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Investing in Australia – Significant Investor Migration Visas

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Opportunity

The new framework for the Significant Investor (SIV) and Premium Investor (PIV) programmes has now been implemented and is effective from 1 July 2015. The SIV programme provides the opportunity for foreign persons to obtain an Australian visa by investing at least AUD$5 million over four years in complying Australian investments.

Norton Rose Fulbright is a leading commercial law firm with experience advising local and foreign investors on investment into Australian real estate, venture capital, private equity, agriculture and other investment opportunities, as well as assisting fund managers in the development of a range of investment products and structures.

The firm has a strong track record as a strategic legal advisor to fund managers involved in the development of investment products offered to migrant investors.  Reflecting the firm’s reputation, Norton Rose Fulbright has been at the forefront of consultations with government and industry stakeholders leading to the development of the new SIV regime.  The firm is advising fund managers on modifications to their existing products to maintain compliance, as well as assisting with the launch of a range of funds, including venture funds and emerging/small companies funds.

 

Mandated Australian portfolio for SIV migrant investor

Migrant investor applicants must invest a minimum A$5 million in the following investment products:

 At least A$500,000 Venture Capital Limited Partnership (VCLP) or Early Stage Venture Capital Limited Partnership (ESVCLP)
  • Applicant monies are taken upfront in a specified vehicle and held in an escrow arrangement, or as security for a guarantee issued by an Australian ADI.
  • Investments by a fund have commenced within four years from the grant of the provisional visa.
  • Sale proceeds received before the provisional visa ends are to be reinvested in complying funds.
 At least A$1.5 million Unlisted managed investment scheme or listed investment company (LIC), that invests in emerging companies InvestmentsinASX listed securities of companies that have a market capitalisation of less than A$500 million.Fund may hold cash with AustralianADIs and other cash like instruments (subject to a 20% cap).Derivatives may be used for risk management and non-speculative purposes.At any time, the proportion of the fund’s net assets held in entities whose market capitalisation has grown above A$500 million, must not exceed 30%.

Fund must be operated or managed by an AFS licensed fund manager with a minimum A$100 million funds under management in Australia.

Other emerging company investments can be acquired by the fund, subject to fund limits:

  • Unquoted Australian securities are to be no more than 20% of the fund’s net assets immediately after the time of investment.
  • Securities quoted on a securities exchange operated in a foreign country (subject to a 10% limit).

Must maintain a minimum of 20 investee companies from three months post the fund’s inception date.

No further purchase can be made to any individual asset that exceeds 10% of the fund’s net assets.

 

Any remaining portion of the A$5 million may be invested in one or more ‘balancing’ investments:

 Up to A$3 million  Unlisted managed investment scheme or LIC, that primarily invests in a permitted asset class Permitted asset classes are:

  • Companies, A-REITs, infrastructure trusts including their ordinary equity, preferred equity, convertible bonds or corporate issued floating rate notes listed on an ASX.
  • Corporate bonds or notes issued by an ASX entity (or wholly owned subsidiary of the Australian listed entity) or investment grade rated Australian corporate bonds or notes rated by an AFS licensed debt rating agency.
  • Deferred annuities issued by Australian registered life companies. Cannot commence paybacks during the provisional visa period.
  • Retail, office, industrial or hotel real property in Australia.
  • Use of futures, swaps or other derivatives must be used for risk management only.
  • Cash products to be less than 20% of fund’s net assets.
  • Operated by a large licensed fund manager (as above).

Fast track approach for premium investors under the PIV regime

The Premium Investor Visa programme (PIV) framework is targeting talented entrepreneurs and innovators and offers a 12 month pathway to permanent residency.  A migrant must invest A$15 million and will access the regime upon invitation of the Australian Government.  Austrade will make nominations on approved criteria based on entrepreneurial skill or talent and ongoing benefit to Australia, and subject to character and integrity checks.

A migrant needs to make an investment by direct investment or investment in an Australian managed fund(s) that invests in one of more of the following:

  • ASX listed assets;
  • Australia government or semi-government bonds or notes;
  • Corporate bonds or notes issued by an ASX listed entity (or wholly owned subsidiary of the Australian listed entity) or investment grade rated Australian corporate bonds or notes rated by an AFC licensed debt rating agency;
  • Australian proprietary listed companies;
  • Real property in Australia excluding residential property;
  • Deferred annuities issued by Australia registered life companies; and
  • Approved philanthropic donation.

A philanthropic contribution or a combined investment and a philanthropic contribution by an investor is considered a complying premium investment, if all of the requirements of the Regulations are met.  As the term ‘philanthropic contribution’ is not defined, it gives the government the flexibility to determine what constitutes such a contribution for the purpose of the Migration Regulations.

More information

This article is general in nature and specific legal advice should be sought. Migrants should obtain advice from a registered migration adviser on migration law matters.

For further information or enquiries, please contact:

Fadi Khoury | Partner
Norton Rose Fulbright Australia
Level 18, Grosvenor Place, 225 George Street, Sydney, Australia
Tel +61 2 9330 8685 | Mob +61 414 865 365 | Fax +61 2 9330 8111
fadi.khoury@nortonrosefulbright.com

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