Phu (Migration)

[2021] AATA 4127

Phu (Migration) [2021] AATA 4127 (26 August 2021)

DECISION RECORD

DIVISION:Migration & Refugee Division

APPLICANTS:  Mrs Minh Phong Phu
Mr Kam Man Lee
Master Carson Lee

CASE NUMBER:  2000620

DIBP REFERENCE(S):  BCC2018/2399580

MEMBER:Susan Hoffman

DATE:26 August 2021

PLACE OF DECISION:  Perth

DECISION:The Tribunal remits the applications for Business Innovation and Investment (Provisional) Subclass 188 visas for reconsideration, with the direction that the first named applicant meets the following criteria for a Subclass 188 visa:

·     cl.188.225 of Schedule 2 to the Regulations

Statement made on 26 August 2021 at 2:00pm

CATCHWORDS
MIGRATION – Business Skills (Provisional) (Class EB) visa – Subclass 188 (Business Innovation and Investment (Provisional)) – ownership interest in the main business for at least two of the four prior fiscal years – business based in Vietnam – Certificates of Business Registration – criteria to be a ‘main business’ – annual turnover – decision under review remitted

LEGISLATION
Migration Act 1958 (Cth), ss 65, 134
Migration Regulations 1994 (Cth), rr 1.03, 1.11; Schedule 2, cls 188.225

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 January 2020 to refuse to grant the visa applicant a Business Innovation and Investment (Provisional) Subclass 188 visa in the Business Innovation stream under s.65 of the Migration Act 1958 (the Act).

2. The visa applicants applied for the visa on 4 June 2018. The delegate refused to grant the visa on the basis she was not satisfied that the primary applicant had an ownership interest in the main business for at least two of the four fiscal years before being invited to apply for the visa.

3. The applicants were represented in relation to the review by Ms Sanling Chan from Data Tend Pty Ltd.

4. The Tribunal invited the applicants to make written submissions. Based on these and other documents before the Tribunal, it was satisfied that it could make its decision on the papers. No hearing was held.

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

CONSIDERATION OF CLAIMS AND EVIDENCE

1. The issue identified by the delegate is whether or not the primary applicant (henceforth the applicant) had an ownership interest in a main business for at least two of the four fiscal years before being invited to apply for the visa, as required by clause 188.225 in Schedule 2 of the Regulations.

   Clause 188.225

   (1) For at least 2 of the 4 fiscal years immediately before the time of invitation to apply for the visa, the applicant had an ownership interest in one or more established main businesses that had an annual turnover of at least AUD 500 000 in each of those years.

   (2) If the applicant was engaged in one or more businesses providing professional, technical or trade services for at least 2 of the 4 fiscal years immediately before the time of invitation to apply for the visa, the applicant was directly engaged in the provision of the services, as distinct from the general direction of the operation of the business, for no more than half the time spent by the applicant from day to day in the conduct of the business.

2. Ownership interest in a business means an interest as a shareholder in a company that carries on the business; or as a partner in a partnership that carries on the business; or as the sole proprietor of the business. This includes an interest held indirectly through one or more interposed companies, partnerships or trusts (section 134 of the Act).

3. The meaning of ‘main business’ is set out at Regulation 1.11.

4. The visa application was lodged on 4 June 2018. The invitation to do so was issued on 1 June 2018. The applicant nominated Giai Thanh Trading Service Co Ltd (GT) as the main business. The major business activity was described as follows:

   Trading services/products for local consumption ie electrical and households. Involved into FMCG, retails, manufacturing as well as construction trading. Applicant also deal with land trading especially wrt to construction trading.

10.  According to the application form, the business was based in Vietnam. The applicant stated on the form that she was the owner of the business and her involvement in the business started on 9 July 2009. She described the business structure as being sole proprietor/sole trader and that she had 100% interest in the business.

11.  According to the CIA’s World Factbook, Vietnam’s fiscal year is the calendar year. The applicant submitted financial statements for the company for years ended 31 December 2014, 2015 and 2016. The Tribunal is satisfied that a fiscal year for the purpose of this review is a calendar year.

12.  The four fiscal years before the invitation to apply for the visa was issued (which was on 1 June 2018) were calendar years 2014, 2015, 2016 and 2017. The applicant nominated 2014 and 2015 (the relevant years) as the best years from those four years.

Did the applicant have an ownership interest in the nominated main business during the relevant years?

13.  According to Certificates of Business Registration from Vietnam, supplied to the Department by the applicant, the company was first registered on 9 July 2009. Translations of Vietnamese documents to do with business registration had been provided to the Department. Some were unclear and hard to follow.

14.  The Tribunal requested clarification and the applicant submitted a spreadsheet which listed 11 changes to the Business Registration records. The Tribunal has copied from the spreadsheet and put it into a different format, with some minor changes, for ease of reading, as below. The applicant’s evidence on the ownership question is as follows:

1. 9 July 2009 to 26 December 2012, she did not own any shares in the company.

   ·From 9 July 2009 to 26 December 2012, the applicant had nil ownership in the nominated main business.

   ·In 2009, because I was still working in a Taiwanese company (EVATECH VIETNAM CO.LTD) that produced shoes, I did not have time to manage my own company ,so I left it to my cousin (Her name is CHENH GI KIM) to help with the operation. The certificate of Business Registration did not have my name as I was the silent 100% investor. I invested total $35,300.00AUD in 2009. I have 100% ownership but not noted in the business extract.

2. On 27 December 2012, there was a change in ownership and shareholding.

   ·27 December 2012 to 24 April 2013, she had 100% ownership

   ·Business Registration Certificate shows change of ownership of the business from my cousin (CHENH GI KIM) to me (PHU Minh Phuong )

3. On 25 April 2013, she sold 50% of her shares

   ·25 April 2013 to 16 December 2013, she had 50% ownership

   ·I wanted to expand my business so I sold my 50% shares to my friend (TRING A CAU) on April 25, 2013.

4. On 17 December 2013, there was a change in business activities

   ·17 December 2013 to 11 February 2015, she had 50% ownership

   ·Increase trading items: Industry code (4649)- Wholesale of cosmetics and interior decoration products; and (4669)- Wholesale of accessories for leather shoes, leather sandals ,rags ,scrap metal, firewood and industrial waste.

5. On 12 February 2015, there was a change of ownership and shareholding

   ·12 February 2015 to 15 November 2015, she had 50% ownership

   ·My friend (TRINH A CAU) sold to my sister (PHU MINH PHAN ) 50% shares of this ownership.

6. On 16 November 2015, there was a change of address of the business premises

   ·16 November 2015 to 17 December 2015, she had 50% ownership

   ·My old Office address : No.06, D6 Street ,Phu hoa 1 Residence Area,Phu Hoa Ward, Thu Dau Mot City,Binh Duong Province,VietNam.(I rented this house ) ; Changed my new Office  address : No.758 Quarter 3,Phu Tho Ward ,Thu Dau Mot City, Binh Duong Province,VietNam.( I bought my new house ,so i moved address in here )

7. On 18 December 2015, there was another change of address

   ·18 December 2015 to 8 November 2016, she had 50% ownership

   ·My old Office address :No.758 Quarter 3,Phu Tho Ward ,Thu Dau Mot City, Binh Duong Province,VietNam.(I sold my old house). ; Changed my new Office  address :No.52, D1 Street ,Phu hoa 1 Residence Area,Phu Hoa Ward ,Thu Dau Mot City,Binh Duong Province,VietNamg .( I bought my new house ,so i moved address in here )

8. On 9 November 2016, there was a change in ownership and shareholding

   ·9 November 2016 to 23 November 2016, she had 100% ownership

   ·My sister wanted to start her own company and did not have enough funds so she sold me her 50% shares on 9 Nov 2016 so I own 100% after the sale.

9. On 24 November 2016, there was a further change in ownership and shareholding

   ·24 November 2016 to 28 December 2016, she had 70% ownership

   ·In 2006 I had my first baby ,so my husband advised me to return to Hong Kong to live, so I wanted to sell my shares in the company and leave Vietnam.I sold 30% shares to my friend (NGO NGOC PHUNG) on 24 Nov 2016 ,I own 70% on that time.

10.On 29 December 2016, there was a further change in ownership and shareholding

·29 December 2016 to 4 October 2017, she had 100% ownership

·Then my friend (NGO NGOC PHUNG)  tried a week of managing the company but he has no experience in this business so he sold 30% of the shares back to me on 29 Nov 2016. I own 100% at that time.

11.On 5 October 2017, there was another change in the ownership and shareholding

·5 October 2017 going forward, she had 60% ownership

·When I left VietNam to Australia, I sold 40% shares to my friend (LE PHI HUNG) on 5 Oct 2017

15.  The Tribunal has compared the information from the spreadsheet with the translated Vietnamese documents and is satisfied that the applicant’s explanations make sense of the business registration documents. Based on the foregoing, the Tribunal finds that the applicant’s ownership interest in the nominated business, GT, was follows:

27 December 2012 to 24 April 2013, she had 100% ownership

25 April 2013 to 8 November 2016, she had 50% ownership

9 November 2016 to 23 November 2016, she had 100% ownership

24 November 2016 to 28 December 2016, she had 70% ownership

29 December 2016 to 4 October 2017, she had 100% ownership

5 October 2017 going forward, she had 60% ownership

16.  The Tribunal is satisfied that the applicant had an ownership interest in GT in each of the four fiscal years immediately before the time of the invitation to apply for the visa.

17.  The Tribunal will now consider the criteria to do with a main business.

Does the nominated business meet the criteria to be a main business?

18.  The meaning of “main business” is set out in r.1.11 of the Regulations. The first of the criteria under r.1.11(1)(a) requires the applicant to have an ownership interest.

19.  The Tribunal has already established that the applicant has had at least 50% ownership in the company since 27 December 2012. That being so, the first of the criteria, set out in r.1.11(1)(a), is met.

20.  Secondly, the applicant must maintain, or have maintained, direct and continuous involvement in the management of the business from day-to-day and in making decisions affecting the overall direction and performance of the business.

21.  The Tribunal notes that the applicant obtained a Bachelor of Economics, with a focus on financial accounting, graduating in 2008. In a statement she provided to the Department, the applicant wrote that she married in August 2012 in Hong Kong, and in the following month she returned to Vietnam where she continued to run the business operations until around early 2016. She then returned to Hong Kong to prepare for the birth of their child.

22.  The applicant wrote that between September 2012 and early 2016 she frequently travelled to Hong Kong to see family, but each visit was about seven to ten days, due to her business commitments in Vietnam. The applicant wrote that she was juggling family and business when she travelled.

23.  The Department asked the applicant why she was described as a housewife on a visa application. She responded that the visa application was done by a ticketing or tour agency and they must have assumed she was a housewife as she was travelling with her husband. She wrote that she was not asked about this, and she was a housewife as well as running a business in Vietnam.

24.  The financial statements of the company record the applicant as its legal representative. She approved them in her capacity as director of the company.

25.  The Tribunal invited the applicant to provide more information about her business in Vietnam. In a statutory declaration dated 23 August 2021, the applicant provided the following details:

·     She completed her degree in economics from Ho Chi Minh University in 2008, and upon completion she started work as an interpreter for a large trading company, interpreting from Vietnamese to Mandarin and vice versa. That company was building commercial ties with companies located in Taiwan.

·     GT was established on 9 July 2009 by the applicant but as she was still employed elsewhere, she did not want to give her employer the impression she was not committed to her job as an interpreter. The applicant was the person who made the capital investment in GT but GT was registered in her cousin’s name.

·     Through her interpreter job, the applicant learnt there was a niche market in wholesaling. In 2009, GT employed three people: the cousin, Ms Gi Kim Chenh, and two delivery people.

·     GT would order bales of textiles including leather and supply to retailers who made clothes and shoes, in quantities that suited these retailers. 

·      In December 2012 the applicant resigned from the interpreter job and assumed the directorship of GT. Two more people were employed, a bookkeeper and a warehouse manager. There were now six people working for GT.

·      On a day to day basis, her tasks included the following:

o   Managing staff

o   Pricing goods that were to be sold

o   Managing budgets and cash flow, using reports from the bookkeeper

o   Finding suppliers in China and maintaining relationships with them

o   Marketing goods to potential customers

o   Making decisions affecting the overall direction and performance of the business

26.  The applicant gave more detail on the decision-making she was involved in, as follows:

·     Setting goals for sales to grow in the business

·     Determining the wholesale model; connecting wholesalers and retailers to increase market share of the target market

·     Understand and analyse suppliers in multiple ways and establish good working relationships with them

·     Finding textile suppliers of textiles and leather that would enable competitive pricing of products

·     Maintaining the staff’s focus on service and building a team to mange the complexity of a wholesale business

·     Managing supplier relationships, developing new customers, tracking inventory, warehousing, purchasing, estimating, billing and financial reporting

·     Analyse and control expenditure and measure against budgets and projected cash flow.

·     Identify target markets and establish marketing campaigns

27.  The applicant wrote that in 2013, she identified another niche market which was to supply hardware and she was instrumental in adding that arm to the business. She referred to the province of Binh Duong in Vietnam as being a centre for export-oriented manufacturing industries including 900 woodworking factories, nearly 400 garment-making factories, 170 footwear factories and nearly 100 electronics companies. As the applicant can speak Cantonese, Mandarin, Vietnamese and English, she could source materials needed by the various manufacturers and by foreign companies that were establishing themselves in Binh Duong province which was where the applicant lived. The applicant said that she negotiated with suppliers in China, Cambodia and Myanmar.

28.  The applicant clarified that the change in business activities in December 2013 was adding additional product lines. She was required by law to inform Vietnamese authorities of this.

29.  The Tribunal observes that the evidence provided to the Department and to the Tribunal at different times has been generally consistent, and coherent.

30.  Based on the evidence before it, the Tribunal accepts that the applicant maintains or has maintained direct and continuous involvement in the management of the business on a day-to-day basis and in making decisions affecting the overall direction and performance of the business. Therefore, the second criterion, as set out in r.1.11(1)(b), is met.

31.  Thirdly, the total value of the ownership interest of the applicant and her spouse must meet certain thresholds, depending on factors including turnover.

32.  According to GT financial statements, the turnover for financial years 2014 and 2015 were 20,566,523,123 VND and 28,150,439,751 VND (Vietnamese = dong). The equivalents in Australian currency were AUD1,162,860 and AUD1,698,560 respectively.

33.  As the turnover was more than AUD400,000 in each of those years, and the applicant owned more than 30% of the business during the relevant years, the third criterion as per r.1.11(1)(c) is met.

34.  Finally, the business must be a qualifying business, which is defined at 1.03 of the Regulations to mean “an enterprise that is operated for the purpose of making profit through the provision of goods and/or services (other than the provision of rental property) to the public and is not operated primarily or substantially for the purpose of speculative or passive investment.”

35.  The Tribunal has already recorded the nature of the business operated through GT which was as a wholesaler. Its customers were other businesses that manufactured and sold a range of goods. The Tribunal is satisfied, given the nature of the GT business, that it provided goods and services to the general public and was not operated for the purpose of speculative or passive investment. Therefore, the Tribunal finds that GT was a qualifying business, thereby satisfying the criterion in r.1.11(1)(d).

36.  As all four criteria under r.1.11(1) are met, the Tribunal finds that the business operated by GT was a main business at the relevant time.

Did the annual turnover exceed AUD500,000 for at least two of the four fiscal years immediately before the time of invitation?

37.  As already recorded, the invitation to apply for the visa was issued on 1 June 2018. The four fiscal years before then were the calendar years of 2014, 2015, 2016 and 2017.

38.  The Tribunal has already recorded the turnover of GT for financial years 2014 and 2015 was 20,566,523,123 VND and 28,150,439,751 VND, with the Australian equivalent being AUD1,162,860 and AUD1,698,560 respectively. Clearly these turnovers exceed the threshold of AUD500,000 as required by cl. 188.225(1).

39.  GT did not provide professional, technical or trade services in the sense contemplated by cl.188.225(2). Given this, the Tribunal is satisfied it need not consider this criterion any further.

CONCLUDING FINDING

40.  Given the findings above, the Tribunal is satisfied that cl.188.225 is met. The appropriate course is to remit the matter to the Minister to consider the remaining criteria for the visa.

41.  As the primary applicant has satisfied that clause, the Tribunal also remits the applications by the secondary applicants for reconsideration on the same basis as the primary applicant.  

DECISION

42.  The Tribunal remits the applications for Business Innovation and Investment (Provisional) Subclass 188 visas for reconsideration, with the direction that the first named applicant meets the following criteria for a Subclass 188 visa:

• cl.188.225 of Schedule 2 to the Regulations

Susan Hoffman
Member