X
Based on our years of experience, we specialise in providing practical, effective, and innovative advice concerning commercial and corporate transactions. Our paramount consideration in each case is the "Client’s needs". We have expertise in negotiating and drafting commercial contracts. We provide clients with a range of corporate law advice, including corporate governance issues, directors' duties, as well as competition and consumer law advice.

Key Practices

Professionals

Yukio Hayashi

Yukio Hayashi

Senior Partner

Kenneth Hong

Kenneth Hong

Managing Partner

John Kim

John Kim

Partner

David Ahn

David Ahn

Special Counsel

Seil Kim

Seil Kim

Special Counsel

Steven Hu

Steven Hu

Special Counsel

Victoria Cha

Victoria Cha

Special Counsel

Justin Leong

Justin Leong

Senior Associate

Tin-Lok Shea

Tin-Lok Shea

Senior Associate

Daisuke Ueda

Daisuke Ueda

Associate

Erica Lee

Erica Lee

Associate

Tracy Huo

Tracy Huo

Associate

Jacky Cho

Jacky Cho

Lawyer

Amelia Zhang

Amelia Zhang

Lawyer

Gerard An

Gerard An

Lawyer

Gina Jung

Gina Jung

Lawyer

Jeanie Lee

Jeanie Lee

Lawyer

Minjeong Song

Minjeong Song

Lawyer

Sagang Chung

Sagang Chung

Lawyer

Ian Hutchinson

Ian Hutchinson

Senior Consultant

Bella Cho

Bella Cho

Foreign Lawyer

Claire Kim

Claire Kim

Foreign Lawyer

MORE

Insights

MORE >


Commercial & Corporate

Recent changes in FIRB

The Australian government has made significant changes to Australian foreign investment law, also known as the FIRB regime. This article will summarise the pivotal changes to this regime.    Key legislation: Foreign Acquisitions and Takeovers Act 1975 (Cth) (FATA) Foreign Investment Reform (Protecting Australia's National Security) Regulations 2020 (Cth)  Foreign Acquisitions and Takeovers Regulation 2015 (Cth) (FATR) The test of national security is of increasing importance in determining approval of foreign investment in Australia, as seen by the introduction of new FIRB laws in the form of the Foreign Investment Reform (Protecting Australia’s National Security) Regulations 2020 (the 2020 Amendments), which came into effect on 1 January 2021. The 2020 Amendments serve to implement major reforms to the FIRB regime in Australia with respect to foreign government investors and national security, with the key changes relating to the following areas: Mandatory notification of FIRB for ‘notifiable national security action’. Treasurer’s ‘last resort powers’ of unwinding a transaction after FIRB approval. Treasurer’s ‘call-in’ powers and reviewing national security actions. Treasurer’s ability to extend decision making periods. Harsher penalties for non-compliance with FIRB regime. Increased FIRB powers of compliance and enforcement. Re-defining ‘foreign government investor.’ Change in ‘significant action’ control test.   Mandatory notification of FIRB for ‘notifiable national security action’ Prior to the recent reforms the foreign investment laws in Australia required foreign persons to notify any ‘notifiable action’ or ‘significant action.’ The new 2020 Amendments now also require mandatory notification of ‘notifiable national security action’. This is when a foreign person: acquires a 'direct interest' (10%+ or in a position of control or influence) in a 'national security business' (see point 2 below regarding what is considered 'national security business') acquires an interest in Australian land that is defence premises, or in which an Australian national intelligence agency has or will have an interest which is either publicly known or could be known upon making reasonable inquiries or which is land covered by an area of Australian land declared by the Treasurer by legislative instrument; or starts to carry on a 'national security business'. The exemptions from notifiable and significant actions are also applicable to the new notifiable national security actions, however there will be no money lending exemptions for notifiable national security actions and there are changes to existing exemptions. Moreover, this reform introduces a new concept of ‘national security business’ which covers the following: (critical infrastructure) where the business is a responsible entity or a direct interest holder (holding 10%+) in relation to a critical infrastructure asset under the Security of Critical Infrastructure Act 2018 (Cth), including the electricity, gas, water, and ports sectors. (telecommunications) where the business is a carrier or carriage service provider under the Telecommunications Act 1997 (Cth) (defence) where the business does any of the following: develops or manufactures critical goods or critical technology intended for a military end-use or military use by "relevant defence persons" (being defence and intelligence personnel in activities relating to Australia's national security, or the defence force of another country in activities that may affect Australia's national security); supplies critical goods or critical technology that are, or are intended to be, for a military end-use or military use by relevant defence persons; or provides or intends to provide critical services to relevant defence persons; or (data and personal information) where the business: stores or has access to information with a security classification. stores or maintains personal information of Australian defence and intelligence personnel collected by Australia's Defence Force, Defence Department, or an Australian national intelligence agency, which if accessed could compromise Australia's national security; or collects, stores, maintains or has access to personal information of Australian defence and intelligence personnel that has been collected as part of an arrangement with the Australian Defence Force, Defence Department or an Australian national intelligence agency, which if disclosed could compromise Australia's national security. To the extent a foreign person starts or acquires an interest in these national security businesses (as described above), it will be necessary to notify FIRB.   Treasurer’s ‘last resort powers’ of unwinding a transaction even after FIRB approval Prior to the 2020 Amendments, if an action is a risk to ‘national interest’, the Treasurer could prohibit the transaction or make divestment orders even if the transaction had already occurred. However, the previous regime restricted these divestment powers to only when the applicant had breached a condition under an existing FIRB approval or failed to notify FIRB when it was required to do so. The Treasurer was also unable to change or make new conditions to an existing FIRB approval without the applicant’s consent or unless the Treasure was sure there would not be a disadvantage to the applicant. Under the new regime, the Treasurer now holds wide ranging ‘last resort’ powers that can approve or reject anything on the grounds of ‘national security’. Even after FIRB has approved the investment, the Treasurer, subject to satisfying a list of newly introduced requirements, now has the authority to impose additional conditions, change existing conditions or order the divestment and sale of the investments.  Foreign investors should be weary of these changes and obtain legal advice to ascertain the extent of how FIRB and the Treasurer may impact the mode of investment desired. A recent example of the Treasurer exercising such power was in the rejection of China State Construction Company’s proposed $300 million acquisition deal for the major Australian building contractor Probuild over concerns of national security.   Treasurer’s ‘call-in’ powers and reviewing national security actions The Treasurer’s new ‘call-in power’ allows them to review any action which was not previously notified to FIRB, is a significant action or reviewable national security action, or may pose a national security concern. After the review, the Treasurer can make prohibition or divestment orders if satisfied the action would result in a risk to national security. The Treasurer can initiate a review any time within 10 years after the action occurs.   Treasurer’s ability to extend decision making periods Previously, the Treasurer’s ability to extend the FIRB assessment decision making period was limited to a public interim order, which could prevent the applicant from proceeding with a transaction by up to 90 days. The previous regime also allowed for applicants to request for an extension of decision time, so as to avoid a public interim order. However, the 2020 Amendments now allows the Treasurer to extend the decision period up to 90 days unilaterally and the applicant cannot complete the investment until the Treasurer has delivered its decision.   Harsher penalties for non-compliance with FIRB regime  The 2020 Amendments increase and include a wider range of criminal and civil penalties for non-compliance with the FIRB regime, e.g.: failure to give notice of notifiable action or notifiable national security action;  taking an action notified to FIRB prior getting FIRB approval; breaching a FIRB approval condition. Depending on the extent of the non-compliance or misrepresentations to FIRB, as at the date of this article, the Treasurer has the powers to impose penalties that include up to 10 years imprisonment for individuals or civil penalties of up to $1.11 million for individuals or up to $555 million for corporations.   Increased FIRB powers of compliance and enforcement The 2020 Amendments provide the Treasurer with increased powers, beyond giving infringement notices and fines. The Treasurer will have monitoring and investigation powers with other government agencies and will have access to premises with consent or with a warrant to gather more information. The Treasurer will also have the power to accept enforceable undertakings from foreign persons and the power to give directions to persons to prevent or address suspected breaches of the FIRB regime. For example, a direction may be issued to a foreign person to comply with provisions of relevant legislation or existing FIRB approval conditions. Finally, the Treasurer will also revoke FIRB approval upon proof that the grant of approval was based on false or misleading information. Foreign persons who undertake actions pursuant to a no-objection notice must notify the government within 30 days after taking the actions.   Re-defining ‘foreign government investor’ Previously, foreign government investors were defined as a corporation, trustee of a unit trust or general partner of a limited partnership, in which a foreign government investor from more than one foreign country collectively have at least 40% interest. Certain types of foreign persons may no longer be considered a foreign government investor under the new 40% rule Even if 40% or more  of its interests are held collectively by more than one foreign government investors, a fund vehicle may still not be considered a foreign government investor under the 40% test if: No investor from one country holds 20% or more interest in the fund vehicle No foreign government investor in the fund vehicle has access to non-public information about the fund’s investments that affect the financial metrics of the underlying investment. The foreign government investors are truly passive and exert no control. This is an important change for foreign fund vehicles that invest into Australia.   Change in ‘significant action’ control test The previous regime ensured any foreign person with the acquisition of interests in an Australian entity constituted a ‘significant action’ only if there is a change in control. However, this caused a drafting anomaly where a person who already had substantial interest in an Australian entity could increase that interest without such increase constituting a significant action. The 2020 Amendments change this control test so that it would no longer need to be satisfied where the acquirer already has a pre-existing substantial interest in the relevant Australian entity by itself or with one or more associates.   Moneylending activities require FIRB approval in relation to National Security Assets In relation to moneylending activities by foreign persons, there is a general exemption for the requirement to obtain FIRB approval for moneylending activities.  However, with these new regulatory reforms, the exemption no longer applies for moneylending activities that involves the acquisition of security interests in a national security business or national security land.     [Disclaimer] The contents posted are general legal information, not legal advice, and the author and publisher have no legal responsibility for the contents. Each post is based on the law that was in force at the time of writing. Please consult a lawyer directly for accurate legal advice.


Commercial & Corporate

Consumer law - Return of goods

Q: I bought a pair of jeans, but I couldn't wear them because the zipper broke after wearing it twice. When I asked for a return, the store clerk told me, "The jean was an on-sale item, and we do not accept returns." How can I deal with this matter? A: In Australia, the Australian Consumer Law (ACL) guarantees consumers various rights. The scope of ACL is very wide, and it can be applied not only to products but also to services. Section 54 of the ACL states, so to speak, that goods are of acceptable quality—that is, they are safe, durable and free from defects, are acceptable in appearance and finish and do what they are ordinarily expected to do. In this sense, the seller has to refund, replace or repair these jeans because clothes that break after being worn twice would not be "reasonably durable". Section 54 of the ACL determines "reasonable quality" for a product by taking into account various factors such as general use, price, labelling, etc. For example, a $5 t-shirt naturally has a lower degree of "reasonable quality" than that of a $50 t-shirt. In other words, the $5 t-shirt being discoloured after several times of washing will not fall under a consumer guarantee claim. If a home appliance such as a refrigerator breaks after one year of normal use, it will not be considered "reasonably durable". Products such as home appliances often come with a manufacturer's warranty for a fixed period (for example a one-year warranty). However, although this manufacturer's warranty expires, the consumer's right could continue if section 54 applies. In addition, ACL requires manufacturers to incorporate into a warranty the term that "this manufacturer's warranty does not limit the consumer's ACL rights". Furthermore, even if the purchased goods are goods on sale, used goods or goods purchased on the Internet, despite a difference in the degree of guarantee, section 54 of ACL still applies. Situations in which the ACL consumer guarantee does not apply include a purchase of goods without receipts or proof of purchase, a purchase between private individuals without receipt (e.g. garage sales) or at auctions or with goods used unusually. Additionally, there may be cases in which consumers want to return a product just because they changed their mind without any problem with quality. In such cases, ACL does not apply. Accordingly, for the current case, if the store does not accept the return of the jeans, it is recommended that you first tell the store manager that you will consult with the Australian Competition and Consumer Commission or Fair Trading. If they still deny responding, we encourage you to contact these agencies.


Commercial & Corporate

How to avoid bankruptcy

Card Loan – how to avoid bankruptcy Q: I was laid off last year. Since then, I’ve had no source of income and my credit card loan has increased to nearly $30,000. It has come to the point that I can no longer repay it. The collection started to become difficult, so I received consultation from an acquaintance who asked what would happen if I were to go bankrupt. What should I do? (30-year-old unemployed male). A: Bankruptcy definitely frees debtors from their creditors and allows them to restart. However, it is not an easy world. Once you go bankrupt, you lose social credibility and it may become a serious hindrance in the future. For example, it may become difficult to create a new credit card or it may become difficult to obtain a loan. Additionally, there will be restrictions in finding a job and during the bankruptcy declaration, prior permission from the administrator is required to travel abroad. Therefore, bankruptcy is not that simple. However, “self-bankruptcy” is a reliable process when communicating with creditors. As for creditors, their biggest concern is how to get their debts repaid, not how to make you go bankrupt. In the case you go bankrupt, the card company will not be able to recover a dollar, due to the liquidator’s expenses. So, from the credit card companies perspective, it is not an amiable option to make you go bankrupt. It is not that simple to say that if you sell your assets and appropriately repay that you can ask to give up the remaining bonds. In order to settle with the credit card company, you need to negotiate with them. First of all, you will need to disclose all your assets, providing them with credibility that you do not have any income. In order to do this, you will need to show them sincerity and remorse. Additionally, it is important to show them how you got into the situation (such as being laid off) and what you spent with the card. For example, the majority of these may be daily necessities and, in this regard, you may be able to obtain sympathy from the credit card company. In my experience, the most effective method is to suggest to the credit card company “If you give up on the balance, I can borrow a small amount (e.g. $10,000) from my father or relative and make up the repayment”. Then there may be a chance of reconciliation. Additionally, every card company and banks share information regarding problematic customers, so if you had problems with other financial institutions previously, bankruptcy may occur. In any case, when it comes to negotiating with a card company, if possible, it is best to obtain expert advice.


Commercial & Corporate

Debt Recovery

“A person A who resides in Eastwood lent the amount of $8,000 to his friend B. B promised that he would repay $1,000 per month for eight months and at the end of the last month, B would pay interest of $400. However, B has not repaid any money for five months, and ultimately, he started ignoring A’s contact at all. As such, A wishes to bring a court action against B for the debt recovery.”  1. Mediation through Community Justice CentreBefore commencing a legal proceeding, parties are recommended to resolve their issues through mediation service provided by the local Community Justice Centre. Disputes are sometimes resolved and settled in this stage, and these procedures are beneficial to the parties in disputes in order to ascertain each other’s positions. One of advantages for mediation in the Community Justice Centre is that it does not require any legal assistance by lawyers. Mediation procedures generally take two hours and are free      of charge. If A and B execute a settlement document through the mediation and register it to the court, such a document will have legally binding effects. A settlement through mediation procedures is particularly efficient in the sense that parties do not need to spend time and costs for legal proceedings. It is generally known that around 80% of cases are settled in this stage. To get more information, please contact 1800-990-777. 2. Letter of demandIf parties are unable to reach an agreement in mediation, party A may send a letter of demand to party B. That letter may include an amount of debt and a due date, and that A would initiate a court action by submitting a complaint to the court unless B repays the debt by the due date. For instance, A can send the letter stating that “I hereby demand that you repay me $8,400 by 30 April 2018. Otherwise, I will commence legal proceedings against you to recover the debt without any further notice”. It would be good to include in the letter that both legal costs and an interest on the debt would be charged. Although sending a letter alone to B’s address by post is the best way, sending an email or a facsimile together with the letter is even more effective.  3. Court proceedingsIf B doesn’t repay the debt by the due date indicated in the letter of demand, A can initiate a court proceeding in the Small Claims Division of the Local Court given that the amount of debt is less than $10,000. One of the benefits of lodging a claim in the Small Claims Division is that the rules of evidence do not apply, and a trial is conducted faster and simpler than by a judicial panel. Hence, a claimant can be self-represented without appointing a lawyer if he or she has no difficulty speaking in English. If the      amount of debt is more than $10,000, a claimant should bring an action in the General Division of the Local Court, and if it is more than $750,000, he or she should bring an action in the Supreme Court. In litigations that are not in the Small Claims Division, it is commonplace for claimants to appoint lawyers in trials due to the complexity of facts and numerous potential sources of disputes. On this occasion, claimants should be noted that a limitation period for a debt recovery is six years from the date of accrual of a debt.  If more than six years has already elapsed, a claimant may be unable to bring a court action for a debt recovery against a debtor.  4. Statement of ClaimA has to attest an object of and a reason for a claim in a complaint called the Statement of Claim and submit the document to the Local Court Registry with a filing fee of $99, which begins an official court proceeding. In the Statement of Claim, a claimant can also demand the other administrative fees      incurred for a proceeding including a filing fee as well as a legal interest (the  average interest rate from January 2018 to June 2018 ranged from 5.50% to 7.50% and can vary before and after a trial). Also, if a lawyer represents a claimant in a court proceeding, A can also demand a legal fee in the Statement of Claim. Once A completes the Statement of Claim and submits both the original copy and two      replicated copies (total three copies) to the Local Court Registry, A will be immediately granted a confirmation stamp and a case number. The original copy would be stored at the court, and the other two replicate copies would be returned to A. A has to serve one of the two replicate copies which have the court’s stamps to B within six months thereafter. The most recommended way of a service is either in person or via post by the court. When intending to use the court’s postal service, A can apply for it upon the submission of the Statement of Claim, and the application fee for the service is $42 as of now, the amount which can be also claimed from B by including the amount in the Statement of Claim.  5. Default JudgmentB has to submit a Defence to the court within 28 days of being served with the Statement of Claim. If B fails to do so, A can apply for a Default Judgment. A Default Judgment is when the court unilaterally makes a judgment against a defendant without a hearing, and this judgment concludes with final costs inclusive of an amount of debt, legal costs and interests. When applying for a Default Judgment, A has to submit to the court both an Affidavit of Service which proves that the Statement of Claim is properly served to B either in person or via post by the court and a Notice of Motion-Default Judgment for liquidated claim.