Significant Investor Visa Fiona Halsey | Halsey Legal Services - - PowerPoint PPT Presentation

Significant Investor Visa

Fiona Halsey | Halsey Legal Services www.halseys.com.au www.halseys.com.au

Warning

1) This presentation is intended only to provide a summary and general overview on matters of interest. It is not intended to, nor does it constitute legal advice. We make no warranties or representations about the contents of this presentation. You should consider the content of the presentation as merely promoting discussion on the topics referred to. You should not act on or rely on the contents of this presentation before not act on or rely on the contents of this presentation before first obtaining professional advice specific to your circumstances. 2) This presentation does not create a solicitor-client relationship between you and the presenter, author or promoter of the presentation.

HALSEYS

What is it?

1) Business Innovation and Investment (Provisional) Visa (Subclass 188) 2) Business Innovation and Investment (Permanent) Visa (Subclass 888) HALSEYS

Requirements

To be eligible for the provisional visa: 1) Investment of at least A$5 million 2) Complying investments 3) Minimum of 4 years HALSEYS

Other requirements

1) Health 2) Character 3) No history of involvement in unacceptable business or investment activities, regardless of location of activities 4) Certain other public interest criteria (4001, 4002, 4003, 4) Certain other public interest criteria (4001, 4002, 4003, 4004, 4010, 4020 and 4021) 5) Reside in Australia for 40 days per year (may be assessed cumulatively – 160 days over 4 years) 6) Genuine intention to reside in the State or Territory which govt agency nominated the applicant Halseys

Note

Certain usual requirements of business investment/ skilled migration visas do not apply. 1) No innovation points test 2) No upper age limit 3) No English language threshold requirement (note: if 3) No English language threshold requirement (note: if unable to demonstrate functional English, applicants must pay a second instalment charge) 4) No restriction in relation to obtaining work or study once visa is granted HALSEYS

Complying Investments

What are complying investments? 1) Commonwealth, State or Territory Government Bonds 2) ASIC regulated managed funds with a mandate for investing in Australia 3) Direct investment into Australian proprietary companies 3) Direct investment into Australian proprietary companies Listed investments are NOT acceptable, however, this can be achieved through use of a suitable managed fund HALSEYS

Investment requirements

What are the specifics? 1) Investments can be held in any combination, however, depends upon the State 2) Investors can change investments 3) Sums withdrawn must correspond with sums reinvested 3) Sums withdrawn must correspond with sums reinvested 4) An investor has 30 days from withdrawal to reinvest 5) If funds are reinvested within 30 days, the investments will be taken to have been held continuously (in relation to the 4 year requirement) 6) Current investments may count towards the $A5M total, however, must be held for 4 years of provisional visa HALSEYS

Investment Requirements

Value of investments 1) As long as no withdrawals are made, the value of investments may fall below A$5M 2) If the value of investment increases over A$5M, no withdrawals are permitted unless they are reinvested within 30 days HALSEYS

Details of different kinds of complying investments

1. Managed funds 2. Pty Ltd companies 3. Government bonds (not covered in any detail)

• Rules for managed funds and Pty Ltd companies are

very different

• Different rules for the individual applicant asset holding

entity, and the complying investments HALSEYS

Managed funds

Features of a complying managed fund: 1) MIS as defined in the Corporations Act 2001 2) Interests are not able to be traded on a financial market 3) No representations have been made to a member that the interests will be able to be traded the interests will be able to be traded 4) The issue of the interests are covered by an AFSL 5) Restricted investments, as specified by the Minister Additionally: 1) Available to the public 2) IDPS is allowed HALSEYS

Managed Funds – permitted underlying investments

Purposes specified by the Minister (really quite broad): 1) Infrastructure projects in Australia 2) Cash held by Australian ADIs 3) Bonds issued by Cth, State or Territory Governments 3) Bonds issued by Cth, State or Territory Governments 4) Bonds, equity, hybrids or other corporate debt in companies and trusts listed on any Australian stock exchange 5) Bonds or term deposits issued by Australian financial institutions HALSEYS

Managed Funds

Purposes specified by the Minister (cont): 6) Real estate in Australia 7) Australian agribusiness 8) Other ASIC regulated MISs that invest in the above list

• f investments
• f investments

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Managed Funds

1) Potentially could use a standard retail fund, however, will need to be careful that fund only invests in acceptable

• investments. We say – don’t take the risk.

2) Likely that suitable funds will be established to satisfy visa requirements 3) A number of entities are establishing their own funds at the moment 4) Although the relevant State government will consider if investments are complying, this is no guarantee of quality or safety HALSEYS

Managed Funds

Form 1413: 1) Declaration from the fund manager that all of the underlying investments in the fund are limited to the classes of investments specified by the Minister. 2) Any underlying funds within an MIS will also need to complete this form. 3) Available from the Department of Immigration and Citizenship website. HALSEYS

Examples of complying managed fund

Property Fund WA located shopping centre NSW Road Victorian rental properties

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Examples of complying managed fund

Equity Fund Corporate debt from Coles Listed companies (eg Wesfarmers) Cash with Westpac

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Examples of complying managed fund

Fund of Funds Fund 2 - Property Fund 1 - Equity Fund 3 - Infrastructure Entities listed

• n an

Australian exchange Australian property Australian infrastructure

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Examples of non-complying managed fund

Property Fund Platinum International Managed Fund New Zealand Road Victorian rental properties

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Examples of non-complying managed fund

Equity Fund Companies listed only on New Zealand exchange Wesfarmers Victorian rental properties

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Examples of non-complying managed fund

Fund of Funds Fund 2 - Property Fund 1 - Equity Fund 3 - Infrastructure Entities listed

• n an

Australian exchange Australian property Australian infrastructure plus some NZ infrastructure

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Effect of NZ Infrastructure

1) Causes all investments made through the top fund to be non-complying 2) No investor satisfies the requirement 3) Everyone involved probably sued Immigrants should require that all fund managers certify that the underlying investments are complying, and require suitable guarantees and indemnities. However this is not a perfect solution. HALSEYS

Australian Pty Ltd Companies

1) Must be registered under the Corporations Act 2001 and with ASIC 2) Must genuinely operate a qualifying business 3) Must have ABN 4) Applicant must have an ownership interest in the 4) Applicant must have an ownership interest in the company Acceptable investments through a Pty Ltd company are quite different to those through a managed fund HALSEYS

Australian Pty Ltd Companies

Qualifying business: 1) Enterprise that is operated for the purpose of making profit through the provision of good, services or goods and services (but not the purpose of rental property) to the public, and is not operated for the purpose of speculative or passive investment. speculative or passive investment. 2) Company cannot be wholly or substantially created for the purpose of being a complying investment. At law, goods does not include land – there has always been a distinction. HALSEYS

Australian Pty Ltd Companies

Qualifying business (cont): 1) Company must carry on as a qualifying business for at least two years.

• If invested in the company for two years or more,

company must be a qualifying business for at least two years.

• If investment is held for less than two years,

company must be a qualifying business for the entire period. 2) Otherwise, must show that that there was a genuine attempt to maintain a qualifying business by providing evidence. HALSEYS

Australian Pty Ltd Companies

Qualifying business (cont): 1) Speculative an investment that carries a high level of risk of loss 1) Passive generally, purchased with the intention of long term generally, purchased with the intention of long term appreciation and limited maintenance HALSEYS

Australian Pty Ltd Companies

Ownership interest:

• Interest as a shareholder in the company that carries on

the business, including interest held directly through one

• r more interposed companies, partnerships or trusts
• Ownership may be in any proportion

General Corps Law restrictions on Pty Ltd companies:

• Generally thought inappropriate for public fundraising
• Cannot have more than 50 non-employee shareholders
• Cannot undertake fundraising that requires prospectus

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Prospectus not required if

• Minimum amount for acceptance is $500,000 (can be

cumulative)

• 20/12/2 exemption applies (not more than 20 investors

investing a total of $2million in each 12 months)

• All investors are sophisticated investors

(Note – rules for funds and companies are completely

• different. If you have a qualifying business, we

recommend use of a Pty Ltd company – you can get to 50 investors with quite limited compliance requirements.) HALSEYS

Examples of complying Pty Ltd company

Pty Ltd company Compliance business Employment agency Consulting business

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Examples of non-complying Pty Ltd company

Pty Ltd company Brazilian shopping centre Companies listed on ASX Victorian rental properties

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Examples of non-complying Pty Ltd company

Pty Ltd company - 1 Complying Pty Ltd company Complying fund Victorian rental properties (unless all shares in 1 are held by investor/ spouse as their investment vehicle, and then couldn’t count the Victorian rental properties)

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Examples of non-complying investments

Individuals Holdings in ASX company Real property – eg house in Farm Business company eg house in Applecross

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However, could invest in all through an MIS, and in a business and possibly a farm through a Pty Ltd company

Structure of Investments

Investments may be held: 1) directly by an investor or jointly with a spouse or de facto; 2) through a company where the total amount of issued shares are owned by the investor or jointly with a spouse or de facto; or 3) through a valid trust where the trustees and beneficiaries are the investor or jointly with a spouse or de facto. Investments may be managed by a third party. HALSEYS

Source of investment funds

1) Unencumbered 2) Lawfully acquired HALSEYS

Timing

1) Investments must be made before the grant of visa. 2) Investments can be made beforehand. 3) There is some discussion surrounding certain States requiring investments to only be made after the Department has informed the applicant to do so. However, the Department position is that previous investments can count towards the A$5M as long as they are held for the entire period of the provisional visa (minimum 4 years). 4) Applicants will be informed during the process when to make the investments if they have not already done so. HALSEYS

How to obtain the visa

Provisional visa: 1) Nomination by a State or Territory; 2) Expression of interest to “Skill Select”; and 3) Invitation to apply for visa. HALSEYS

Nomination by State or Territory

Each state has its own requirements for nomination in addition to the base requirements of the Visa. Generally, these requirements include: 1) Contribution to the State or Territory’s economy 2) Residence in the State or Territory 2) Residence in the State or Territory HALSEYS

WA Requirements

1) Business or personal assets of at least A$5M available for investment in complying investments in Australia 2) Additional $50,000 available for domestic and/ or settlement purposes 3) Contribution to the WA economy HALSEYS

Other State requirements

NSW 1) At least A$1.5M invested in NSW Waratah Bonds QLD 1) Preference given to applicants with investments that 1) Preference given to applicants with investments that have a direct economic benefit to QLD 2) Genuine and realistic commitment to reside in QLD HALSEYS

Other State requirements

SA 1) Commitment to conduct 6 monthly surveys issued by Immigration SA during the provisional visa term 2) In order to be eligible for the permanent visa – must have held a minimum A$3M in SA ASIC registered propriety business for any 2 years in the 4 years of the provisional visa HALSEYS

Other State requirements

VIC 1) A$200,000 for settlement purposes 2) If the investor choses to invest in Victorian Government Bonds, minimum of A$1.5M is required 3) Economic benefit to Victoria 3) Economic benefit to Victoria HALSEYS

Skill Select

Once the EOI has been lodged with Skill Select, the applicant may be invited to apply for the visa. HALSEYS

Applying for the visa

1) Once an invitation has been issued, the applicant has 60 days to lodge their visa application. 2) If the application is not lodged within 60 days, the applicant will receive another invitation to lodge their application and will be granted another 60 days to do so. 3) If the applicant still does not lodge their application, the applicant must resubmit their expression of interest to Skill Select and wait to be invited to lodge the visa application again. HALSEYS

Extending the provisional visa

1) After at least 3 years, an applicant can extend the provisional visa for a maximum of two additional visas. 2) The maximum total period of the provisional is eight years. 3) If an applicant wants to extend the provisional visa, they must be nominated by the State or Territory again. HALSEYS

Permanent Visa

Subclass 888 Once the provisional visa has been held for 4 years, applicants can apply for a permanent visa HALSEYS

Permanent visa requirements

1) Nominated by a State or Territory 2) Have continuously held complying investments for the life of the provisional visa 3) Held the provisional visa for at least 4 years 4) Met the residence requirement (40 days per year or 4) Met the residence requirement (40 days per year or cumulative) 5) Record of compliance with Australian laws including taxation, superannuation and workplace relations 6) Not been involved in unacceptable business or investment activities 7) Strong commitment to continue business and investment activity in Australia HALSEYS

Permanent visa

Once the permanent visa has been granted, applicants do not have to maintain complying investments. Note: the applicant must continue their business and investment activity in Australia HALSEYS

Costs

1) Nomination by State – WA = $300 2) Provisional visa – new = $4,065 3) Provisional visa – extension = $500 4) Provisional visa – less than functional English = $8,520 5) Provisional visa – dependants 18 years or over (less 5) Provisional visa – dependants 18 years or over (less than functional English) = $4,250 6) Permanent visa = $1,960 7) Permanent visa – dependants 18 years or over (less than functional English) = $4,250 HALSEYS

Other costs

1) Health assessments 2) Police checks 3) English test HALSEYS

Migration agents - issues

• Be clear about what you are doing for the potential

migrant – scope out your work carefully

• Do not undertake to locate suitable investments
• If you make referrals to a third party, refer to more than
• ne source, and have a solid referral agreement and

excellent disclosure

• Can receive a referral fee from a financial adviser,

however, this must be disclosed, and we recommend you disclose it. Potential criminal offence.

• Could establish a joint venture with a financial adviser
• Disclosure is crucial with all alternatives

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Keen to establish a fund?

• Costs can be workable, especially if 20 or less investors
• Halseys can help you to establish and maintain your

fund, from start to finish

• We have a stable of RM’s
• We offer specialist and yet personal legal services
• We offer specialist and yet personal legal services
• Licensee Solutions provides excellent ongoing

compliance services

• Next slide shows the usual tasks – you may or may not

need all of these

• Join our LinkedIn Group – Significant Investor Visa

HALSEYS

Task Comment Time frame Indicative cost Arrange responsible managers with appropriate experience and qualifications Licensee Solutions Needed for licence application Ongoing As applicable - cost varies between $2,000 - $7,000 per month dependent upon individual Licence application Licensee Solutions Prepare proofs 4 weeks $8,000 - $10,000 Licence application Licensee Solutions Submit application to 1-2 months to be processed (ASIC may take more or less time for this) $1,485 (ASIC fees) ASIC Trust deed Halsey Legal Trust deed drafted by HLS 4 weeks $5,000 - $20,000 Other trust requirements Trust account and auditor Ongoing As applicable Drafting application form and reviewing information memorandum Halsey Legal Preparation of

• ffer documents

– assisted by HLS 4 weeks $5,000 - $20,000 Ongoing compliance Licensee Solutions Ongoing legal work Halsey Legal

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Example

• David and Sally decide that they would like to set up a

managed fund, targeted towards potential immigrants. They have 10 potential investors. They are not sure if it will be financially viable for them to establish the fund, and they are not sure of some of the rules.

• Halseys offers a package for $2,500 plus GST –
• Halseys offers a package for $2,500 plus GST –

includes an initial meeting and provision of a written

• pinion as to the necessary requirements for a

complying fund (or Pty Ltd company). This allows you to have definitive advice, before you commit to the overall process. HALSEYS

How can we help?

Halseys’ management team collectively represents more than 60 years

• f experience in the financial services and credit industries as solicitors,

advisers, researchers and senior managers. We can assist you to establish or maintain a complying managed fund. For further information, please visit www.halseys.com.au. Join our new LinkedIn group – Significant Investor Visa

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