Subclass 188 Visa – Investment in Australian business

Updated 06 February 2017

Foreign investors wishing to enter Australia for the purposes of managing a business or investing in Australian entities, will be required to obtain a Business Innovation and Investment (Provisional) Visa (Subclass 188 Visa).  This visa is valid for four (4) years, and allows the person to travel in and out of Australia for that period, bring family members to Australia, establish or acquire Australian businesses and make Australian investments.  The visa is a stepping stone to acquiring a Business Innovation and Investment (Permanent) visa (Subclass 888 Visa), which provides permanent residence to visa holders still associated with Australian businesses.

On 1 July 2015 the ‘streams’ of investment available to applicants changed, with the updated requirements of the five (5) ‘streams’ outlined below.

Business Innovation stream

The Business Innovation stream allows the holder to establish, develop and manage a new or existing business in Australia.

Applicants must be nominated by a state or territory government.

Applicants must:

  • be under 55 years of age, although a state or territory can waive this requirement if the proposed business will be of exceptional economic benefit to the nominating state or territory;
  • score at least 65 on the points test;
  • for two out of the four financial years immediately before being invited to apply, have had an ownership interest in an established business or businesses that had at least $500,000 turnover in each of those years;
  • own at least one of the following percentage of the nominated main business:
    • 51 per cent, if the business has a turnover of less than $400,000 per year;
    • 30 per cent, if the business has a turnover of $400,000 or more per year;
    • 10 per cent, if the business is a publicly listed company;
  • have an overall successful business career;
  • have a genuine desire to continuously own and maintain a management role in a business in Australia;
  • if the nominated main business provides professional, technical or trade services, must have spent no more than half their time providing those services, as opposed to general management of the business;
  • at the time of invitation, must have total net business and personal assets of at least $800,000 (personally or in combination with a partner) that are lawfully acquired and available for legal transfer to Australia within two years of the visa being granted; and
  • have had no involvement in unacceptable business or investment activities.

Investor stream

The Investor stream requires the holder to make a designated investment of at least $1.5million in an Australian state or territory and maintain business and investment activity in Australia.

Applicants must be nominated by a state or territory government.

Applicants must:

  • be under 55 years of age, although a state or territory can waive this requirement if the proposed business will be of exceptional economic benefit to the nominating state or territory;
  • score at least 65 on the points test;
  • have a high level of management skill in relation to the eligible investment or qualifying business activity;
  • have at least three (3) years’ experience of direct involvement in managing one or more qualifying businesses or eligible investments;
  • have an overall successful record of eligible investment or qualifying business activity;
  • have a genuine and realistic commitment to continuing their business and investment activity in Australia after the original investment has matured;
  • have a genuine intention to live for at least two (2) years in the state or territory in which they have made a designated investment;
  • for at least one (1) of the five (5) financial years immediately before being invited to apply, have directly managed a qualifying business in which they have a ten (10) per cent ownership or eligible investments of at least $1.5 million;
  • during the two (2) financial years immediately before being invited to apply, have legally acquired net business, investment and personal assets of at least $2.25 million that are available for legal transfer to Australia within two (2) years of the visa being granted;
  • make a designated investment of at least $1.5 million in a state or territory government security using unencumbered funds accumulated from qualifying businesses or eligible investments and be prepared to hold that investment for at least four (4) years from date of issue in their nominating state or territory; and
  • have had no involvement in unacceptable activities.

Significant Investor stream

The Significant Investor stream requires the holder to invest at least $5 million into complying significant investments in Australia over four years, and to maintain business and investment activity in Australia.

Applicants can be nominated by a state or territory government or Austrade on behalf of the Australian government.

Applicants must have a genuine and realistic commitment to:

  • reside in the state or territory whose government agency nominated them;
  • continue their business and investment activity in Australia after the conclusion of their provisional visa; and
  • live in Australia for at least 40 days per year for the duration of their provisional visa (or have a spouse that lives in Australia for at least 180 days per year).

Applicants must also:

  • have net assets of at least $5 million that are legally acquired, unencumbered, and available to be used to make the complying investment in Australia (personally or in combination with a partner);
  • not have been involved in unacceptable business or investment activities.

For applications made after 1 July 2015, Applicants must make a complying significant investment of at least $5 million over four (4) years in the following proportions:

  • at least $500,000 in venture capital and growth private equity funds which invest in start-ups and small private companies;
  • at least $1.5 million in approved managed funds investing in emerging companies listed on the Australian Stock Exchange (ASX); and
  • a ‘balancing investment’ of at least $3 million in managed funds that may invest in a range of assets, including:
    • ASX-listed companies;
    • Australian corporate bonds or notes;
    • annuities; and
    • commercial real estate.

Premium Investor stream

The Premium Investor stream requires the holder to invest at least $15 million into complying ‘premium’ investments in Australia and to maintain business and investment activity in Australia.

Applicants must be nominated by Austrade on behalf of the Australian government.

Eligible investments include:

  • 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; and
  • State and territory government approved philanthropic donations.

Applicants must also:

  • have a genuine and realistic commitment to continue their business and investment activity in Australia after the conclusion of their provisional visa; and
  • have net assets of at least $15 million that are legally acquired, unencumbered, and available to be used to make the complying investment in Australia (either personally or in combination with a partner).

Entrepreneur stream

This stream is for holders who have a funding agreement from a third party for at least $200,000 to undertake a complying entrepreneur activity that is proposed to lead to either the commercialisation of a product or service in Australia or the development of a business in Australia.

Applicants must be nominated by a state or territory government.

Applicants must:

  • be under 55 years of age, although a state or territory can waive this requirement if your proposed complying entrepreneur activity will be of exceptional economic benefit to the nominating state or territory;
  • have competent English;
  • be undertaking or proposing to undertake a complying entrepreneur activity in Australia and have a genuine intention to continue this activity

A complying entrepreneur activity must meet the following requirements:

  • it must relate to an innovative idea that will lead to the commercialisation of a product or service in Australia, or the development of an enterprise or business in Australia;
  • it must not relate to residential real estate, labour hire or the purchase of an existing enterprise or franchise in Australia;
  • it must have one or more legally enforceable agreements to receive funding with a total of at least $200,000 from one of the following entities:
    • Commonwealth Government agency;
    • State or Territory Government;
    • Publicly Funded Research Organisation;
    • Investor registered as an Australian Venture Capital Limited Partnership or Early State Venture Capital Limited Partnership;
    • Specified Higher Education Provider;
  • under the agreement at least ten (10) per cent of the funding must be payable to the entrepreneurial entity within twelve (12) months of the day the activity starts to be undertaken in Australia;
  • the Applicant must hold at least thirty (30) per cent interest in your entrepreneurial entity when they entered into the agreement; and
  • the Applicant must have a business plan for the entrepreneurial entity noting how the innovative idea will lead to the commercialisation of a product or service in Australia, or the development of an enterprise or business in Australia.

The points test

The points test gives points for various elements of human capital and business innovation and includes objective measures of business performance.  Points are awarded for:

  • age;
  • English language ability;
  • Qualifications;
  • experience in business or investment;
  • net personal and business assets;
  • business turnover; and

The full list of factors and accompanying points can be viewed on the Department of Immigration and Border Protection website.

Takeaways

The Significant and Premium Investor visas provide an attractive method of attaining residency for high net-worth individuals.  In the aim of attracting valuable overseas investment to Australia, the non-financial requirements are relatively easy to satisfy.  Financiers seeking international investments can gain added utility from their investments by way of the visa, provided that they can meet the requirements specified by the Australian Government, and where required, are invited to apply.

Further references

Department of Immigration and Border Protection – ‘Business Innovation and Investment (Provisional) visa (subclass 188)

Legislation

Migration Act 1958 (Cth)

Migration Regulations 1994 (Cth)

Further information

This is not an exhaustive list of all the requirements for a Visa 188. If you need assistance or advice about acquiring businesses to comply with the visa requirements, contact us for an obligation free and confidential discussion.

Malcolm-Burrows-009Malcolm Burrows B.Bus.,MBA.,LL.B.,LL.M.,MQLS.
Legal Practice Director
Telephone: (07) 3221 0013
Fax: (07) 3221 0031
Mobile: 0419 726 535
e: mburrows@dundaslawyers.com.au

Disclaimer

This article is not legal advice. It is general comment only. You are instructed not rely on the commentary unless you have consulted one of our Lawyers to ascertain how the law applies to your particular circumstances.

Dundas Lawyers
Street Address Suite 12, Level 9, 320 Adelaide Street Brisbane QLD 4001

Tel: 07 3221 0013

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