Significant Investor Visa - Complying Investment Categories Expanded

On 13 August 2013, the government revised the minister’s instrument specifying ‘Eligible Managed Fund Investments’ for the significant investor visa regime to include, amongst other things, derivatives (within limits). The changes are good news for investors and ASIC regulated fund managers who can now offer a broader range of investment classes to SIV applicants.

What’s changed?

In summary, the revised instrument (IMMI 13/092)¹ allows additional classes of investments by managed funds, namely:

• bonds, equity, hybrids or other corporate debt in companies and trusts expected to be listed within 12 months on an Australian Stock Exchange;
• annuities issued by an Australian registered life company in accordance with section 9 or 12A of the Life Insurance Act 1995;
• derivatives used for portfolio management and non-speculative purposes which constitute no more than 20% of the total value of the managed fund;
• loans secured by mortgages over other eligible managed fund investments; and
• fund of funds investing into the above new classes of investments.

The new instrument also clarifies that cash held by ADIs includes negotiable certificates of deposit, bank bills and other cash like instruments.

When does this take effect? 

The new instrument takes effect from 23 November 2013.  Form 1413 will need to be updated to reflect the new instrument and a new form is expected to be released in due course.²

Full list of complying investments

The following table includes the full list of complying investments that may be held in eligible managed funds from 23 November 2013 and how they compare with the current regulations.*

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*Changes are in bold and strikethrough text

What does the above mean?

While the changes enable ASIC-regulated fund managers to offer a broader range of asset classes, there are no changes to the types of complying investments already available for direct investment by SIV applicants (namely, government bonds and Australian proprietary companies with qualifying businesses).

These changes are a boost to the Australian funds management industry, giving greater flexibility to fund managers to tailor SIV compliant funds to meet investors’ risk-reward appetites. A broader range of investment opportunities will now be available for SIV investors who can switch their complying investment at any time during the four year provisional visa period, provided they re-invest within 30 days of withdrawing an investment.

Endnotes

1. IMMI 13/092.
2. For more information see IMMI 13/092 and the Explanatory Memorandum.