Bills Digest no. 112 2008–09
Australian Business Investment Partnership (Consequential Amendment) Bill 2009
WARNING:
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 consulted to determine
the subsequent official status of the Bill.
CONTENTS
Passage history
Purpose
Background
Financial implications
Main provisions
Contact officer & copyright details
Passage history
Australian
Business Investment Partnership (Consequential Amendment) Bill 2009
Date introduced: 12 March 2009
House: House of Representatives
Portfolio: Treasury
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.
Links: The 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 at http://www.comlaw.gov.au/.
Purpose
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 2001.
Background
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:[1]
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.
Financial implications
The Explanatory
Memorandum states that the Bill has no financial impact.[2]
Main provisions
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.
Explanatory Memorandum, Australian Business Investment Partnership
(Consequential Amendment) Bill 2009 pp. 3–4.
[2]. ibid., p. 4.
Kali Sanyal and
Angus Martyn
17 March 2009
Bills Digest Service
Parliamentary Library
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