Effective from 23 November 2013, the categories of managed funds, regulated by the Australian Securities and Investments Commission (ASIC) which qualify as a 'complying investment' for the purposes of the Business Innovation and Investment (Provisional) (subclass 188) visa and the Business Innovation and Investment (Permanent) (subclass 888) visa (Significant Investor Visa or SIV), will be significantly expanded.

Significant Investment Visas

In order to qualify for a SIV, individuals must:

  • submit an application and be nominated by a State or Territory government;
  • make an investment of at least five million Australian dollars into complying investments; and
  • if granted a provisional visa (subclass 188), the individual must reside in Australia for a period of 160 days over four years in order to qualify for a permanent visa (subclass 888).

Complying investments

In order to comply, an investment must be made in one or more of the following:

  • Commonwealth, state or territory bonds;
  • direct investment into an Australian proprietary company that is not listed on an Australia stock exchange; and
  • ASIC regulated managed funds with a mandate for investing in Australia.

Individuals may invest in any combination of complying investments, and may switch between different types of complying investments, provided the total investment exceeds AUD$5 million.

The investor must make the investing using funds:

  • held personally by the individual, or with their spouse or de facto partner;
  • from a company provided all shares in that company are held by the individual, or with their spouse or de facto partner; or
  • through a trust provided the individual, or the individual with their spouse or de facto partner, are the sole trustee[s] and beneficiary[s].

ASIC regulated managed funds

The classes of ASIC regulated managed funds which are complying investments for the purposes of SIVs will be significantly expanded with effect from 23 November 2013 as a result of a new legislative instrument issued by the Minister of Immigration.

Substantive changes include:

  • the expansion of approved classes of cash held by Australian deposit-taking institutions to include negotiable certificates of deposit, bank bills and other cash-like instruments;
  • bonds, equity, hybrids or other corporate debt in companies and trusts expected to be listed within 12 months on an Australian Stock Exchange will now be considered complying investments; and
  • the addition of several additional categories of complying investments:
    • bonds or term deposits issued by an Australian financial institution;
    • annuities issued by an Australian life company in accordance with section 9 or 12A of the Life Insurance Act 1995;
    • derivatives used for portfolio management in non-speculative purposes which constitute no more than 20% of the total value of the managed fund; and
    • loans secured by mortgages over the investments including infrastructure, cash investments, government bonds, listed securities, corporate bonds, real property, agribusinesses and annuities.

Historically, very few ASIC regulated managed funds would have been considered a complying investment. These expanded categories of complying ASIC regulated managed funds therefore create significant additional opportunities for foreign investors seeking residency in Australia.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.