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This is a Bill, not an Act. For current law, see the Acts databases.
1998-99
The Parliament of
the
Commonwealth of
Australia
HOUSE OF
REPRESENTATIVES
Presented and read a first
time
Pooled
Development Funds Amendment Bill 1999
No.
, 1999
(Industry, Science and
Resources)
A Bill for an Act to amend the
Pooled Development Funds Act 1992, and for related
purposes
ISBN: 0642 42618X
Contents
A Bill for an Act to amend the Pooled Development
Funds Act 1992, and for related purposes
The Parliament of Australia enacts:
This Act may be cited as the Pooled Development Funds Amendment Act
1999.
This Act commences on the day on which it receives the Royal
Assent.
Each Act that is specified in a Schedule to this Act is amended or
repealed as set out in the applicable items in the Schedule concerned, and any
other item in a Schedule to this Act has effect according to its
terms.
1 Section 3
Repeal the section, substitute:
(1) The object of this Act is to develop, and demonstrate the potential
of, the market for providing patient equity capital (including venture capital)
to small or medium-sized Australian enterprises that carry on eligible
businesses.
(2) To achieve this object, the Act establishes a scheme under which
companies that provide that kind of capital can become pooled development funds
(PDFs), which entitles them to more competitive tax
treatment.
2 Subsection 4(1) (at the end of paragraph (a)
of the definition of shareholders’ funds)
Add “(but not including any amounts remaining unpaid on the
shares)”.
3 Subsection 4(1)
Insert:
widely-held complying superannuation fund has the meaning
given by section 4A.
4 After section 4
Insert:
(1) For the purposes of this Act, a fund is a widely-held complying
superannuation fund if:
(a) it is not an excluded superannuation fund (within the meaning of the
Superannuation Industry (Supervision) Act 1993); and
(b) it satisfies the test in either subsection (2) or (3).
Resident funds
(2) A fund satisfies the test in this subsection at a particular time
during a year of income of the fund (within the meaning of the Income Tax
Assessment Act 1936) if it is a complying superannuation fund for the
purposes of Part IX of that Act in relation to the year of income.
Non-resident funds
(3) A fund satisfies the test in this subsection if:
(a) it is a superannuation fund (within the meaning of the
Superannuation Industry (Supervision) Act 1993); and
(b) it is a non-resident superannuation fund (within the meaning of the
Income Tax Assessment Act 1936); and
(c) it is established for the sole or principal purpose of providing
retirement benefits for its members; and
(d) it complies with the applicable laws of a foreign country that
regulate funds established for that purpose.
5 Paragraph 14(1)(e)
Omit “can and will”, substitute “is reasonably likely to
be able to”.
6 Paragraph 18(c)
Omit “reduce its share capital or buy shares in itself”,
substitute “reduce its share capital, or buy shares in itself, within 2
years after becoming a PDF or merging with another PDF as mentioned in section
32A”.
7 At the end of section 19
Add:
(2) There are 3 kinds of investment that a PDF is allowed to make under
this Division:
(a) subscribing for or buying shares (see section 20);
(b) acquiring non-transferable options to buy shares (see section
20A);
(c) lending money to companies (see section 20B).
(3) The other sections of this Division (sections 21 to 28A) apply to each
of those kinds of investment.
Note: In particular, section 27 provides that, unless the
Board otherwise approves, immediately after an investment of any of the above
kinds is made, the total of all amounts paid on the shares in the investee
company held by the PDF must be at least 10% of the total of all amounts paid on
the issued shares in the investee company. (This means that the PDF must hold at
least 10% of the paid-up share capital in the investee company before the PDF
can acquire non-transferable options in the company or lend it
money.)
8 Subsection 20(1)
Omit “The investment must be made”, substitute “A PDF may
make an investment”.
Note: The heading to section 20 is replaced by the heading
“First kind of allowed investment: acquiring
shares”.
9 After section 20
Insert:
(1) A PDF may make an investment by acquiring an option to subscribe for
or buy shares in a company (in this Division also called the investee
company).
Note: However, section 27 provides that, unless the Board
otherwise approves, a PDF cannot make such an investment unless it first holds
shares in the investee company. The total of all amounts paid on those shares
must be at least 10% of the total of all amounts paid on the issued shares in
the investee company.
(2) The option must be exercisable only by the PDF. It must not be capable
of being transferred to another person.
(3) If the PDF later wishes to exercise the option by subscribing for or
buying any of those shares, it must comply with section 20 and the other
provisions of this Division that relate to section 20 investments: the exercise
of the option is treated as a new investment that is separate from the
acquisition of the option.
(1) A PDF may make an investment by lending money to a company (in this
Division also called the investee company) under an agreement with
the investee company.
Note: However, section 27 provides that, unless the Board
otherwise approves, a PDF cannot make such an investment unless it first holds
shares in the investee company. The total of all amounts paid on those shares
must be at least 10% of the total of all amounts paid on the issued shares in
the investee company.
(2) Immediately after the agreement is entered into, the total of the
outstanding amounts of loans that the PDF has made (other than the amounts of
unregulated investments) must not exceed 20% of the shareholders’ funds of
the PDF.
10 Subsection 21(1)
Omit all the words before paragraph (a), substitute:
(1) The PDF must believe, on reasonable grounds, that:
(aa) if the investment is covered by section 20 (shares)—the shares
concerned are being, or were, issued or allotted for the sole or principal
purpose of raising money; or
(ab) if the investment is covered by section 20A (options)—the money
paid as consideration for the option concerned is being raised solely or
principally; or
(ac) if the investment is covered by section 20B (loans)—the loan
money concerned is being borrowed solely or principally;
for use in doing one or more of the following:
11 Subsection 21(4)
After “investment”, insert “(including the acquisition of
an option)”.
12 At the end of section 22
Add:
(2) However, nothing in this Division prevents a PDF from making an
investment that is allowed by section 32A (which deals with mergers of
PDFs).
13 After paragraph 25(1)(b)
Insert:
and (ba) all amounts the PDF has paid to acquire options in the investee
company that the PDF has not yet exercised; and
(bb) all amounts the PDF has lent to the investee company that remain
outstanding;
14 After section 27
Insert:
As soon as practicable, and in any event within 30 days, after a PDF
invests in a particular investee company for the first time, the PDF must give
the Board a written notice setting out full particulars of the
investment.
15 At the end of Division 1 of Part
4
Add:
This Act applies to investments made by a PDF through one or more
interposed entities as if the PDF had made the investments directly.
16 After paragraph 29(2)(a)
Insert:
(aa) as allowed by section 32A (which deals with mergers of PDFs);
or
17 Subsection 31(1)
Omit “ADI or a life office)”, substitute “ADI, a life
office or a widely-held complying superannuation fund)”.
18 Subsection 31(1)
Omit “banks or life offices)”, substitute “ADIs, life
offices or widely-held complying superannuation funds)”.
19 After subsection 31(2)
Insert:
(2A) However, in determining whether a person is an
associate of another person, disregard any connection those
persons have with or through a PDF.
Example: This means that, despite paragraph (1)(d), the fact
that 2 persons are both officers of the same PDF does not make the officers
associates of one another (although they would still be associates
if they were both officers of the same non-PDF company).
(2B) This section does not prevent a PDF from merging with another PDF as
mentioned in section 32A.
20 After section 32
Insert:
(1) A PDF (the investor PDF) may acquire shares in another
PDF (the investee PDF) if, and only if, the acquisition is part of
a process of the 2 PDFs merging into one PDF.
(2) Any consideration given to the shareholders in the investee PDF for
the acquisition must be in the form of:
(a) shares in the investor PDF; or
(b) a genuine dividend payable from any undistributed profits of the
investee PDF;
or both.
(3) The investor PDF must give the Board written notice before making an
acquisition allowed by this section.
21 After paragraph 41(1)(d)
Insert:
(da) for each of the PDF’s investee companies (within the meaning of
Division 1 of Part 4), the proportion of the investee company’s issued
share capital held by the PDF at the end of the financial year;
(db) the amounts of all profits, gains or losses the PDF made during the
financial year from each such investee company;
(dc) the amounts of all unregulated investments held by the PDF at the end
of the financial year;
(dd) the amounts of all profits, gains or losses the PDF made during the
financial year from unregulated investments;
22 After paragraph 41(1)(i)
Insert:
(ia) full particulars of the dividends the PDF paid to the shareholders in
the PDF during the financial year;
23 Paragraph 47(1)(a)
Omit “revocation provision”, substitute “provision of
this Act”.
24 Paragraph 47(1)(d)
Repeal the paragraph, substitute:
(d) the Board is satisfied that a condition of the PDF’s
registration has been contravened by, or in relation to, the PDF.
25 Subsection 47(4)
Repeal the subsection.
26 Subsection 50(1) (table)
Repeal the table, substitute:
|
Penalties for contraventions of this Act |
||
|---|---|---|
|
Item |
Provision |
Penalty |
|
1 |
Section 19 (investments not made in accordance with Division 1 of Part 4
other than section 27A) |
500 penalty units |
|
2 |
Section 27A |
50 penalty units |
|
3 |
Subsection 28(2B) |
500 penalty units |
|
4 |
Subsection 29(1) |
500 penalty units |
|
5 |
Subsection 29(2) |
500 penalty units |
|
6 |
Subsection 30(1) |
200 penalty units |
|
7 |
Subsection 32(2) |
100 penalty units |
|
8 |
Subsection 33(4) |
100 penalty units |
|
9 |
Subsection 34(3) |
50 penalty units |
|
10 |
Subsection 35(3) |
50 penalty units |
|
11 |
Subsection 41(1) |
50 penalty units |
|
12 |
Subsection 42(1) |
50 penalty units |
|
13 |
Subsection 43(4) |
50 penalty units |
|
14 |
Subsection 46(2) |
100 penalty units |
27 Application of
amendments
General
(1) The amendments made by this Act (except for those mentioned in the
following subitems) apply, in relation to a PDF, from the beginning of the
PDF’s 1999-2000 income year (the transition time).
(2) In subitem (1):
income year has the same meaning as in the Income Tax
Assessment Act 1997.
Registration decisions
(3) The amendment made by item 5 applies to a decision about registration
that the Board makes after the transition time, even if the application for
registration was made before that time.
Notification of initial
investments
(4) The amendments made by items 14 and 26 apply to investments made after
this item commences.
Interposed entities
(5) The amendment made by item 15 applies to investments made after 4
August 1999.
(6) However, the Board may determine that that amendment does not apply to
a particular investment if the Board is satisfied that the relevant PDF, or the
interposed entity that is to make the investment, was already under a legal
obligation to make the investment at the end of 4 August 1999.
Annual returns
(7) The amendments made by items 21 and 22 apply to annual returns for the
1999-2000 financial year and all later financial years.
Revocation power
(8) The amendments made by items 23, 24 and 25 apply to contraventions of
this Act, or of a condition of a PDF’s registration, that happen after
this item commences.