AUSTRALIA Law and Practice Contributed by: Michael Lawson, Nicole Brown, Lizzie White and Tamaryn Leach, MinterEllison
• making investments that are directed at deriving income in the nature of interest, rent, dividends, royalties or lease payments. For an investment to qualify as an EVCI, the investment must not exceed the value restriction imposed at the time of the investment (ie, AUD50 million for an investment by an ESVCLP and AUD250 million for an investment by a VCLP). In addition to the requirements for registration, the VC Act applies various restrictions to these structures: • no single investor in an ESVCLP, other than in certain circumstances, can contribute more than 30% of the total committed capital; • the maximum committed capital for an ESV - CLP is AUD200 million; • VCLPs and ESVCLPs cannot invest in a single investment whose total assets exceed AUD200 million at the time of investment; and • in general, they cannot make debt invest - ments other than permitted loans as defined in the VC Act. Given the strict requirements and restrictions imposed on VCLPs and ESVCLPs, many fund managers establish these vehicles with paral - lel funds (usually soft stapled-unit trusts). This structure allows fund managers to obtain the tax benefits afforded to VCLPs and ESVCLPs with respect to investments that are EVCIs while providing the fund manager with the flexibility to invest in non-EVCIs via parallel funds – a common strategy for leading Australian private equity and venture capital funds. CCIVs Amendments to the Corporations Act in 2022 have facilitated the emergence of a new fund vehicle – the CCIV. This vehicle is a company
limited by shares, which must consist of one or more “sub-funds”. While the CCIV itself is a legal entity, sub-funds are not separate legal entities. Each share in a CCIV must be referable to a sin - gle sub-fund, and the assets of the CCIV must be allocated to a particular sub-fund in an allo - cation register. The Corporations Act provides that the assets of one sub-fund are not available to satisfy the liabilities of another sub-fund. CCIVs can be structured as open-ended or closed-ended and are suitable for retail or wholesale clients. A retail CCIV is subject to specific rules broadly similar to registered man - aged investment schemes. A CCIV must be designated as retail or wholesale, though under certain circumstances, a CCIV will be required to register as a retail CCIV. A CCIV is managed by a “corporate director”, which must be a public company with an AFSL authorisation to “operate the business and con - duct the affairs of a CCIV” for retail or whole - sale CCIVs (as applicable) holding the relevant type of assets. A CCIV and each sub-fund are established upon registration with ASIC and are governed by that CCIV’s constitution. 2.2.3 Restrictions on Investors Australia has a highly developed and continually evolving regulatory regime in relation to invest - ments from offshore into Australia. In summary, the Treasurer of Australia, acting through the Foreign Investments Review Board (FIRB), can block foreign direct investment that is “contrary to Australia’s national interest” if clearance is required. The foreign investment review framework is set by the Foreign Acquisitions and Takeovers Act 1975 (the “FATA Act”) and the Foreign Acquisi -
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