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The Australian government has made changes to the Significant Investor Visa (SIV) regime that have expanded the visa streams that will be required to maintain complying investments, reduced the investment period and adjusted investment allocations away from balancing investments towards venture capital and growth private equity investments.   The changes took effect from 1 July 2021.

What is the SIV regime?

The SIV stream of subclass 188 visas offer entrepreneurial and high net worth individuals a pathway to permanent residency if they are willing to make “complying investments” in areas of the Australian economy, without complications that apply to other visas such as English language tests, business skills assessments or age limitations.

Any person willing to invest $5,000,000 in accordance with the complying investment framework (Framework) set out in the Migration (IMMI 15/100: Complying Investments) Instrument 2015 (Instrument) may apply for an SIV.

Key changes

The changes that took effect on 1 July 2021 include the following matters of interest to fund managers:

Complying Investment Framework to extend to Investor visas

The complying investment framework now extends beyond SIV to the ‘Investor visa’ (IV). IV holders will be required to maintain an investment of $2.5 million in complying investments. In comparison, the investment requirement of SIV holders will remain at $5 million.

Changes to investment allocation

For applicants after 1 July 2021, the venture capital and private equity component has increased from 10% to 20% of the investment amount. The investment allocation for emerging companies remains at 30%, while the balancing investment allocation has reduced from 60% to 50%.

For new SIV holders, this means that they must maintain a minimum of $1 million in venture capital and private equity investments and the amount available for investment in balancing investments will reduce to $2.5 million per SIV holder. The investment requirements of existing SIV holders and applicants before 1 July 2021 remain unchanged.

 

Data Table

Shorter investment period

New SIV holders will be eligible to apply for permanent residence if they meet the qualification requirements after three years – this is a year faster than the previous qualification period of four years. The SIV will now be valid for five years, which gives SIV holders additional time to meet the requirements.

Data Table 

Requirement to provide annual independent audit reports

From FY21-22, fund managers of emerging company investments and balancing investments will also be required to conduct an annual audit.  A copy of the annual audit will need to be provided to IV and SIV holders, so they can attach it to their visa applications.

Clarification in relation to use of fund of funds, emerging companies and derivatives

The SIV Instrument now clarifies that:

  1. a fund of funds must itself be a managed investment fund for the purposes of the SIV regime
  2. venture capital and private equity investments may be held through fund of funds and investor directed portfolio services
  3. derivatives which are designed to materially reduce or completely eliminate the exposure of an investor to the risk of loss from changes in the market price of an emerging companies investment are not permitted
  4. emerging companies which in turn invest in companies which do not meet the market capitalisation requirements for emerging companies are not permitted.For example, a small exchange traded fund which invests in the securities of large capitalised companies is not permitted
  5. SIV and IV holders will also be required to enter into venture capital and private equity investment fund agreements within six months of the grant of the visa (which is earlier than the 12 months timing under the old rules).

 

The information contained in this article is provided by and on behalf of Equity Trustees Limited ABN 46 004 031 298 and its related entities (collectively ‘EQT’) for information purposes only and may be subject to change at any time without notice. EQT disclaims to the maximum extent allowed by law, any warranties, either express or implied, with respect to this document. 

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