The significant investor visa program provides fund managers and others with an exciting new opportunity to market investment products to the emerging body of high net worth individuals throughout Asia. Access to a large and growing base of investment funds and the long term investment horizon required by the visa regulations make this an opportunity that fund managers and providers of underlying investments cannot afford to ignore.
A long-awaited new class of visa was introduced on 24 November. It aims to provide a streamlined and simplified pathway to permanent residence for migrant investors who invest $5 million in complying investments in Australia for a period of 4 years. Visa applicants do not need to satisfy the innovation points test and there are no upper age limits.
Complying investments are eligible managed funds, Australian proprietary companies and government bonds. To be complying, a managed fund must satisfy the following:
- the investment is a managed investment scheme – the regulations do not require the scheme to be registered with ASIC;
- the interests are not able to be traded on a financial market;
- no representation has been made to any member that the interests will be able to be traded;
- the issue of the interests in the fund is covered by an Australian financial services licence;
- the managed fund must be “for a purpose” specified by the Minister in a legislative instrument in writing.
The Minister has specified the following investments in managed investments for the above purposes:
- infrastructure projects in Australia;
- cash held by Australian deposit taking institutions;
- bonds issued by the Commonwealth Government or a State or Territory government;
- bonds, equity, hybrids or other corporate debt in companies and trusts listed on any Australian Stock Exchange;
- bonds or term deposits issued by Australian financial institutions;
- real estate in Australia;
- Australian Agribusiness; and
- other “ASIC regulated” managed funds that invest in the above list of investments.
Intending migrants for this class of visa must be nominated by a State or Territory government agency. It is expected that the nomination requirements will differ between agencies.
This new class of visa presents new opportunities for Australian fund managers and for providers of the underlying investments (e.g. banks, ASX-listed vehicles and the real estate and agribusiness industry). The interplay between foreign and domestic laws will be relevant. Setting up funds to take advantage of the new visa regime involves a complex intersection of various foreign and Australian laws and regulations, across the areas of investment and securities law, taxation and immigration law. Foreign restrictions on transferring money overseas will also be relevant. China, for example, has restrictions on currency conversion and the maximum amount of funds that can be transferred overseas without government approval.