The Australian Government is looking to encourage foreign
investment into Australia through the introduction of a new visa
pathway for individuals who make substantial investments in
Australia. The "Significant Investor Visa" (SIV) was
introduced in November 2012 to facilitate migration by individuals
who are willing to invest at least AUD5 million in Australia.
The SIV is likely to drive demand for investment opportunities
in Australia and may provide fund managers with an additional
source of assets. Fund managers wishing to capitalise on this
demand will need to create complying investment structures and
assist individuals to satisfy the criteria for the SIV.
SIV applicants must invest at least AUD5 million in
"complying investments", which include:
direct investment in government bonds issued by the Australian
Government or an Australian State or Territory government
direct investment in unlisted Australian companies
investment certain Australian regulated managed funds.
Investment through managed funds will provide applicants with
the greatest flexibility in terms of underlying asset classes and
investment structure. However, among other things, a managed fund
will need to meet the following requirements to be a complying
the trustee of the fund must hold an Australian Financial
Services Licence (AFSL). While it is not necessary for the trustee
to be located or incorporated in Australia, compliance with
Australia's financial services laws are necessary. The fund
need not be a "registered managed investment scheme",
unless this is otherwise required under the financial services
the fund must only be permitted to invest in a combination of
the following asset classes:
infrastructure projects in Australia
cash held with an Australian bank
government bonds issued by the Australian Government or an
Australian State or Territory government
bonds issued by Australian financial institutions
ASX listed shares, bonds, hybrids or corporate debt instruments
issued by Australian companies or trusts
real estate in Australia
the trustee must make a declaration in a prescribed form
confirming that the investments of the fund will be limited to the
categories of investments
the fund must be open to investment from the general public,
but must not be listed on the ASX.
Requirements imposed by a State or Territory
When applying for a SIV, an applicant must nominate the
Australian State or Territory in which they wish to live. That
State or Territory may then impose additional criteria for
determining what are "complying investments".
For example, some States and Territories will require that some
or all of the AUD5 million is invested for the benefit of that
particular State or Territory, or that it be invested in particular
asset classes (such as government bonds issued by that State or
Fund managers wishing to attract investment from SIV applicants
will need to be able to accommodate the various State and Territory
requirements within the fund.
There are a number of other criteria which an applicant will
need to meet in order to be issued with a SIV, including lodging an
application with the Australian Government and spending a minimum
number of days in Australia during the four year application
How we can help
The Australian offices of K&L Gates have experience
assisting local and overseas fund managers obtain AFSLs and
establish managed funds in Australia. We can assist with all stages
of this process.
We are also available to assist existing Australian fund
managers to make the necessary changes to their current offerings
to attract investment from SIV applicants.
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.
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