking. But while many investors focus heavily on getting FIRB approval at the acquisition stage, the real legal risk often begins after the deal closes.

FIRB is not a once-off hurdle. It is a regulatory framework that follows the asset, the structure, and the investor profile over time. If you are involved in holding, refinancing, or restructuring an asset with any foreign ownership, even indirectly, your FIRB obligations may still be active. Non-compliance can trigger serious outcomes, including penalties, forced divestment, and public enforcement action.

This article outlines the most common traps and the proactive steps we recommend for developers, family offices, and capital partners.

1. FIRB Conditions Continue Post-Settlement

Approval conditions do not automatically lapse once the purchase is complete. In many cases, FIRB will attach enforceable conditions to the approval that are designed to run for years.

These may include:

  • Regular reporting on ownership structure or land use

  • Limits on leasing the property before development commences

  • Restrictions on transferring shares or interests in the landholding vehicle

  • Mandatory notification if the original purpose or asset classification changes

Clients often forget that FIRB approvals are conditional on the information disclosed at the time. If your structure or business plan changes materially, that approval may no longer be valid, or worse, you may be in breach.

2. Structural Changes Can Trigger a Fresh FIRB Obligation

The Foreign Acquisitions and Takeovers Act focuses not only on who holds title, but also on who has control or benefit from the asset.

Common examples that can trigger new FIRB scrutiny include:

  • Transferring shares in a landholding entity, even if done within the same group

  • Admitting new investors, especially foreign beneficiaries of a trust

  • Introducing debt or mezzanine finance from a foreign lender

  • Repurposing the site for leasing, co-living, or build-to-rent instead of selling

Many of these changes may not seem significant from a business perspective, but they can have legal implications. In some cases, the ATO or Treasury may find that your structure now falls outside the scope of the original approval.

3. Substance Matters More Than Form

FIRB's assessment is increasingly focused on economic reality. That means regulators are looking through legal structures to assess actual control, benefit, and decision-making.

Having a local company as the landowner does not shield you from foreign investor scrutiny if:

  • The board or ultimate decision-makers are based offshore

  • Distributions flow to foreign unit holders or beneficiaries

  • Leaseback or licensing arrangements benefit a related foreign entity

  • A foreign party effectively controls the use or development of the land

Even when you are technically compliant, FIRB and Treasury may apply the national interest test based on how the land is actually used and controlled. You should not rely solely on legal form to satisfy compliance.

4. Key FIRB Risks We See in Practice

The risks that come up most often include:

  • FIRB approval letters not being retained or tracked properly

  • Trust deeds being amended to allow foreign beneficiaries without seeking fresh approval

  • Ownership changes occurring during refinancing that were never disclosed

  • FIRB obligations buried in annexures that no one is actively managing

  • Assets quietly moving from development to leasing without notifying Treasury

Many clients assume that once they have received approval, the risk has passed. In reality, FIRB conditions need to be monitored like any other legal covenant.

5. Practical Steps to Stay Compliant

To protect your project and capital stack, we recommend that clients with any foreign nexus:

  • Conduct a FIRB compliance audit at least once a year

  • Maintain a live FIRB register with conditions, dates, and obligations

  • Include FIRB discussions in board meetings and risk reviews

  • Seek legal advice before any restructure, refinance, or new investor is introduced

  • Keep clear records of communications with FIRB or Treasury

FIRB rarely acts without warning, but when they do, the consequences are real. Being able to demonstrate a proactive, well-documented compliance framework is the best way to minimise risk.

Final Word

FIRB compliance is not a regulatory hoop to jump through once. It is a living, ongoing part of your legal governance. The structures that worked at acquisition may not work forever.

If you are holding an asset, changing your structure, or dealing with offshore capital in any form, it is worth reviewing where you stand. FIRB obligations can resurface years later, often at the worst possible moment — during a refinance, sale, or tax review.

This article contains general information only and does not constitute legal or financial advice. For tailored guidance, contact MWBL Consulting.

Michael Wong
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