Export Market Development Grants (Close Relationships - General) Determination 2002

Overview

The Export Market Development Grants (Close Relationships — General) Determination 2002 was enacted to provide guidelines for Austrade, Australia's export promotion agency, in determining whether entities are closely related for the purposes of the Export Market Development Grants Act 1997. This legislative instrument was introduced to address the need for clear criteria in assessing relationships between entities applying for export market development grants, ensuring that the grant process is fair and transparent. The Determination was made by Mark Vaile, the Minister for Trade, under the authority of the Export Market Development Grants Act 1997, with the policy objective of preventing conflicts of interest and ensuring that grants are awarded to entities that are genuinely independent in their operations. This Determination outlines the factors Austrade must consider when assessing whether an entity is closely related to another, including the nature of any connection between the entities and the extent of control or influence one entity may have over another. The guidelines aim to clarify what constitutes a close relationship, taking into account various scenarios such as employment, directorship, substantial shareholding, partnership, and trustee-beneficiary relationships. The Determination also includes an extended definition of "ordinarily employed" to cover situations where the employment relationship may not be immediately apparent. By establishing these criteria, the Determination supports the integrity of the grant application process under the Act.

Scope and Application

The Export Market Development Grants (Close Relationships — General) Determination 2002 applies to entities under the Export Market Development Grants Act 1997, specifically those that are or could be in a close relationship with another entity, which could affect their eligibility for export market development grants. This applies to individuals or organisations that are ordinarily employed by another entity, companies where the other entity is a director or substantial shareholder, associations or cooperatives where the other entity is a member of the governing body, partnerships where the other entity is a partner or director of a partner company, corporations where someone is a director of both, or where the entity is a beneficiary of a trust and the other entity is the trustee. The Determination has a national reach as it applies throughout Australia and is overseen by Austrade, the entity responsible for forming opinions on whether entities are closely related. The Determination revokes a previous version made on 1 July 1997 but allows for its continued application to grant applications for years commencing before 1 July 2001. Any subordinate instruments that extend or restrict the application of this Determination would need to be made under the authority of the Act.

Key Provisions

The main operative sections of the Export Market Development Grants (Close Relationships — General) Determination 2002 (the Determination) include the definitions (section 3), the revocation and savings provisions (section 4), and the guidelines for Austrade to determine close relationships between entities (sections 5-8). Section 3 provides definitions for key terms used in the Determination, such as "Act," "entity," and "related corporation." Section 4 revokes the previous Determination made on 1 July 1997 but allows it to continue applying to certain applications. Section 5 outlines the purpose of the Determination, which is to provide guidelines for Austrade to form opinions on whether entities are closely related. Section 6 details the general principle Austrade must consider, focusing on connections and control or influence between entities. Section 7 enumerates specific scenarios where entities are likely to be closely related, and section 8 extends the meaning of "ordinarily employed" to clarify the conditions under which a person may be considered ordinarily employed by an entity. The Determination imposes specific obligations on Austrade, the entity charged with administering the Export Market Development Grants under the Export Market Development Grants Act 1997. Austrade must consider any connection between entities and the extent of control or influence one entity can exercise over another when forming an opinion on whether the entities are closely related. This includes examining the relationship's nature, the level of control, and any relevant factors that might indicate a close relationship. Austrade is required to follow the guidelines set out in the Determination, ensuring a consistent and transparent approach to assessing close relationships between entities applying for grants. The Determination does not explicitly outline offences, penalties, or consequences for breach. However, the implications of a failure to comply with the guidelines could be significant, particularly for entities seeking grants. A determination by Austrade that two entities are closely related when they are not could result in the disqualification of one or both entities from receiving grants, leading to potential financial losses and reputational damage. Conversely, a failure to correctly identify closely related entities could result in grants being awarded to entities that do not meet the eligibility criteria, potentially leading to misallocation of funds and legal challenges. While specific penalties are not mentioned in the Determination, the consequences of non-compliance with the guidelines could be severe for the entities involved.