Innovation Investment Fund Program Round Three Direction No. 1 of 2006

Administered by Department of Industry, Science and Resources

Legislation au F2006L03854 In force Legislative Instrument

Legislation content

Explanatory Statement

 

Issued by the authority of the Minister for Industry, Tourism and Resources

 

Industry Research and Development Act 1986

 

Innovation Investment Fund Program Round Three Direction No 1 of 2006

 

General Outline

 

The Innovation Investment Fund Round Three Program (the Program) is a competitive, merit based program designed to promote the commercialisation of Australian research and development through the injection of venture capital into new companies in their seed, start-up or early expansion stage.  The Program also aims to develop fund managers with experience in the early stage venture capital industry.

 

The Innovation Investment Fund Program Round Three Direction No 1 of 2006 (the Direction) reflect the emphasis on new managers within the program and include changed merit criteria.

 

The Direction provides the Industry Research and Development Board (the Board) with an additional function.  This additional function relates to the administration of the Program including the policies and practices to be followed by the Board in the performance of the function. In accordance with the Direction, the Board assesses applications against merit criteria outlined in the Direction and provides a ranking of those applications.  The Program Delegate determines which eligible applications will receive funding and takes into account the merit ranking provided by the Board, the available Program funding, and the policy objectives of the Program.

 

The Direction does not affect the rights of a person (other than the Commonwealth) as at the date of registration so as to disadvantage that person or impose liabilities on that person (other than the Commonwealth) in respect of anything done or omitted to be done before the date of registration on the Federal Register of Legislative Instruments.

 

Legislative authority

The Direction is issued to the Board by the Minister for Industry, Tourism and Resources (the Minister) acting under subsection 19 (1) 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 sub-clause 20 (2) of the Industry Research and Development Act 1986.  In addition the Minister consulted with the Pooled Development Funds Registration Board in developing the Direction.

 

Public consultation was conducted.  Consultation took the form of acceptance of submissions in response to the discussion paper issued in relation to the Program, and interviews with a limited number of stakeholders.  

 

Financial Implications

The Direction has no financial impact.  The Direction provides a framework by which the Board provides assessments and merit ranking of eligible applications.  The Program Delegate makes the final decision in determining the quantum, terms and conditions of licences under the Program.

 

Date of effect

The Direction commences on and from the day on which particulars of the Direction has been published in the Gazette.

 

Notes on Provisions of the Directions

 

PART 1 – PRELIMINARY

 

Name of Direction

 

Clause 1

 

The Direction constitutes the Innovation Investment Fund Program Round Three Direction No 1 of 2006.

 

Commencement

 

Clause 2

 

The Direction commence on and from the day on which particulars of the direction has been published in the Gazette.

 

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 provision of assessments and merit rankings of eligible applications under the Program - and the policies and practices that the Board must follow in the performance of this function.

 

Interpretation

 

Clause 4

 

This clause explains key terms used in the Direction and a definition of R&D activities.  It includes a new definition to allow the Board the ability to attribute a preference to applicants who are new managers.

 


PART 2 – CONSIDERATION OF APPLICATIONS TO PARTICIPATE IN THE PROGRAM

 

Board to have regard to certain policy objectives

 

Clause 5

 

The Board must have regard to the policy objectives of the Program in giving effect to the Direction.  

 

Procedure

 

Clause 6

 

This clause provides a guide to the Board on the assessment and merit ranking of eligible applications.  The Board must consider eligible applications in relation to a particular funding round as soon as practicable after the Program Delegate has provided those applications to it.  The Direction also provides for the Board to interview any applicant and request additional information from applicants to assist in the assessing and ranking of eligible applicants.

 

Board may decline to provide merit ranking

 

Clause 7

 

The Board may refuse to provide a merit ranking of a particular applicant if it is not satisfied that its application shows sufficient merit. 

 

PART 3 – ASSESSMENT AND MERIT RANKING OF APPLICATIONS

 

Assessment of applications

 

Clause 8

 

The Board assesses the merit of each applicant's activities against the merit criteria contained within the Direction.

 

Merit Criteria

 

Clause 9

 

The Board will assess applicants against the merit criteria in the Direction.  These criteria are:

(a)            whether the proposed applicant has effective strategies to contribute to the training and developing of Australian based staff in all aspects of making venture capital investments in early stage companies;

(b)           the proposed size of the fund and ratio of privately sourced capital to Commonwealth program capital (subject to the Commonwealth program capital not exceeding a 1:1 ratio to the privately sourced capital and the Commonwealth program capital being no more than $20 million);

(c)            the level and structure of management fees proposed;

(d)           the applicant’s capacity and experience in early stage equity investing giving particular attention to realising returns from investments, sourcing investment opportunities and managing an investment portfolio;

(e)            whether the applicant has a balanced management team including relevantly qualified and skilled personnel;

(f)             whether the applicant has an understanding of, and experience in, dealing with issues related to Australian and international investments, products, services and markets; and

(g)           whether the applicant has a demonstrated willingness to operate within the intent of the IIF program.

 

Other matters

 

Clauses 10-13

 

The Board may attribute a preference for new managers (clause 10).  The Board may attribute a higher level of importance to the merit criterion and will not require that short listed applicants demonstrate their ability to access capital (clause 11).  The Board may have regard to the accessibility of the Program for industry around Australia (clause 12), and may have regard for additional criteria and undertake other enquiries to consider the suitability of applicants (clause 13).

 

Clauses 14-16

 

The Program Delegate may make policies in relation to the administration of the Program (clause 14), and may make decisions and guidelines in relation to the Program (clause 15).  The Program Delegate will seek the advice of the Board on: new investments beyond the investment period; changes to key personnel; changes to structure of a fund; application of sanctions against a manager or investor; suspension of funding in relation to a fund; termination of a licence; and investee company eligibility (clause 16).

 

PART 4 – ASSESSMENT OF PROPOSALS FOR VARIATION TO GOVERNING DOCUMENTS

 

Clause 17

 

In making a decision on whether to vary any provision of the governing documents, the Program Delegate will seek the advice of the Board and may seek the advice of others.   

 


PART 5 – BOARD TO HAVE ADMINISTRATIVE RESPONSIBILITY FOR THE PROGAM

 

Clause 18

 

The Board has administrative responsibility for the Program and where the Board provides advice to the Program Delegate, the Program Delegate must consider the advice of the Board and advise the Minister of any such advice where requested to do so by the Board.

 

Clause 19

 

The Board may advise the Minister, or the Minister may request advice from the Board, on non-financial administration matters relating to the Program.

 

Clause 20

 

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

Overview

The Innovation Investment Fund Program Round Three Direction No 1 of 2006 was enacted under the authority of the Industry Research and Development Act 1986 to address the need for venture capital injection into new Australian companies at their seed, start-up, or early expansion stages. The primary aim of this Direction is to foster the commercialisation of Australian research and development while also nurturing experienced fund managers in the early-stage venture capital sector. The Direction was issued by the Minister for Industry, Tourism and Resources under sections 19(1) and 20(1) of the Act, with the policy objective of enhancing the commercialisation of Australian R&D through strategic venture capital investments. The Direction outlines the Industry Research and Development Board’s additional function, which includes the assessment and merit ranking of eligible applications, and provides guidance on the policies and practices the Board must follow in this role. The Direction ensures that the Board's assessments are aligned with the Program’s policy objectives, with the final funding decisions made by the Program Delegate based on merit rankings, available funding, and the Program’s objectives.

Scope and Application

The Innovation Investment Fund Program Round Three Direction No 1 of 2006 applies to the Industry Research and Development Board (the Board), as well as to eligible applicants for funding under the Innovation Investment Fund Program Round Three (the Program). This legislation aims to promote the commercialisation of Australian research and development by providing venture capital to new companies in their seed, start-up, or early expansion stage. The Program also seeks to develop fund managers with experience in the early stage venture capital industry. The Direction extends to the Commonwealth and does not affect the rights of any person (other than the Commonwealth) as at the date of registration. The Direction is issued under the Industry Research and Development Act 1986 by the Minister for Industry, Tourism and Resources and provides the Board with instructions in relation to the assessment and merit ranking of eligible applications for funding under the Program. The Board is required to consider the policy objectives of the Program, assess eligible applications against merit criteria, and provide a ranking of those applications. The Program Delegate makes the final decision in determining the quantum, terms, and conditions of licenses under the Program. The Direction does not have any financial implications.

Key Provisions

The Innovation Investment Fund Program Round Three Direction No 1 of 2006 (the Direction) primarily outlines the functions and responsibilities of the Industry Research and Development Board (the Board) in administering the Innovation Investment Fund Program (the Program). This includes assessing and ranking applications based on merit criteria (Clause 8) and providing policy advice to the Program Delegate, who has the final say in funding decisions (Clause 14). The Direction also specifies the merit criteria for assessing applications, such as the applicant's strategy for training Australian staff, the fund's size and capital structure, management fees, and experience in early-stage equity investing (Clause 9). The Board may also attribute a preference to new managers and consider additional criteria to evaluate the suitability of applicants (Clauses 10-13). The Direction imposes several obligations on the Board, including considering the Program's policy objectives (Clause 5), assessing applications as soon as practicable (Clause 6), and providing merit rankings unless an application lacks sufficient merit (Clause 7). The Board must also cooperate with any independent evaluations of the Program and provide data and advice to the Minister (Clause 20). Furthermore, the Direction allows the Board to attribute preferences to new managers and consider additional criteria to evaluate the suitability of applicants (Clauses 10-13). There are no explicit offences, penalties, or civil/criminal consequences for breach detailed within the Direction itself. However, any breaches of related legislation or terms of funding agreements could potentially lead to legal consequences. The Direction focuses on providing a framework for the assessment and administration of the Program, rather than detailing specific penalties for non-compliance with the Direction. It is important to note that while the Direction does not affect the rights of any person other than the Commonwealth, any actions taken under the Program must comply with broader legal requirements and any applicable terms and conditions of funding agreements.

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Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.