Changes to the foreign investment review framework as a result of COVID-19 could have ‘unintended consequences’ for fund managers.
Since 29 March, 2020, all proposed foreign investments subject to Foreign Acquisitions and Takeovers Act 1975 require approval, regardless of value or the nature of the foreign investor.
According to investment advisory group Atlas Advisors, the changes had unknowingly captured some managed funds which could reduce Australia’s appeal as an investment destination.
This came at a time when Australia was in ‘desperate need of capital’ and equity and debt funding was already in short supply.
Executive chairman Guy Hedley said: “The reforms importantly aim to safeguard the national interest against opportunism amid the COVID-19 crisis. However, it also creates needless complications for managed funds that invest broadly across different industries and sectors on behalf of investors in areas that require capital support.
“In today’s fast-moving business environment, where innovation is key to survival, enterprise cannot wait unreasonably long periods of time for the delivery of outcomes.”
He warned various types of businesses, from startups to private companies, could be at risk of collapse if they were unable to access the necessary funds.
“These measures will leave thousands of Australian startups, emerging, listed and private companies stranded without critical funds needed to drive business continuity and change,” he said.
“Many of these companies will inevitably collapse, forgoing billions of dollars’ worth of tax and employment generating business opportunities.”