Welcome to the Australian Investment Council’s third Policy and Research
update for 2020.
The pace of regulatory change remains heightened with the governments’
response moving from survival to kick starting the economy and a number of
regulators (re)commencing consultations on important issues for the private
The Council has been busy with a wide range of advocacy, research and
knowledge sharing projects. These include:
- meeting with government and opposition Ministers, and government
departments to promote the industry’s
Roadmap to Recovery: Creating a Stronger and More Dynamic Economy
policy statement which was released in June. The Roadmap’s constructive
focus has been well received and is timely given governments’ move towards
an agenda of stimulating the economy. Key policy proposals from the
Council’s Roadmap have been echoed in recent government policy
announcements, such as the Senate Select Committee’s on Financial
Technology and Regulatory Technology
and the recently announced whole-of-government
Global Business and Talent Attraction Taskforce;
- Responding to the major
reforms to the Foreign Investment Review Framework;
- Appearing at and making a
to the Senate Committee inquiry into Australia’s trade and investment
- Launching a Knowledge Series which has included sessions with the Lord
Mayor of the City of London and, New Zealand Treasury and the Overseas
For more detail, including upcoming activities, please find below a
list of our main submissions, engagements and research from June 2020
through to early-September 2020.
If you have any policy or research questions or issues you would like
to discuss, please contact us.
Submissions, hearings and government meetings
Tax Treatment of Employee Share Schemes
The Standing Committee on Tax and Revenue conducted an inquiry into Tax
Treatment of Employee Share Schemes. The Council provided a
on 10 June to the Standing Committee highlighting the importance of ESS to
the industry and some technical concerns with the regime.
Australia’s Technology Investment Roadmap
The Department of Industry, Science, Energy and Resources released a
Technology Investment Roadmap focused on low emissions technology. Working
with a number of players in the clean energy space, the Council lodged a
submission, on 21 June, focused on the ability of private capital to support
Cleantech, the benefits of equity co-investment, the importance of R&D
and developing Australia’s skills base.
Inquiry into diversifying Australia’s trade and investment profile
Joint Standing Committee on Trade and Investment Growth is undertaking an
inquiry into diversifying Australia’s trade and investment profile. The
focus of the Committee’s inquiry has been to understand whether there is a
need for Australia to diversify its trade markets and foreign investment
On 15 July, the Council
attended the Joint Standing Committee on Trade and Investment Growth’s
via teleconference. On 3 August, the Council also provided a written
to the inquiry. The submission highlighted the importance for effective
capital flows into Australia to support Australian businesses and
Australian jobs. A number of recommendations were put forward including the
establishment of a national co-investment program.
RG97: Disclosing Fees and Costs in PDSs and Periodic Statements
On 24 July, ASIC released minor amendments to the fees and cost disclosure
regime for issuers of superannuation and managed investment products, RG97.
The key changes included ASIC amending the transitional arrangements for
product disclosure statements (PDSs) in response to COVID-19, such that:
- PDSs given on or after 30 September 2022 must comply with the new
- Issuers can choose to apply the new requirements from 30 September 2020;
- Once an issuer has elected to apply the new requirements, all subsequent
PDSs for that financial product must comply with the new requirements.
Further information is available on
Submission to Federal Budget
The Australian Investment Council lodged a comprehensive
to the Federal Budget. The Council’s recommendations fit largely into three
1) Introduce a new public and private sector co-investment fund to support
Australian entrepreneurs and Australian fast-growth businesses;
2) Fill skills and talent gaps and build a pipeline of skills that will
support Australia’s future growth industries; and
3) Fast-track outstanding legislation, implement previously recommended
reforms and remove inconsistencies to improve the competitiveness of
Australia’s investment regime.
AustCyber’s new Cyber Security Strategy
The Council continues to maintain a close relationship with AustCyber,
which released a new
Cyber Security Strategy
on 6 August. An overview of the strategy is available on our
including a link to the Council’s December 2019
ASIC update on managed fund asset valuation
On 11 August, ASIC released an update regarding the valuation of assets
held in managed funds. ASIC noted that “valuations of illiquid assets have
been challenging as a result of increased economic and financial
uncertainties due to the pandemic. In this context, it is more important
than ever that valuations of managed fund assets are regular, robust and
Further information, including and FAQ on COVID-19 implications for
financial reporting and auditing, is available on
Major reforms to the Foreign Investment Review Framework – Tranche 1
The Federal Treasury is undertaking a 'Major reforms to the Foreign Investment Review Framework'. The review is the most comprehensive reforms to Australia’s foreign
investment review framework since the introduction of the Foreign Acquisitions and Takeovers Act 1975 (FATA). The reforms,
which are due to come into effect on 1 January 2021, will update
Australia’s foreign investment review framework to:
1) address national security risks;
2) strengthen compliance; and
3) streamline investment in non-sensitive businesses.
The draft amendments to the FATA will be released in two parts – the first,
released in July, includes the definition of national security business.
The Council, working with fund managers and leading industry experts,
to this first ‘tranche’ of proposed changes on 31 August.
The second tranche will include the remainder of the regulatory changes,
including streamlining measures (including investor exemption certificates)
and other technical amendments.
Senate Select Committee Inquiry on Financial Technology and Regulatory
Technology Interim Report
Senate Select Committee’s on Financial Technology and Regulatory
Technology tabled an
on the findings and recommendations into its inquiry into the FinTech and
RegTech sectors on 2 September.
Recommendations outlined in the Committee’s report provide clear direction
on what has to be done to deliver the economic opportunity in these areas
over the next few years. Some of the reforms identified in the report have
been on the Council’s policy agenda for some time, and it’s encouraging to
see the Committee driving for their implementation.
The Council made two
to the inquiry and attended a
Key recommendations in the report that the Council has advocated for
1. Implementing a Collective Investment Vehicles for Limited Partnerships
2. Widening access to the Early Stage Venture Capital Limited Partnerships
and Venture Capital Limited Partnerships investment vehicles;
3. Providing clarity on the Research & Development Tax Incentive (RDTI)
to ensure genuine software creation by Australian startups is reliably
4. Implementing guidance on the RDTI in conjunction with the Australian Tax
Office that includes limitations on the ability for payments to be clawed
5. Considering incentives to encourage collaboration between large
businesses and startups; and
6. Encouraging a culture for superannuation funds to invest more widely,
including in Australian startups without undermining the sole purpose test.
Global Business and Talent Attraction Taskforce
Global Business and Talent Attraction Taskforce
was announced on 4 September by Minister Tudge and Minister Birmingham. The
two-year initiative will “identify and attract exceptional talent and
high-value businesses from around the globe to Australia” and initially
focus on businesses operating in:
- Advanced Manufacturing;
- Financial Services (including Fintech); and
The Council will continue to engage with Minister Tudge and Minister
Birmingham’s offices on this initiative and will hold its first meeting
with the Taskforce in the coming weeks.
Treasury Laws Amendment (Research and Development Tax Incentive) Bill
The report by the Senate Economics Legislation Committee on the inquiry
into the Treasury Laws Amendment (Research and Development Tax Incentive)
Bill 2019 has been extended from 24 August 2020 to 12 October 2020.
The Council has been a leading advocate for the major R&D regime policy
reform package to be paused indefinitely, given the prevailing economic
climate, so more certainty for Australia’s innovation ecosystem.
ASIC Consultation Paper 328 – Initial public offers: Relief for
voluntary escrow arrangements and pre-prospectus communications
ASIC recently released a
to submissions on Consultation Paper 328 – Initial public offers: Relief
for voluntary escrow arrangements and pre-prospectus communications.
The relief and updated guidance follows ASIC’s public consultation in
February 2020 under CP 328 Initial public offers: Relief for voluntary
escrow arrangements and pre-prospectus communications (CP 328). CP 328 set
out ASIC’s proposal to grant legislative relief for voluntary escrow
arrangements and pre-prospectus communications to security holders and
Alongside the relief, ASIC has updated its guidance in
Regulatory Guide 5 Relevant Interests and Substantial Holding
Notices in relation to voluntary escrow arrangements and
Regulatory Guide 254 Offering securities under a disclosure document
in relation to advertising and publicity for offers of securities that
require a disclosure document.
Major reforms to the Foreign Investment Review Framework – Tranche 2
The second tranche of proposed changes to FATA are expected to be released
later in September. The Council will again work with fund managers and
leading industry experts to promote the interest and concerns of the
private capital industry.
Protecting Critical Infrastructure and Systems of National Significance
The Department of Home Affairs’
will impact how investments into ‘critical infrastructure’ are potentially
monitored and responded to by government. The consultation also has bearing
on the FATA reforms to due to a cross over of definitions in the Security of Critical Infrastructure Act 2018.
Division 6 – Negative control
While the ATO’s work on control for the purposes of Division 6C was not
deprioritised as part of the ATO’s reprioritising in response to the
COVID-19 pandemic, no material progress has been made. The Council
continues to engage with the ATO and is expecting progress on this issue
later this year.
Consultation on RDTI Guidance
The Department of Industry, Science, Energy & Resources has opened a
for the RDTI. The Department is seeking feedback on:
- Clarity and readability of the refreshed Guide;
- additional guidance that business may require to assist with assessment
of eligibility; and
- how the guide will be used.
The Council will be making a submission on this consultation.
Research and knowledge sharing
Benchmark Report – Q1, 2020
In association with Cambridge Associates, the AIC released the
Q1 2020 Australia Private Equity and Venture Capital index and
benchmark statistics. The overview report is available to all members while access to the PE
and VC specific benchmarks are restricted to members that contribute
directly to the reports. If you currently do not have but would like access
to these reports please contact Council’s research team.
Cambridge Associates has produced an insightful article on the Q1 2020
results, 'Australian Private Equity and Venture Capital: 'A Portfolio VaccineAmid Early Days of the Global Pandemic', which provides a snapshot of the finding as well as diving deeper into
the implications for private capital and providing a comparison against
other developed economies and relevant indices.
Political Insight Series: Scott Morrison & The Middle Power
Steve Lewis, Senior Adviser at Newgate Australia and former journalist with
the Canberra Press Gallery, shared his
into how Australia’s Prime Minister is forging closer ties with European
leaders. He also looks into how the formalisation of a free trade agreement
with the European Union will create opportunities for Australia in the
years to come.
Private Capital CFO Series
In collaboration with the Australian Investment Council, EY conducted a
private capital CFO Series webinar on valuations on 19 August.
EY’s Julie Wolstenholme and Jaya Kandasamy provided insight into a fair
value approach in the current market and guidance from IPEV. The discussion
included considerations of ramp up and recovery profiles, impacts on
discount rates as well as market transaction appetite, and explored
reporting and disclosures for meeting compliance standards.
Knowledge Series: Lord Mayor of London
Lord Mayor of the City of London, Alderman William Russell spoke with Australian Investment Council Chief
Executive Yasser El-Ansary via video conference on 22 July in a one-hour
webinar watched by members all over the country. They discussed the impact
of COVID-19 on the UK economy, the importance of free trade agreements and
the Sydney-London Fintech bridge.
Research Report: Managing the paradox of strict goals and agility: Why
private capital owned companies have an advantage even in times of
The Australian Investment Council has been working in collaboration with
Massimo Garbuio, author and Associate Professor of entrepreneurship at the
University of Sydney Business School, on a research project to understand
the value of private sector directorships.
Preliminary findings of the
were recently published on the Council’s website.
Investment into New Zealand: changes to the overseas investment regime
On 27 August, the Council in association with New Zealand Trade and
Enterprise provided members with an opportunity to engage directly with the
New Zealand Treasury and the Overseas Investment Office. The presentation
provided attendees an opportunity to clarify and demystify the New Zealand
Investment approval criteria and process.
A range of questions from attendees were answered by the presenters with
100% of respondents ‘agreeing’ or ‘strongly agreeing’ that they are “now
better informed about how the latest changes to the New Zealand overseas
investment laws impact international investors”. The recorded presentation
is available to members via the
member login at aic.co. Please contact [email protected] if you
have any difficulties gaining access.
University of Sydney collaboration
The Council and the University of Sydney have initiated a project with a
group of Master of Management students to explore the implications of
enduring changes to consumer behaviour as a result of the COVID-19
pandemic. The projects report is due in October.
Benchmark Report – Q2, 2020
The Q1 2020 Cambridge Associates benchmark reports are expected to be
released in October 2020.
The Australian Investment Council will provide a range of interesting and
informative knowledge series event over the coming months. These are likely
to include delving into issues such as cyber security, private capital
market trends, subscription lines of credit and ESG. Keep an eye out for
your invitation or contact [email protected].