Patel (Migration)

[2019] AATA 5378

Patel (Migration) [2019] AATA 5378 (24 September 2019)

DECISION RECORD

DIVISION:Migration & Refugee Division

APPLICANTS:  Urvashibahen Dipakkumar Patel

Dipakkumar Jayantilal Patel

Dhun Dipakkumar Patel

Yesh Dipakkumar Patel

CASE NUMBER:  1612467

HOME AFFAIRS REFERENCE(S): BCC2015/2004770

BCC2015/2005623

BCC2016/2262727

BCC2016/2969550

MEMBER:John Cipolla

DATE:24 September 2019

PLACE OF DECISION:  Sydney

DECISION:The Tribunal remits the applications for Business Skills (Residence) (Class DF) visas for reconsideration, with the direction that the first named visa applicant meets the following criteria for a Subclass 890 visa:

·cl.890.211 of Schedule 2 to the Regulations.

Statement made on 24 September 2019 at 10:28am

CATCHWORDS
MIGRATION – Business Skills (Residence) (Class DF) visa – Subclass 890 (Business ownership interest in one main business in 24 months before visa application lodgement – Additional shares acquired – applicants holders of 40% stake in main business at relevant time – business actively operating – decision under review remitted

LEGISLATION
Corporations Act 2001 (Cth), ss 151, 231
Migration Act 1958 (Cth), ss 65, 134(10), 351, 359
Migration Regulations 1994 (Cth), rr 1.03, 1.11, Schedule 2, cls 890.211, 892.221(a)

CASES
Ananda Marga Pracaraka Samga Pty Ltd v Tomar (No.6) (2013) FCA 284
Bux Global Limited v Hooke (2018) FCA 882
Re Nine Entertainment Group Ltd (No 1) [2012] FCA 1464; (2012) FCR 439
Shahpari v Minister for Border Protection [2016] FCCA 513
Yang v Minister for Immigration and Border Protection [2014] FCCA 1576

STATEMENT OF DECISION AND REASONS

APPLICATION FOR REVIEW

1. This is an application for review of a decision made by a delegate of the Minister for Immigration on 2 August 2016 to refuse to grant the visa applicants Business Skills (Residence) (Class DF) visas under s.65 of the Migration Act 1958 (the Act).

2. The applicants applied for the visas on 13 July 2015 At the time of application, Class DF contained four subclasses: 890 (Business Owner), Subclass 891 (Investor), Subclass 892 (State/Territory Business Owner) and 893 (State/Territory Sponsored Investor). The applicants in this case are seeking to satisfy the criteria for the grant of Subclass 892 (State/Territory Business Owner) visas, as set out in Part 892 of Schedule 2 to the Migration Regulations 1994 (the Regulations). At least one member of the family unit must satisfy the primary criteria set out in Subdivision 892.2. The others need only to satisfy the secondary criteria set out in Subdivision 892.3.

3. The delegate in this case refused to grant the visas on the basis that the first named visa applicant (‘the applicant’) did not satisfy the requirements of cl.892.211 of Schedule 2 to the Regulations.

4. The applicant was represented in relation to the review.

5. For the following reasons, the Tribunal has concluded that the matter should be remitted for reconsideration.

CONSIDERATION OF CLAIMS AND EVIDENCE

BASIS OF DELEGATES REFUSAL

1. The grant of the visa requires an applicant to demonstrate an ownership interest in one or more main businesses throughout the 24 month period prior to lodgement of the visa application. As noted above the visa application was lodged on 13 July 2015 and hence the requisite 24 month period prior to application ran from 13 July 2013 to 12 July 2015. Main business is defined in regulation 1.11 of the Migration Regulations. This provision specifies how an applicant is able to establish that they had an ownership interest in one or more main businesses throughout the requisite 24 month period. The delegate noted that the applicant applied for the grant of the visa on the basis of claims relating to 2 nominated main businesses Shreedas Group Pty Ltd (Shreedas) and Yashdhun Pty Ltd. The delegate found that neither of these businesses were publicly listed companies and therefore subclause 1.11(1)(c)(i) did not apply.

2. The delegate further noted that a range of evidence was submitted in support of the applicant’s claims of ownership of Shreedas. This included a company statement that was issued by the Australian Securities and Investments Commission (ASIC) on 3 April 2013 showing that the primary applicant held 300 of the company’s 1200 shares. The delegate noted that this equated to 25% ownership. On 25 April 2016 an email was received by the Department from the applicant’s then migration agent advising that the applicant’s spouse had purchased shares in Shreedas prior to the relevant two-year period. A range of evidence in support of this claim was made. The delegate determined that there were a number of discrepancies in the evidence provided to establish that the applicant had a 30% interest in a main business in Australia during the requisite period.

3. The delegate concluded that:

   “Given the above discrepancies I am not satisfied that the applicant’s spouse genuinely purchased a 15% shareholding in Shreedas in February 2013 as claimed. As such I am not satisfied that the value of the applicant’s ownership interest, or the total value of the ownership interests of the applicant and the applicant’s spouse in Shreedas Group Pty Ltd was a minimum of 30% for the full two years immediately before the application was made. Therefore I am not satisfied that Shreedas Group Pty Ltd is a main business, as defined in regulation 1.11”.

EVIDENCE AT REVIEW

1. The applicant lodged an application for review with the Tribunal on 10 August 2016.

2. On 24 June 2019 the Tribunal wrote to the applicant inviting the applicant to comment on information that the Tribunal considered would, subject to the applicant’s comment or response, be the reason, or part of the reason, for affirming the decision under review. The letter noted that:

   The particulars of the information were as follows:     

   ·The company extracts for Shreedas Group Pty Ltd (see attached – documents at pt 2- f102; pt 4- f61a, 61b ), indicate that the transfer of the 180 shares from Muvva Holding Pty Ltd to Mr D J Patel was only registered with the ASIC on 26 April 2016.

   ·This is relevant to the review, because this information indicates that Mr Patel was not a shareholder of Shreedas Group Pt Ltd, i.e, does not have legal ownership interest in the 180 shares before 26 April 2016. Although you have provided an agreement for sale of shares between Muvva Holding Pty Ltd and D.J. Patel dated14 February 2013, for the purchase of 180 shares in the Shreedas Group Pty Ltd, this agreement was not stamped.

   ·The standard transfer form, although indicated the date of purchase of the 180 shares as at 14 February 2013, was only signed on 26 April 2016 and not stamped.

   Subject to further information provided by you, the Tribunal may find that
   the total value of the ownership interests of Ms Patel and Mr Patel in Shreedas
   Group Pty Ltd was less than 30% of the total value of the business at any time
   before the application was made on 13/7/2015.

   If the Tribunal finds so, it would lead to the Tribunal to find that Shreedas Group Pty Ltd does not meet the requirement in r.1.11(1)((c) and therefore is not a ‘main business’ in the two years immediately before the application is made. This would further lead to the Tribunal to find that the applicant does not meet cl.890.211(1). This would be the reason, or a part of the reason, for affirming the delegate’s decision.

3. The Tribunal received a comprehensive response from the applicant’s representative dated 8 July 2019. The submission was accompanied by a number of annexures, both the submission and the associated annexures have been duly considered by the Tribunal.

4. On 10 July 2019 the Tribunal wrote to the applicant seeking the provision of further information following up information provided in the response of 8 July 2019. The Tribunal in its letter noted as follows:

   “The Tribunal thanks you for the response dated 8 July 2019 to its 359A letter of 24 June 2019.

   The Tribunal requests further information under s.359(2).

   The Tribunal notes that at point 3 of the response it is noted that “the share transfer was not registered until April 2016 due to administrative error.”
   Please provide detailed evidence pertaining to the nature of the administrative error that is being referred to.

   With regard to points 3 and 4 of the submission of 8 July 2019 the Tribunal notes that ASIC does not require any evidence regarding the accuracy of any backdating-all that is required is that the relevant form is filled in and the relevant fee paid. Backdating requires a higher fee to be paid, but if that is done then it is all accepted at face value.

   The Tribunal has formed a preliminary view that this case can be distinguished from the decision of Yew referred to in the submission of 8 July 2019. The main distinguishing factor is that while the most recent ASIC extract provided, records the processing date as the date the form was submitted, namely 26 April 2016, the effective date of the transaction was also recorded as 26 April 2016, rather than 14 February 2013. In the case of Yew, the effective date recorded for the transaction with ASIC was the correct backdated date. In the Yew case this was the date of incorporation. There was no transfer of shares that took place.

   The Tribunal requires evidence as to how Muvva Holding atf Muvva Family Trust are related to the applicants. The case of Yew involved only immediate family and primary and secondary applicants. In the case of Yew the record of decision indicates that the Tribunal Member was satisfied that there was an understanding between the applicant and her husband that 50% of the shareholding in the name of the husband was held on her behalf. Indeed the most recent ASIC documents recorded that and that Tribunal accepted it on that basis. The distinguishing issue in that case was whether the shares were in fact held non-beneficially by Mr Goh for his wife Ms Yew. In that case as there was no authoritative body that requires advice of the name of the person to whom the shares are being held, there was no registration or stamped document available. In the Yew case the date of registration is recorded on the ASIC extract as the date of incorporation, in this review before the Tribunal it is 26 April 2016.

   The Tribunal notes that the transfer of shares must be notified to ASIC and the name of the shareholders recorded correctly. The Tribunal further notes that each year the annual return records these details and you have 28 days to advise of any changes, or pay late fees. Shreedas Group P/L would have received annual returns recording 300 shares to Mrs Patel, 612 to Muuva Family Trust and 288 to Andre F/T as the shareholders in August 2013, 2014 and 2015 and would have required the payment of the annual fee and prepared minutes each year stating that the details recorded were correct. The Tribunal notes the provision of the sale document in the response of 8 July 2019. This document states at clause 5.1(g) that the company (Shreedas GroupP/L) has complied with all obligations as to filing of returns regarding the Corporations Act. The Tribunal requires all evidence pertaining to the filing of these returns in 2013, 2014 and 2015.

   The Tribunal further notes that to be recognised as a member (which is now the formal term under the Corporations Act for a shareholder), the details need to be entered into the company’s register of members, please refer to s.231(b) of the Corporations Act. This can be done retrospectively with the director resolution reflecting this as being the case-see Ananda Marga Pracaraka Samga Pty Ltd v Tomar (No.6) at [543] which notes that:

   “The requirement in s.151 that there should be entered in the register “(b) the date at which the name of each person was entered in the register as a member” in my view refers, not to the date on which the entry was physically made, but to the date on which he should have been entered in the register as a member, that is, in the case of a subscriber to the memorandum, the date on which he subscribed and, in the case of a transferee, the date on which the directors approve the transfer, or resolved that it be registered. It is the duty of the offices of the company to give effect promptly to the company’s obligation to enter the names of its members in the register. The statutory provision is to be read accordingly as authorising, indeed requiring, the entry in the register of the date when the directors approved, or directed the registration of, the transfer to the transferee.”

   The Tribunal notes point 22 of the submission of 8 July 2019 which notes that “the applicant owned at least 30% of shares during the relevant period, following a valid and registered sale and purchase agreement. Further information about the circumstances leading to late registration of the transfer with ASIC and other matters can be provided.”

   The Tribunal requires any further information or evidence pertaining to the late registration of the transfer with ASIC and the ‘other’ matters referred to at point 22.

   The Tribunal also requires any other documentation that shows the legitimacy of the backdating. To this end the provision of any relevant director resolutions along with financial statements back to the purported date of the share transfer and evidence pertaining to the payment of any dividends in 2013 and 2014 should be provided.”

5. The applicant’s representative sought an extension of time to provide a response to the Tribunal’s letter of 10 July 2019 and an extension was granted to 8 August 2019.

6. The Tribunal received a response from the applicant’s representative dated 8 August 2019. The applicant’s representative in the response noted that the central issue for the purposes of the current review proceeding was whether the applicant satisfied regulation 890.211(1) of the Migration Regulations. The response noted that the regulatory requirements were that the applicant establish that they held an ownership interest in Shreedas Group Pty Ltd in Australia between 13 July 2013 and 13 July 2015, at least two years immediately before the application was made. The submission notes that:

   Principles regarding Ownership Interest

   The central issue in the current proceedings is whether the Applicant satisfies reg 890.211(1) of the Migration Regulations 1994 ("the Regulations").

   Regulation 890.211(1)

   ' in Shreedas Group Pty Ltd ("Shreedas Group") in Australia between 13 July 2013 and 13 July 2015, at least 2 years immediately before the application was made.

   Section 134(10) gives the meaning of ownership interest as:

   Ownership interest in relation to a business, means an interest in the business as:

   (a)      a shareholder in a company that carries on the business; or

   (b)      a partner in a partnership that carries on the business; or

   (c)      the sole proprietor of the business;

   including such an interest held indirectly through one or more interposed companies, partnerships or trusts;

   In addition, regulation 1.11A provides for certain circumstances in which ownership interest can include 'beneficial ownership', being a category of equitable ownership distinct from 'legal ownership' referred to in s 134(10)[1].

   [1] See e.g. reg 1.11A(4) referring to the difference between beneficial and legal ownership

   Accordingly, we submit that it is open to the Applicant to demonstrate that they had an ownership interest in Shreedas Group in one of either two ways: the first, being that the Applicant had legal ownership, as per the principles outlined below. The second, is by establishing beneficial ownership, again, as outlined below but limited by operation of reg 1.11A.

   In our submission, the Review Applicants are unable to establish 'beneficial ownership' of 30% of the business by operation of reg 1.11A(3) which provides:

   (1) Subject to subregulation (4), for Parts 132, 188, 888, 890, 891, 892 and 893 of Schedule 2, ownership by an applicant, or the applicant's spouse or de facto partner, of an asset, an eligible investment or an ownership interest, includes beneficial ownership only if the beneficial ownership is evidenced in accordance with subregulation (2).

   (2) To evidence beneficial ownership of an asset, eligible investment or ownership interest, the applicant must show to the Minister:

   (a)   a trust instrument; or

   (b)   a contract; or

   (c)   any other document capable of being used to enforce the rights of the applicant, or the applicant's spouse or de facto partner, as the case requires, in relation to the asset, eligible investment or ownership interest;

   stamped or registered by an appropriate authority under the law of the jurisdiction where the asset, eligible investment or ownership interest is located.

   (2) A document shown under subregulation (2) does not evidence beneficial ownership, for subregulation (1), for any period earlier than the date of registration or stamping by the appropriate authority.

However, we submit that pursuant to ss 134(10) of the Act, the Review Applicants are able to establish an ownership interest in the business for a stake of at least 30% on 14 February 2013 which is the date on which the relevant share transfer was effected

Principles regarding Legal Ownership

Department policy provides some guidance on the meanings of 'ownership interest' in certain circumstances. In regards to shareholders of a company, it states:

A person is a shareholder in a company if the person meets the definition of a shareholder (member) under the relevant corporations law in the country in which the business activity is registered. The earliest date that an applicant might have attained ownership interest in a company is the date that the applicant was registered as a shareholder.

In agreement with the principles outlined by the Tribunal, reference must be had to s 231(b) of the Corporations Act which states that a person becomes a shareholder, or member, when they:

(b) agree to become a member of the company after its registration and their name is entered on the register of members[2]

[2] Corporations Act 2001, s 231(b).

A copy of the Register of Members of Shreedas Pty Ltd is enclosed with this submission which shows Dipakkumar Jayantilal Patel acquiring an additional 180 shares in the business on 14 February 2013 taking the combined shareholding of Mr and Mrs Patel above 30% on that date.

Furthermore, with reference to s 231 of the Corporations Act, it is possible to be registered as a member of a company retrospectively.

As the Tribunal again notes, one manner in which retrospective registration may be deemed to have occurred is outlined in the case of Ananda Marga Pracaraka Samga Pty Ltd v Tomar (No.6).[3]

[3] (2013) FCA 284 [543]

In Kopilovic v Gatley (2005) 53 ACSR 64, EM Heenan J set out a detailed analysis of relevant authorities on the status of membership of a company. His Honour concluded that although the status of a member of a company is not acquired until the applicant's name has been recorded on the register of members, a person entitled to be entered who has "not in fact been so registered at any particular time but who subsequently became registered" would retrospectively acquire membership from the date on which the person should have been registered (at [48]).[4]

[4] Ananda Marga Pracaraka Samgha Ltd v Tomar (No 6) (2013) FCA 284 [543];

The requirement in s.151 that there should be entered in the register "(b) the date at which the name of each person was entered in the register as a member" in my view refers, not to the date on which the entry was physically made, but to the date on which he should have been entered in the register as a member, that is, in the case of a subscriber to the memorandum, the date on which he subscribed and, in the case of a transferee, the date on which the directors approve the transfer, or resolved that it be registered. It is the duty of the officers of the company to give effect promptly to the company's obligation to enter the names of its members in the register. The statutory provision is to be read accordingly as authorising, indeed requiring, the entry in the register of the date when the directors approved, or directed the registration of the transfer to the transferee.[5] (Our emphasis)

[5] Ibid, [544], citing Kopilovic v Gatley (2005) 53 ACSR 64 at [49]

Accordingly, evidence of the directors approving the transfer of shares or a resolution that the Applicant be entered onto the company register will establish an ownership interest for the purposes of the Corporations Act as of the date of the approval or resolution. In our submission, this has been met.

Limited guidance is available on what types of actions or evidence may be sufficient to evidence directors' approval or resolutions for the above purposes. In our submission, the Agreement of Sale of Shares executed and witnessed on 14 February 2013 is evidence of transfer of the shares to the Review Applicant. The relevant Share Certificate for the transaction is also enclosed with this submission.

We also refer to the decision of McKerracher J, made in the Federal Court, in Bux Global Limited v Hooke[6], which indicates alternative methods of accruing legal ownership as a member of a company may be available:

[6] (2018) FCA 882

It is also at least arguable that there are broader definitions of membership of a company than that which depends upon acceptance as set out in s 231(b) of the Corporations Act.

That does not need to be determined at this stage, but there is authority in support of the conclusion that s 231 is not an exhaustive definition of the circumstances in which a person will be a member. To adopt the language of Jacobson J in Re Nine Entertainment Group Ltd (No 1)[2012] FCA 1464 (2012)-211-ECR-439 AT [50]

There is nothing in s 231 to suggest that it is an exhaustive definition of the circumstances in which a person is a member. Authorities of over 100 years standing, including a decision of the High Court of Australia, suggest otherwise[7].

[7] Ibid, citing Jacobson J in Re Nine Entertainment Group Ltd (No 1) [2012] FCA 1464; (2012) FCR 439 (at [50].

Tribunal's Invitation to Comment

The Tribunal has requested information with regard to the following matters, which are addressed in turn.

Circumstances Leading to Delayed Notification of Share Transfer

We refer the Tribunal to the letter provided by Mr Doug Tarrant of LevelOne Business and Tax Advisers dated 1 August 2019, which is the registered ASIC agent for Shreedas Group. It was also the registered ASIC agent for Mr Sateesh Muvva, the former director of the business.

In his letter, Mr Tarrant explains that given the large number of entities within the Shreedas Group:

"it was common practice for [Levelone's] office to receive financial data from our client (by whom he means Mr Muvva) in excess of 12 months after the end of the previous financial year. Our office would usually take 3 months to process the financial data... As a result many of the company share transfers were not submitted until 18 months or longer after the actual physical event taking place"

It would seem that the present matter is such a case, and as such, this is the `Administrative error' referred to at point 3 of our 8 July 2019 response. Mr Tarrant goes on to note in his letter, and provides evidence of, an ASIC late lodgement penalty in relation to 'Changes To (Members) Share Holdings — L2' dated 26 April 2016, which is the same date on which the changes were registered with ASIC, as per the Shreedas Group Historical Company Extract.

Additionally, he provides evidence of a Standard Transfer Form displaying a 'Date of Purchase 14/02/2013' from Muvva Group Holdings to Shreedas Group (albeit that the document itself is signed on 26 April 2016).

Mr Tarrant also advises, and provides evidence of the fact that the payment for the relevant transfer from Muvva Group to Shreedas Group was effected on 30 October 2012. This evidence has already been provided to the Tribunal.

The Tribunal notes in its 10 July 2019 invitation:

With regard to points 3 and 4 of the submission of 8 July 2019 the Tribunal notes that ASIC does not require any evidence regarding the accuracy of any backdating-all that is required is that the relevant form is filled in and the relevant fee paid. Backdating requires a higher fee to be paid, but if that is done then it is all accepted at face value.

In our submission, notwithstanding any evidence required by ASIC about the accuracy of date of any backdating, there is corroborating evidence before the Tribunal that the share transfer was effected in February 2013, and while the transfer itself was not registered with ASIC until 26 April 2016 the Applicant demonstrably had, pursuant to s 134(10) of the Migration Act, an 'ownership interest' in Shreedas Group in the two years before the application was lodged. A late notification fee was issued by ASIC in relation to the transfer, and the contractual aspects of the transfer are independently verifiable and serve to illustrate the point.

Enclosed with this submission are the FY2013, 2014 and 2015 Company Statements lodged with ASIC. The Tribunal will notice that the 2013, 2014 and 2015 Company Statements each show the 612 / 288 / 300 share split between Muvva Holdings Pty Ltd, Aksharya Associates Pty Ltd and Urvashibahen Dipakkumar Patel respectively for each of those years, simply because the ASIC records for the additional share purchase of 14 February 2013 was not processed by ASIC until 26 April 2016. However, the effective date of the share transfer (and therefore the ownership of the business) is per the off-market share transfer form of 14 February 2013.

The Tribunal will note that in the 2016 Company Statement enclosed with the submission, the share spilt is recorded as 720 shares for Muvva Holdings Pty Ltd and 480 shares for Mr and Mrs Patel which reflects the updated shareholding from February 2013.

Had Mr Muvva submitted the Share Transfer information to Levelone (and therefore ASIC) in a timely fashion) then the share split would have been recorded with ASIC in the above ratios, however the fact remains that the actual transfer of the shares occurred on 14 February 2013, and as a result the Review Applicants were holders of a 40% stake in the business (collectively) from that time.

Further corroborative evidence of the transfer in fact having occurred on 14 February 2013 is a letter from Ms Tania Kallianiotis of A+ Legal dated 4 August 2019 which confirms that she witnessed the Review Applicant's signature on the 'Agreement for Sale of Shares' dated 14 February 2013, and that this was a contemporaneous signature, as the office address which appears under her signature was the office address for her business in 2013.

Further, the agreement occurred when the Review Applicant returned from overseas to Australia. With regard to the ASIC 'backdating' issue, to be clear the Review Applicants have not sought and do not now seek to amend ASIC's records with regard to the 'effective date' recorded in the Historical Extract of the 14 February 2013 share transfer. It is not disputed that 26 April 2016 was the date on which ASIC updated its records to reflect this transfer, as due to the late notification of the transfer by Mr Muvva to Levelone, (and subsequently ASIC) this is the 'effective date' on which ASIC was notified of the change.

Muuva Family Trust

We confirm that the directors of Muuva Family Trust are not related to the Applicants within any meaning of the Corporations Act, and the Applicants do not rely on any proprietary or other interest in Muuva Family Trust for the purpose of this application. The director/s of Muuva Family Trust met the Applicants at a business meeting, and the relationship is purely transactional.

Annual Returns

With regard to the request on page 4 of the Tribunal's Invitation that "The Tribunal requires all evidence pertaining to the filing of these returns in 2013, 2014 and 2015" we have assumed that the Tribunal is referring to the Company Statements referred to in paragraph 25 above, and the relevant Company Statements from 2013 — 2016 are enclosed.

Conclusion

In our submission there is abundant evidence before the Tribunal (specifically the Share Transfer Agreement, the Transfer of Shares records, the Member register and contemporaneous evidence of the actual transaction) to show that the Review Applicants held an ownership interest of 40% of the business in the 2 years before this application was lodged.

FINDINGS AND REASONS

1. The issue in this review is whether applicant is able to demonstrate an ownership interest in one or more main businesses throughout the 24 month period prior to lodgement of the visa application. As noted above the visa application was lodged on 13 July 2015 and hence the requisite 24 month period prior to application ran from 13 July 2013 to 12 July 2015.

   Ownership interest in main business

2. An ‘ownership interest’, in relation to a business, means an interest in the business as:

   ·a shareholder in a company that carries on the business, or

   ·a partner in a partnership that carries on the business, or

   ·the sole proprietor of the business;

   including such an interest held indirectly through one or more interposed companies, partnerships or trusts: r.1.03 of the Regulations and s.134(10) of the Act. Ownership for this purpose includes beneficial ownership if it is evidenced in accordance with the terms of r.1.11A of the Regulations, set out in the attachment to this decision: r.1.11A(1).

3. In order to meet cl.892.211(1) the Tribunal must be satisfied that the applicant had an interest of this kind in the relevant business or businesses both at the time of making that application and for the two years immediately before. In order to meet cl.892.221(a) the Tribunal must be satisfied that the applicant continues to satisfy this requirement at the time of this decision. No more than two businesses can be nominated for this purpose (r.1.11(2)) and only one or both of the businesses relied on to meet the time of application criterion can be relied on to meet the time of decision criterion: Yang v Minister for Immigration and Border Protection [2014] FCCA 1576.

4. There is a clear legislative requirement that an applicant establish that they held an ownership interest in one or more main businesses in Australia for at least two years immediately before the application is made. In this case as has been noted the requisite period is 13 July 2013 to 12 July 2015.

5. Section 134(10) of the Act gives the meaning of ‘ownership interest’ in relation to a business which includes as a shareholder in a company, that carries out the business, including such an interest held indirectly or through one or more interposed companies, partnerships or trusts.

6. Regulation 1.11A provides certain circumstances in which ownership interest can include ‘beneficial ownership’ being a category of equitable ownership distinct from legal ownership referred to in s.134(10).

7. This suggests that there are two pathways in which an applicant is able to demonstrate an ownership interest in the main business either a legal ownership or through establishing a beneficial ownership.

8. An applicant is able to establish a beneficial ownership by operation of regulation 1.11A(3) . In this case the applicant through their representative concedes that they are unable to establish a beneficial ownership of 30% of the business by operation of regulation 1.11A(3).

9. However the applicant has asserted that they are able to establish an ownership interest in one or more main businesses pursuant to section 134(10) of the Act.

10. The Tribunal has had regard to the relevant principles of how a shareholder interest is acquired with regard to the Corporations Act.

11. Section 231(b) of the Corporations Act provides that a person becomes a shareholder or member when they agreed to become a Member of the company after its registration and their name is entered on the Register of Members.

12. The Tribunal has been provided with a copy of the Register of Members of Shreedas Group Pty Ltd which shows Dipakkumar Jayantilal Patel acquiring an additional 180 shares in the business on 14 February 2013 which took the combined shareholding of Mr and Mrs Patel above 30% on that date.

13. Section 231 of the Corporations Act enables the possibility to be registered as a member of the company retrospectively.

14. Indeed evidence of directors approving the transfer of shares or a resolution that the applicant be entered onto the company register will establish an ownership interest for the purposes of the Corporations Act.

15. The Tribunal has been provided with a copy of the Agreement of Sale of Shares which was executed and witnessed on 14 February 2013. Corroborative evidence has been provided by the witness of the share transfer, Ms Tania Kallianiotis of A+ Legal.  A copy of the relevant share certificate for this transaction has been provided to the Tribunal.

16. The weight of the evidence provided to the Tribunal at review is able to satisfy the Tribunal on balance that the applicants were holders of a 40% stake in the main business Shreedas Pty Ltd as at 14 February 2013.

17. Accordingly, the Tribunal is satisfied that the applicant did have and does have an ownership interest in the nominated business at all relevant points in time.

    Was each business relied on actively operating at all relevant times?

18. In order to meet cl.892.211(1) the Tribunal must be satisfied that the relevant business or businesses were actively operating both at the time of making the visa application and during the two years immediately before. In order to meet cl.892.221(a) the applicant must continue to satisfy this requirement at the time of this decision.

19. The term ‘actively operating’ is not defined in the Act or Regulations. In considering whether this requirement is met, the Tribunal may consider whether the business exhibited activity of a ‘repetitive, continuous and permanent character’ at the relevant times, in which the business actively sought to generate business, in fact generated trade and custom and derived some financial gain for its activities in the relevant period: Shahpari v Minister for Border Protection [2016] FCCA 513 at [71].

20. Based on the evidence before it the Tribunal is satisfied that the business was actively operating at the time of visa application and in the two years prior to lodgement of the visa application. The evidence before the Tribunal indicates that the main business is still actively operating.

21. Accordingly, the Tribunal is satisfied that the nominated business was and is actively operating at all relevant points in time.

22. Accordingly, the Tribunal is satisfied that the nominated business does meet the definition of main business at all relevant points in time.

23. Given the findings above, the Tribunal is satisfied that cl.892.211(1) is met. The appropriate course is to remit the matter to the Minister to consider the remaining criteria for the visa.

24. The Tribunal remits the applications for Business Skills (Residence) (Class DF) visas for reconsideration, with the direction that the first named visa applicant meets the following criteria for a Subclass 892 (State/Territory Sponsored Business Owner) visa:

    ·cl.892.211 of Schedule 2 to the Regulations.

John Cipolla

Senior Member

ATTACHMENT - LEGISLATION

Migration Regulations 1994

1.03Definitions

In these Regulations, unless the contrary intention appears:

…

ownership interest has the meaning given to it in subsection 134(10) of the Act.

…

qualifying business means an enterprise that:

(a) is operated for the purpose of making profit through the provision of goods, services or goods and services (other than the provision of rental property) to the public; and

(b)is not operated primarily or substantially for the purpose of speculative or passive investment.

…

1.11Main business

(1)For the purposes of these Regulations and subject to subregulation (2), a business is a main business in relation to an applicant for a visa if:

(a)the applicant has, or has had, an ownership interest in the business; and

(b)the applicant maintains, or has maintained, direct and continuous involvement in management of the business from day to day and in making decisions affecting the overall direction and performance of the business; and

(c)the value of the applicant’s ownership interest, or the total value of the ownership interests of the applicant and the applicant’s spouse or de facto partner, in the business is or was:

(i)if the business is operated by a publicly listed company—at least 10% of the total value of the business; or

(ii)if:

(A)the business is not operated by a publicly listed company; and

(B)the annual turnover of the business is at least AUD400 000;

at least 30% of the total value of the business; or

(iii)if:

(A)the business is not operated by a publicly listed company; and

(B)the annual turnover of the business is less than AUD400 000;

at least 51% of the total value of the business; and

(d)the business is a qualifying business.

(2)If an applicant has, or has had, an ownership interest in more than 1 qualifying business that would, except for this subregulation, be a main business in relation to the applicant, the applicant must not nominate more than 2 of those qualifying businesses as main businesses.

1.11AOwnership for the purposes of certain Parts of Schedule 2

(1)Subject to subregulation (4), for Parts 132, 188, 888, 890, 891, 892 and 893 of Schedule 2, ownership by an applicant, or the applicant’s spouse or de facto partner, of an asset, an eligible investment or an ownership interest, includes beneficial ownership only if the beneficial ownership is evidenced in accordance with subregulation (2).

(2)To evidence beneficial ownership of an asset, eligible investment or ownership interest, the applicant must show to the Minister:

(a)a trust instrument; or

(b)a contract; or

(c)any other document capable of being used to enforce the rights of the applicant, or the applicant’s spouse or de facto partner, as the case requires, in relation to the asset, eligible investment or ownership interest;

stamped or registered by an appropriate authority under the law of the jurisdiction where the asset, eligible investment or ownership interest is located.

(3)A document shown under subregulation (2) does not evidence beneficial ownership, for subregulation (1), for any period earlier than the date of registration or stamping by the appropriate authority.

(4)Beneficial ownership is not required to be evidenced in accordance with subregulation (2) if the person who has legal ownership of the asset, eligible investment or ownership interest in relation to which the applicant, or the applicant’s spouse or de facto partner, has beneficial ownership:

(a)is a dependent child of the applicant; and

(b)made a combined application with the applicant; and

(c)has not reached the age at which, in the jurisdiction where the asset, eligible investment or ownership interest is located, he or she can claim the benefits of ownership of the asset, eligible investment or ownership interest.

Migration Act 1958

134Cancellation of business visas

….

1. In this section:

….

ownership interest, in relation to a business, means an interest in the business as:

(a) a shareholder in a company that carries on the business; or

(b) a partner in a partnership that carries on the business; or

(c) the sole proprietor of the business;

including such an interest held indirectly through one or more interposed companies, partnerships or trusts.