Australia’s Significant and Premium Investor Visa Programme (SIV/PIV), last amended in July 2015, continues to offer lucrative opportunities for overseas investors and further incentivise capital injection into SMEs.
Significant Investor Visa Programme
The rules of the SIV stipulate investors must invest a minimum of $5 million in complying investments, inclusive of the following mandatory requirements. If these are satisfied, they can apply for a permanent residency visa after four years after the investment is made.
- A minimum of $500,000 in eligible Australian venture capital funds (the Government expects to increase this to $1 million for new applicants within two years);
- A minimum of $1.5 million in eligible managed funds (including LICs) that primarily invest in securities in ASX listed micro-cap and small-cap companies; and
- A ‘balancing investment’ of up to $3 million in managed funds or LICs that invest in a broader range of eligible assets.
The reasoning behind these changes was to encourage more active, high risk investment in innovative business, where previously there had been a trend to invest in more stable forms of capital, namely real estate and government, already well-serviced by capital flows.
Fund managers can take advantage of this favourable regime to increase their distribution networks in primary overseas investor markets. One notable amendment is an anticipated increase to in the required $500,000 threshold to $1000,000 in eligible Australian venture capital funds within the next two years.
Venture Capital and Growth Private Equity (VCPE)
An additional requirement of the new SIV complying investment framework is that applicants must make an investment of $500,000 (10% of their SIV investment) into VCPE funds. VCPE is a form of investment ideal for delivering a capital boost for unlisted start-ups.
Eligibility to receive SIV investment is contingent on a VCPE fund’s registration under the Early Stage Venture Capital Limited Partnership (ESVCLP) or Venture Capital Limited Partnership (VCLP) programmes, overseen by the Department of Industry and Science.
Premium Investor Visa Programme
Also coming into force in 1 July 2015, the PIV program enables a 12-month pathway to permanent residency, with a requisite $15 million investment in a wide scope of investments eligible under the scheme.
Eligible PIV investments encompass:
- Australian securities exchange listed assets.
- Australian government or semi-government bonds or notes.
- Corporate bonds or notes issued by an Australian exchange listed entity (or wholly owned subsidiary of the Australian listed entity) or investment grade rated Australian corporate bonds or notes rated by an AFS licenced debt rating agency.
- Australian proprietary limited companies.
- Real property in Australia, excluding residential property.
- Deferred annuities issued by Australian registered life companies.
- S&T government approved the philanthropic donation.
Other Fund Management Requirements for SIV/PIV
The funds used for the complying investment must be unencumbered and the complying investment cannot be made until notification is received from the Department of Border Protection and Immigration (DIPD). The complying significant investment must be at least AUD $5 million at the time the Department of Border Protection and Immigration decides whether to grant a visa. After this point, the value of the investment may fall below 5 million without affecting visa status.
Integrity Measures for Investor Visa Program
DIBP presides over efficient management of the visa process through the implementation of several integrity measures to ensure the compliant delivery of the investor visa program. These include stringent security and character checks for applicants as well an intensive background information search and law enforcement referral to source country authorities in the event an applicant has been identified as suspicious.
One year on and the SIV/PIV scheme is still functioning well in its current form, with changes expected to be enacted as and when necessary while the market responds to the new regulatory environment. To check if your investments meet the relevant eligibility requirements for the desired programme or for assistance on how to deal with foreign investors as a business owner, contact LegalVision on 1300 544 755.