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2008-2009
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
Australian business investment partnership (Consequential Amendment) bill
2009
EXPLANATORY MEMORANDUM
(Circulated by the authority of the
Treasurer, the Hon Wayne Swan MP)
Table of contents
Glossary 1
General outline and financial impact 3
Chapter 1 Australian Business Investment Partnership 5
Do not remove section break.
The following abbreviations and acronyms are used throughout this
explanatory memorandum.
|Abbreviation |Definition |
|AFSL |An Australian financial services |
| |licence which authorises a person to|
| |carry on a financial services |
| |business under the Corporations Act |
| |2001. |
|ABIP |Australian Business Investment |
| |Partnership Limited, the special |
| |purpose vehicle established by the |
| |Australian Business Investment |
| |Partnership Bill. |
|Commonwealth |Commonwealth of Australia. |
|Corporations |Corporations Act 2001. |
|Act | |
|four major |Australia and New Zealand Banking |
|domestic banks|Group Ltd, Commonwealth Bank of |
| |Australia, National Australia Bank |
| |Ltd and Westpac Banking Corporation |
General outline and financial impact
Australian Business Investment Partnership
The Australian Business Investment Partnership (Consequential
Amendment) Bill 2009 will exempt 'Australian Business Investment
Partnership Limited', once incorporated, from the requirement to
hold an Australian financial services licence (AFSL) under the
Corporations Act 2001 (Corporations Act).
This Bill is part of a package of two Bills which facilitates the
establishment of the Australian Business Investment Partnership
(ABIP). The other Bill in the package is the Australian Business
Investment Partnership Bill 2009.
ABIP will be incorporated soon after the commencement of the
Australian Business Investment Partnership Act 2009 and will be
operational from the date of its registration as a Corporations Act
company.
Under the Corporations Act an Australian financial services licence
(AFSL) authorises a company or its representatives to provide
financial services to clients. Without an AFSL, a company
generally cannot carry on a financial services business.
AFSLs are regulated under the Corporations Act. Subsection 911A(2)
sets out the circumstances in which a person who provides a
financial service will nevertheless be exempt from having to hold
an AFSL.
A company carries on a financial services business where it
provides financial product advice, deals in a financial product,
makes a market for a financial product, operates a registered
scheme or provides a custodial or depository service.
ABIP will provide liquidity support for viable commercial property
assets where financiers have withdrawn from debt financing
arrangements as a result of the global financial crisis.
ABIP will also provide financing arrangements in other areas of
commercial lending if those arrangements are unanimously agreed by
the members of ABIP.
Whilst the statutory concept of providing a financial service in
Section 766A of the Corporations Act does not extend to the
provision of credit per se, it is arguable that activities of ABIP
incidental to the provision of credit, would constitute providing a
financial service within the meaning of Section 766A.
Requiring ABIP Limited to obtain an AFSL for its borrowing and
lending activities would be disproportionate given the
sophisticated nature of its possible client base and the limited
scope and duration of its activities, noting that ABIP:
. will only have five shareholders;
. is only intended to lend for 2 years; and
. its functions are strictly limited by the legislation providing
for its incorporation.
In that context, it is appropriate for there to be an exemption
from the AFSL requirements in relation to any activity of ABIP
which constitutes the carrying on of a financial services business
under subsection 911A(2) of the Corporations Act.
Date of effect: The measures in the Bill will take effect on the
commencement of the legislation.
Proposal announced: The proposal was announced by the Prime
Minister on 24 January 2009 in a Media Release, 'Building
Australia's future - a $4 billion Australian Business Investment
Partnership to support Australian jobs'.
Financial impact:
This Bill has no financial impact. The financial impacts of the
establishment of ABIP are outlined in the Explanatory Memorandum of
the Australian Business Investment Partnership Bill 2009
Compliance cost impact: This Bill will have no compliance costs.
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Outline of chapter
1. The Bill will exempt 'Australian Business Investment Partnership
Limited' from the requirement to hold an Australian financial
services licence (AFSL) under the Corporations Act 2001.
Context of amendments
2. On 24 January 2009, the Government announced the establishment of
the Australian Business Investment Partnership to provide liquidity
support for viable commercial property assets where financiers have
withdrawn from debt financing arrangements as a result of the
global financial crisis.
Detailed explanation of new law
Exemption
3. Schedule 1 of the Bill amends the Corporations Act 2001. Item 1
includes within the list of exemptions from the requirement to hold
an AFSL under subsection 911A(2) the services provided by
Australian Business Investment Partnership Limited in accordance
with the Australian Business Investment Partnership Act 2009.
Other provisions
4. The Act may be cited as the Australian Business Investment
Partnership (Consequential Amendment) Act 2009. [Clause 1]
5. The Act will commence at the same time as the Australian Business
Investment Partnership Act 2009 commences. [Clause 2]