Summary of the announcement made by the Dept of Immigration and Border Protection (DIBP) on the Significant Investment Visa (SIV) and the Premium Investor Visa (PIV)
The DIBP has made an announcement on 15 May 2015 regarding the complying investment framework for the SIV and the PIV.
1. Elements that apply to all investments for the SIV and the PIV
· The funds must be unencumbered and lawfully acquired;
· Investors are required to reinvest funds within 30 days of withdrawing them from a complying investment or cancelling the investment in order for the investment to continue to be complying;
· Direct investment into residential real estate is excluded and indirect exposure through investment vehicles is to be restricted to less than 10 % of a vehicle’s net assets; and
· Exclude “loan back” arrangements where the investment is used as collateral by investors.
2. Complying investment framework that only apples to the SIV
There are two mandatory investment components and one balancing investment component:
- At least $500,000 in eligible Australian venture capital or growth private equity fund(s) investing in start-up and small private companies. The Government expects to increase this to $1 million for new applications within two years as the market responds;
- At least $1.5 million in an eligible managed fund(s) or Listed Investment Companies (LICs) that invest in emerging companies listed on the Australian Securities Exchange (ASX); and
The balancing component:
- A ‘balancing investment’ of up to $3 million in managed fund(s) or LICs that invest in a combination of eligible assets that include other ASX listed companies, eligible corporate bonds or notes, annuities and real property (subject to the 10 per cent limit on residential real estate).
What about the PIV requirements?
It is still very much a work in progress as far as the government is concerned.
They have decided the following will apply at least:
· There are no mandatory complying investment components with which the PIV must comply;
· The Austrade will take the role to nominate the PIV applicant. Austrade will assess the nomination application against the criteria based on entrepreneurial skill or talent and ongoing benefit to Australia and character/ integrity check. the PIV can only be applied for by invitation of Australian government.
· It is not clear how Austrade will headhunt or invite the PIV applicant?
What must the PIV invest in?
On the first reading, it seems the PIV can invest in the following areas as complying investment:
(a) Australian securities exchange listed assets;
(b) Australian government or semi-government bonds or notes(NB: the SIV is not allowed to invest in Australian government bonds under the new framework);
(c) Corporate bonds or notes issued by an Australian exchange listed entity
(d) Australian proprietary limited companies;
(e) Real property in Australia excluding residential property (NB: the SIV is allowed to indirectly invest in residential property with no more than $500,000);
(f) Deferred annuities issued by Australian registered life companies; and
(g) S&T government approved philanthropic donation.
There is no indication yet from Austrade as to what percentage of the fund the PIV must invest in the above mentioned areas.
So we wait a bit more to see the process will develop.