Bills Digest no. 112 2008–09
Australian Business Investment Partnership
(Consequential Amendment) Bill 2009
This Digest was prepared for debate. It reflects the legislation as
introduced and does not canvass subsequent amendments. This Digest
does not have any official legal status. Other sources should be
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Investment Partnership (Consequential Amendment) Bill
Date introduced: 12 March 2009
House: House of Representatives
Commencement: the formal parts of the Act
(Sections 1–3) commence on Royal Assent. Schedule 1 commences
at the same time as the Australian Business Investment
Partnership Act 2009 commences.
relevant links to the Bill, Explanatory Memorandum and second
reading speech can be accessed via BillsNet, which is at http://www.aph.gov.au/bills/.
When Bills have been passed they can be found at ComLaw, which is
To exempt the
proposed Australian Business Investment Partnership Limited (ABIP)
company from the requirement to hold an Australian financial
services licence (AFSL) under the Corporations Act
The Australian Business Investment
Partnership (Consequential Amendment) Bill 2009 (the Bill) is part
of a package of two Bills which facilitates the establishment of
the Australian Business Investment Partnership (ABIP), with the
main Bill being the Australian Business Investment Partnership Bill
2009. The Bills Digest for that Bill should be consulted for
information about the policy background to ABIP.
The requirement to hold an Australian financial services licence
(AFSL), its relevance to the proposed ABIP, and the rationale for
the proposed exemption from the AFSL is summarised in the
Explanatory Memorandum to the Bill:
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
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
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commercial property assets where financiers have withdrawn from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
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.
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The Explanatory Memorandum states that
the Bill has no financial impact.
Existing subsection 911A(2) of the Corporations Act
2001 lists a range circumstances in which a person carrying on
a financial services business is exempted from the requirement to
hold an AFSL. Item 1 of Schedule 1 inserts
new paragraph 911A(2)(ja) to include a service ‘provided by Australian Business
Investment Partnership Limited in accordance with the
Australian Business Investment Partnership Act 2009’
within the list of exemptions.
Memorandum, Australian Business Investment Partnership
(Consequential Amendment) Bill 2009 pp. 3–4.
ibid., p. 4.
Kali Sanyal and Angus Martyn
17 March 2009
Bills Digest Service
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