Document ID: chunk:federal_register_of_legislation:C2007A00078:clause:8_44:p1
Version: federal_register_of_legislation:C2007A00078
Segment Type: clause
Provision Reference: sch 8 cl 44 (pt 1/5)
Character Range: 38442–41138

44  After section 118‑425
Insert:

118‑427  Meaning of eligible venture capital investment—investments in unit trusts

Requirements for an eligible venture capital investment

 (1) An investment is an eligible venture capital investment if:
 (a) it is *at risk; and
 (b) it is either:
 (i) an acquisition of units in a unit trust; or
 (ii) an acquisition of options (including warrants) originally issued by or on behalf of the trustee of a unit trust to acquire units in the unit trust; or
 (iii) an acquisition of *convertible notes (other than convertible notes that are *debt interests) issued by or on behalf of the trustee of a unit trust; and
 (c) the unit trust meets the requirements of subsections (3) to (8); and
 (d) the sum of:
 (i) the total amount that the partnership has invested in all the *equity interests and *debt interests that the partnership owns in the unit trust; and
 (ii) the total amount that the partnership has invested in all the equity interests and debt interests that the partnership owns in any entities that are *connected entities of the unit trust;
  does not exceed 30% of the partnership's *committed capital.

Certain entities not treated as connected entities

 (2) In applying subparagraph (1)(d)(ii), ignore an entity that is a *connected entity of the unit trust only because it is an *associate of the unit trust because of an investment made in the entity by the partnership.

Location within Australia

 (3) The unit trust:
 (a) must, at the time the investment is made, carry on *business in Australia; and
 (b) must, at that time, meet at least one of the following requirements:
 (i) the central management and control of the unit trust is in Australia;
 (ii) more than 50% of the beneficial interests in the income of the unit trust are held by Australian residents;
 (iii) more than 50% of the beneficial interests in the property of the unit trust are held by Australian residents; and
 (c) if at that time the entity making the investment does not own any other investments in the unit trust—must meet the following requirements:
 (i) more than 50% of the people who are currently engaged by the trustee of the unit trust to perform services must perform those services primarily in Australia;
 (ii) more than 50% of its assets (determined by value) must be situated in Australia;
  during the whole of the period of 12 months, or such shorter period as the *Venture Capital Registration Board determines under section 25‑5 of the Venture Capital Act 2002, starting from the time the investment is made.
However, subparagraph (c)(i) or (ii) does not apply to the unit trust if the Venture Capital Registration Board so determines under