The Australian government has announced changes to the complying investment criteria of the Significant Investment Visa (SIV) which will come into effect on 1 July 2015. These changes are intended to direct investment to emerging companies and venture capital (VC) funds.

Complying investments will now include mandatory allocations to certain types of assets including:

  • minimum of $500,000 investment in an Australian venture capital or growth private equity fund which invests in start-up and small private companies.  The venture capital component must be invested in an AusIndustry registered Venture Capital Limited Partnership (VCLP) or an Early Stage Venture Capital Limited Partnership (ESVCLP). Venture capital funds do not have to be invested immediately, SIV applicants will have a period of 12 months following the grant of the provisional visa to make an investment in an eligible VCLP or ESVCLP;

  • minimum of $1.5 mil investment in a complying managed fund which invests in emerging companies (companies which have a market capitalisation of less than $500 million). There is some flexibility for the complying emerging companies fund to invest a certain allocation of its assets in unlisted companies, companies with market capitalisation greater than $500 million and foreign companies and cash and derivatives (for risk management purposes only). A further requirement which is likely to cause angst amongst smaller fund managers is that fund managers responsible for managing emerging companies funds must hold at least $100 million firm wide funds under management in order to qualify for SIV compliance;

  • balance of investment in complying managed funds which invests in listed Australian companies, Australian corporate bonds/notes in listed Australian companies, deferred annuities or non-residential real estate in Australia (there is a 10% limit on residential real estate for the complying fund).

Other key changes appear to be as follows:

  • investments in Australian private companies and State and Territory Government Bonds will no longer qualify for SIV;

  • investments in Australian mortgage funds do not appear to be complying going forward; and

  • loan back funds where the interests in the fund is used as collateral for loans will no longer be permitted.

Premium Investor Visa Updates

The Premium Investment Visa (PIV) will be introduced on 1 July 2015 which requires a $15 million complying investment. PIV holders will be able to apply for an Australian permanent visa 12 months after the investment as opposed to the 48 months required for SIV holders.

PIVs are based on referrals from State/Territory governments and are designed to attract entrepreneurial skill or talent to Australia. Austrade will assess and nominate the candidate.

PIV investments can either be made directly or through managed funds into Australian listed securities, government bonds/notes, corporate bonds issued by Australian public listed companies, private Australian companies, property in Australia (excluding residential real estate), and annuities issued by Australian life companies.

Application

The new SIV requirements will apply from 1 July 2015. The detailed regulations regarding the changes are expected to be published before this time.

State and Territory Sponsorship applications under the current regime have been suspended from 22 April 2015. This means that any new application for SIVs where the applicant has yet to receive their State or Territory Sponsorship will need to comply with the new SIV complying investment requirements.

The Department of Immigration and Border Protection has stated that the new changes will not affect visa applications which are already in the system as at 22 April 2015.