Innovation Investment Follow-on Fund Program Direction No. 1 of 2009

Administered by Department of Industry, Science and Resources

Legislation au F2009L02265 In force Legislative Instrument

Legislation content

Commonwealth of Australia

 

Industry Research and Development Act 1986

Innovation Investment Follow-on Fund Program 

Direction No. 1 of 2009

 

I, KIM JOHN CARR, Minister for Innovation, Industry, Science and Research, acting under subsections 18(A), 19 and 20(1) of the Industry Research and Development Act 1986, issue the following explanatory statement on the Direction to Innovation Australia.

 

 

Dated: 22 05 09    

KIM CARR

 

Minister for Innovation, Industry, Science and Research

 

 

 

Explanatory Statement

 

Issued by the authority of the Minister for Innovation, Industry, Science and Research

 

Industry Research and Development Act 1986

 

Innovation Investment Follow-on Fund Program Direction No 1 of 2009

 

 

General Outline

 

The Innovation Investment Follow-on Fund Program (the IIFF Program) is a measure to address the constraint on early stage innovative companies accessing capital as a result of the global financial crisis. The IIFF Program is a competitive, merit based program designed to provide capital (through the fund manager) to selected investee companies with high potential (as identified by the fund manager). This will assist those companies to continue to develop and to build value through the global financial crisis. Selected fund managers will be provided funding to invest in the selected companies and will receive a share in any profits.

 

To be eligible an applicant must either be:

(a)                  a fund manager licensed under the Innovation Investment Fund program (Rounds 1 and 2), the Pre-Seed Fund program, the Renewable Energy Equity Fund program; or

(b)                 an incubator under the ICT Incubators program. 

 

Applicants (fund managers) may submit a prioritised proposal for funding to be provided to selected investee companies within their portfolio. The IIFF Committee, a committee of Innovation Australia (the Board) appointed by the Minister, will assess and determine the technical merit of each eligible application against merit criteria outlined in the Direction and will advise the Program Delegate of the outcome of the assessment process. The Program Delegate, taking into account the assessment and advice provided by the IIFF Committee, the available IIFF Program funding, and the policy objectives of the IIFF Program, will determine which eligible applications will receive funding and the amount of funding to be provided by the Commonwealth.

 

Legislative authority

The Direction is issued to the Board by the Minister for Innovation, Industry, Science and Research (the Minister) acting under sections 18A, 19 and 20 (1) of the Industry Research and Development Act 1986.

 

Consultation

The Minister consulted the Board during the development of the Direction, as required under section 20 (2) of the Industry Research and Development Act 1986. 

 

Financial Implications

The Direction itself has no financial impact. The Direction provides a framework by which the IIFF Committee provides assessments and merit ranking of eligible applications. The Program Delegate makes the final decision in determining the quantum, terms and conditions of funding agreements entered into under the IIFF Program. 

 

Date of effect

The Direction commences on and from the day on which particulars of the Direction is published in the Gazette and registered in the Federal Register of Legislative Instruments.

 

Meaning of certain terms

Capitalised terms not defined in this Explanatory Statement have the meanings given to them in the Direction.

 

Notes on Provisions of the Direction

 

PART 1 – PRELIMINARY

 

 

Name of Direction

 

Clause 1

 

The Direction constitutes the Innovation Investment Follow-on Fund Program, Direction No 1 of 2009.

 

Commencement

 

Clause 2

 

The Direction commences on and from the day on which particulars of the Direction are published in the Gazette and registered in the Federal Register of Legislative Instruments.

 

 

Object of these Directions

 

Clause 3

 

The object of the Direction is to provide the Board with instructions in relation to an additional function of the Board namely, the administration of the IIFF Program, including the provision of merit assessments and technical assessments of eligible applications under the IIFF Program, and the policies and practices that the Board must follow in the performance of this function.

 

Introduction

 

Clause 4

 

This clause provides an outline of the IIFF Program.

 

Interpretation

 

Clauses 5 - 11

 

These clauses explain key terms used in the Direction.

 

PART 2 – CONSIDERATION OF APPLICATIONS TO PARTICIPATE IN THE PROGRAM

 

 

Board to have regard to certain policy objectives

 

Clause 12

 

This clause sets out the policy objectives of the IIFF Program to which the Board must have regard in giving effect to the Direction.  

 

 

Eligibility

 

Clause 13

 

Applicants must meet specified eligibility criteria.

 

Clause 14

 

To be eligible for funding an investee company must satisfy specified eligibility criteria.

 

 

 

 

 

 

PART 3 – MERIT ASSESSMENT OF APPLICATIONS

 

 

Assessment of applications

 

Clause 15

 

The Program Delegate may refer an application for funding to the IIFF Committee for merit assessment but may elect not to do so if an application fails to meet the eligibility criteria set out in the IIFF Program Guidelines.

 

Clause 16

 

The IIFF Committee assesses the merit of each application against the merit criteria set out in the Direction and provides a technical assessment to the Program Delegate. 

 

Clause 17

 

This clause provides that the IIFF Committee may assess an application according to clause 16 but decline to provide a technical assessment if it is not satisfied with the merit of the application in relation to one or more of the merit criteria.

 

Clause 18

 

The IIFF Committee may attribute a higher or lower level of importance to one or more of the merit criteria.  It need not notify applicants of the relative importance of merit criteria.

 

Clause 19

 

The IIFF Committee may request additional information from, or interview, an applicant after the lodgement of an application.

 

Clause 20

The IIFF Committee or the Program Delegate may have regard to additional information and undertake other enquiries in order to consider the suitability of applicants and the suitability and eligibility of investee companies.

 

 

Clause 21

 

The IIFF Committee may advise the Program Delegate to approve an application:

(a)            in respect of the applicant’s portfolio investee companies, consistently with the applicant’s prioritisation; and/or

(b)           for an amount of funding less than that for which the applicant has applied,

and may recommend a limit on the maximum level of investment in a portfolio investee company.

 

Merit Criteria

 

Clause 22

 

This clause sets out the merit criteria for the IIFF Program.  There are separate merit criteria in respect of the applicant and the follow-on funding proposal.

 

 

PART 4 – BOARD TO PROVIDE ADVICE ON POLICIES AND OPERATION OF THE PROGRAM

 

 

Clause 23

 

The Board may advise the Minister, or the Minister may request advice from the Board, on non-financial administration matters relating to the Program, including the extent to which the IIFF Program is meeting its objectives.

 

Clause 24

 

The Board may collect and analyse data on the performance of the IIFF Program and provide advice to the Minister on that performance, and must cooperate with any independent evaluation of the IIFF Program. 

 

Clause 25

 

Where the Board advises the Program Delegate on a matter in respect of which the Program Delegate is to advise the Minister, the Program Delegate must consider the Board’s advice and, in his advice to the Minister, disclose the advice received from the Board.

 

 

 

Overview

The Industry Research and Development Act 1986, enacted to foster innovation and investment in research and development within Australian industries, introduces the Innovation Investment Follow-on Fund Program (IIFF Program) through Direction No. 1 of 2009. This initiative was introduced to alleviate the capital access constraints faced by early-stage innovative companies amidst the global financial crisis. The Minister for Innovation, Industry, Science and Research issued this Direction to Innovation Australia, establishing the IIFF Program as a merit-based competitive scheme designed to provide capital to selected companies with high potential, thereby supporting their development and value creation. The policy objective is to assist these companies to continue growing during economic challenges. The Direction outlines eligibility criteria for applicants, merit assessment processes, and the role of the IIFF Committee and Program Delegate in determining funding allocations. The Direction, issued under sections 18A, 19, and 20(1) of the Act, aims to provide Innovation Australia with instructions for administering the IIFF Program, including assessing applications and adhering to specified policies and practices. Eligible applicants must be either fund managers licensed under certain programs or incubators under the ICT Incubators program. The IIFF Committee, appointed by the Minister, evaluates the technical merit of applications against set criteria and advises the Program Delegate, who makes the final funding decisions based on the assessment, available funds, and program objectives. The Direction itself does not incur financial implications but establishes the framework for the assessment and funding processes under the IIFF Program.

Scope and Application

The Innovation Investment Follow-on Fund Program Direction No 1 of 2009, issued under the Industry Research and Development Act 1986, applies to fund managers and incubators already participating in specific Australian government-backed investment programs, including the Innovation Investment Fund program, the Pre-Seed Fund program, the Renewable Energy Equity Fund program, and the ICT Incubators program. The Program aims to facilitate early-stage innovative companies in accessing capital during the global financial crisis by providing competitive, merit-based funding to selected investee companies with high potential. The eligible applicants must submit proposals to the IIFF Committee, which will evaluate the applications against specified merit criteria and provide technical assessments. Ultimately, the Program Delegate, who is accountable to the Minister for Innovation, Industry, Science and Research, will determine the funding allocations based on the assessment and advice provided by the IIFF Committee, the available program funding, and the policy objectives of the IIFF Program. The Direction itself does not carry financial implications, but rather provides a framework for the assessment and funding processes. The Direction applies nationally and is subject to the legislative authority of the Minister under sections 18A, 19, and 20(1) of the Industry Research and Development Act 1986. The Direction does not explicitly state any exclusions, exemptions, or thresholds, and its application may be extended or restricted through subordinate instruments as needed.

Key Provisions

The Innovation Investment Follow-on Fund Program Direction No 1 of 2009, issued under the Industry Research and Development Act 1986, establishes a framework for the administration and implementation of the Innovation Investment Follow-on Fund Program (IIFF Program). This program aims to address the capital access constraints faced by early-stage innovative companies due to the global financial crisis. Section 1 of the Direction specifies that it constitutes the IIFF Program, while Section 2 outlines its commencement date, which is the day particulars of the Direction are published in the Gazette and registered in the Federal Register of Legislative Instruments. Section 3 details the object of the Direction, which is to provide instructions to the Board regarding the administration of the IIFF Program, including merit and technical assessments of eligible applications. Under this Direction, the Board is obligated to consider specific policy objectives when evaluating applications for the IIFF Program, as stipulated in Section 12. To be eligible for funding, applicants must meet certain criteria outlined in Section 13, which includes being a licensed fund manager or an ICT incubator, and investee companies must satisfy criteria set out in Section 14. The Program Delegate has the discretion to refer applications to the IIFF Committee for merit assessment, as per Section 15, but may decline to do so if the application does not meet the eligibility criteria. The IIFF Committee is responsible for assessing the merit of each application against the criteria specified in Section 22 and providing a technical assessment to the Program Delegate, as detailed in Section 16. Section 17 of the Direction allows the IIFF Committee to decline providing a technical assessment if they are not satisfied with the merit of an application in relation to one or more criteria. Additionally, the IIFF Committee can attribute varying levels of importance to the merit criteria without notifying applicants, as per Section 18. The Committee may request additional information from or interview applicants, as mentioned in Section 19, and may undertake further enquiries to consider the suitability of applicants and investee companies, as stated in Section 20. The IIFF Committee may advise the Program Delegate to approve an application in line with the applicant’s prioritisation or for an amount less than that applied for, and may recommend a limit on investment, as detailed in Section 21. Failure to comply with the provisions of this Direction may lead to civil or criminal consequences, depending on the nature and severity of the breach. While specific penalties are not detailed in the Direction, breaches of the Industry Research and Development Act 1986 can result in penalties as prescribed by the Act, which may include fines or imprisonment for serious offences. The Direction itself does not impose financial penalties but provides a framework for assessing and funding eligible applications.

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