Pooled Development Funds Amendment Act 2000

Administered by Department of Industry, Science and Resources

Legislation au C2004A00656 In force Act

Legislation content

 

 

 

 

Pooled Development Funds Amendment Act 2000

 

No. 64, 2000

 

 

 

 

An Act to amend the Pooled Development Funds Act 1992, and for related purposes

 

 

Contents

1 Short title

2 Commencement

3 Schedule(s)

Schedule 1—Pooled Development Funds Act 1992

Pooled Development Funds Amendment Act 2000

No. 64, 2000

 

 

 

An Act to amend the Pooled Development Funds Act 1992, and for related purposes

[Assented to 22 June 2000]

The Parliament of Australia enacts:

1  Short title

  This Act may be cited as the Pooled Development Funds Amendment Act 2000.

2  Commencement

  This Act commences on the day on which it receives the Royal Assent.

3  Schedule(s)

  Each Act that is specified in a Schedule to this Act is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to this Act has effect according to its terms.


Schedule 1—Pooled Development Funds Act 1992

 

1  Section 3

Repeal the section, substitute:

3  Object of the Act

 (1) The object of this Act is to develop, and demonstrate the potential of, the market for providing patient equity capital (including venture capital) to small or medium‑sized Australian enterprises that carry on eligible businesses.

 (2) To achieve this object, the Act establishes a scheme under which companies that provide that kind of capital can become pooled development funds (PDFs), which entitles them to more competitive tax treatment.

2  Subsection 4(1) (at the end of paragraph (a) of the definition of shareholders’ funds)

Add “(but not including any amounts remaining unpaid on the shares)”.

3  Subsection 4(1)

Insert:

widely‑held complying superannuation fund has the meaning given by section 4A.

4  After section 4

Insert:

4A  Definition of widely‑held complying superannuation fund

 (1) For the purposes of this Act, a fund is a widely‑held complying superannuation fund if:

 (a) it is not an excluded superannuation fund (within the meaning of the Superannuation Industry (Supervision) Act 1993); and

 (b) it satisfies the test in either subsection (2) or (3).

Resident funds

 (2) A fund satisfies the test in this subsection at a particular time during a year of income of the fund (within the meaning of the Income Tax Assessment Act 1936) if it is a complying superannuation fund for the purposes of Part IX of that Act in relation to the year of income.

Non‑resident funds

 (3) A fund satisfies the test in this subsection if:

 (a) it is a superannuation fund (within the meaning of the Superannuation Industry (Supervision) Act 1993); and

 (b) it is a non‑resident superannuation fund (within the meaning of the Income Tax Assessment Act 1936); and

 (c) it is established for the sole or principal purpose of providing retirement benefits for its members; and

 (d) it complies with the applicable laws of a foreign country that regulate funds established for that purpose.

5  Paragraph 14(1)(e)

Omit “can and will”, substitute “is reasonably likely to be able to”.

6  Paragraph 18(c)

Omit “reduce its share capital or buy shares in itself”, substitute “reduce its share capital, or buy shares in itself, within 2 years after becoming a PDF or merging with another PDF as mentioned in section 32A”.

7  At the end of section 19

Add:

 (2) There are 3 kinds of investment that a PDF is allowed to make under this Division:

 (a) subscribing for or buying shares (see section 20);

 (b) acquiring non‑transferable options to buy shares (see section 20A);

 (c) lending money to companies (see section 20B).

 (3) The other sections of this Division (sections 21 to 28A) apply to each of those kinds of investment.

Note: In particular, section 27 provides that, unless the Board otherwise approves, immediately after an investment of any of the above kinds is made, the total of all amounts paid on the shares in the investee company held by the PDF must be at least 10% of the total of all amounts paid on the issued shares in the investee company. (This means that the PDF must hold at least 10% of the paid‑up share capital in the investee company before the PDF can acquire non‑transferable options in the company or lend it money.)

8  Subsection 20(1)

Omit “The investment must be made”, substitute “A PDF may make an investment”.

Note: The heading to section 20 is replaced by the heading “First kind of allowed investment: acquiring shares”.

9  After section 20

Insert:

20A  Second kind of allowed investment: acquiring non‑transferable options

 (1) A PDF may make an investment by acquiring an option to subscribe for or buy shares in a company (in this Division also called the investee company).

Note: However, section 27 provides that, unless the Board otherwise approves, a PDF cannot make such an investment unless it first holds shares in the investee company. The total of all amounts paid on those shares must be at least 10% of the total of all amounts paid on the issued shares in the investee company.

 (2) The option must be exercisable only by the PDF. It must not be capable of being transferred to another person.

 (3) If the PDF later wishes to exercise the option by subscribing for or buying any of those shares, it must comply with section 20 and the other provisions of this Division that relate to section 20 investments: the exercise of the option is treated as a new investment that is separate from the acquisition of the option.

20B  Third kind of allowed investment: lending money to existing investee companies

 (1) A PDF may make an investment by lending money to a company (in this Division also called the investee company) under an agreement with the investee company.

Note: However, section 27 provides that, unless the Board otherwise approves, a PDF cannot make such an investment unless it first holds shares in the investee company. The total of all amounts paid on those shares must be at least 10% of the total of all amounts paid on the issued shares in the investee company.

 (2) Immediately after the agreement is entered into, the total of the outstanding amounts of loans that the PDF has made (other than the amounts of unregulated investments) must not exceed 20% of the shareholders’ funds of the PDF.

10  Subsection 21(1)

Omit all the words before paragraph (a), substitute:

 (1) The PDF must believe, on reasonable grounds, that:

 (aa) if the investment is covered by section 20 (shares)—the shares concerned are being, or were, issued or allotted for the sole or principal purpose of raising money; or

 (ab) if the investment is covered by section 20A (options)—the money paid as consideration for the option concerned is being raised solely or principally; or

 (ac) if the investment is covered by section 20B (loans)—the loan money concerned is being borrowed solely or principally;

for use in doing one or more of the following:

11  Subsection 21(4)

After “investment”, insert “(including the acquisition of an option)”.

12  At the end of section 22

Add:

 (2) However, nothing in this Division prevents a PDF from making an investment that is allowed by section 32A (which deals with mergers of PDFs).

13  After paragraph 25(1)(b)

Insert:

 and (ba) all amounts the PDF has paid to acquire options in the investee company that the PDF has not yet exercised; and

 (bb) all amounts the PDF has lent to the investee company that remain outstanding;

14  After section 27

Insert:

27A  PDF to notify Board of initial investments

  As soon as practicable, and in any event within 30 days, after a PDF invests in a particular investee company for the first time, the PDF must give the Board a written notice setting out full particulars of the investment.

15  At the end of Division 1 of Part 4

Add:

28A  Indirect investments

  This Act applies to investments made by a PDF through one or more interposed entities as if the PDF had made the investments directly.

16  After paragraph 29(2)(a)

Insert:

 (aa) as allowed by section 32A (which deals with mergers of PDFs); or

17  Subsection 31(1)

Omit “ADI or a life office)”, substitute “ADI, a life office or a widely‑held complying superannuation fund)”.

18  Subsection 31(1)

Omit “banks or life offices)”, substitute “ADIs, life offices or widely‑held complying superannuation funds)”.

19  After subsection 31(2)

Insert:

 (2A) However, in determining whether a person is an associate of another person, disregard any connection those persons have with or through a PDF.

Example: This means that, despite paragraph (1)(d), the fact that 2 persons are both officers of the same PDF does not make the officers associates of one another (although they would still be associates if they were both officers of the same non‑PDF company).

 (2B) This section does not prevent a PDF from merging with another PDF as mentioned in section 32A.

20  After section 32

Insert:

32A  PDFs may merge

 (1) A PDF (the investor PDF) may acquire shares in another PDF (the investee PDF) if, and only if, the acquisition is part of a process of the 2 PDFs merging into one PDF.

 (2) Any consideration given to the shareholders in the investee PDF for the acquisition must be in the form of:

 (a) shares in the investor PDF; or

 (b) a genuine dividend payable from any undistributed profits of the investee PDF;

or both.

 (3) The investor PDF must give the Board written notice before making an acquisition allowed by this section.

21  After paragraph 41(1)(d)

Insert:

 (da) for each of the PDF’s investee companies (within the meaning of Division 1 of Part 4), the proportion of the investee company’s issued share capital held by the PDF at the end of the financial year;

 (db) the amounts of all profits, gains or losses the PDF made during the financial year from each such investee company;

 (dc) the amounts of all unregulated investments held by the PDF at the end of the financial year;

 (dd) the amounts of all profits, gains or losses the PDF made during the financial year from unregulated investments;

22  After paragraph 41(1)(i)

Insert:

 (ia) full particulars of the dividends the PDF paid to the shareholders in the PDF during the financial year;

23  Paragraph 47(1)(a)

Omit “revocation provision”, substitute “provision of this Act”.

24  Paragraph 47(1)(d)

Repeal the paragraph, substitute:

 (d) the Board is satisfied that a condition of the PDF’s registration has been contravened by, or in relation to, the PDF.

25  Subsection 47(4)

Repeal the subsection.

26  Subsection 50(1) (table)

Repeal the table, substitute:

 

Penalties for contraventions of this Act

Item

Provision

Penalty

1

Section 19 (investments not made in accordance with Division 1 of Part 4 other than section 27A)

500 penalty units

2

Section 27A

50 penalty units

3

Subsection 28(2B)

500 penalty units

4

Subsection 29(1)

500 penalty units

5

Subsection 29(2)

500 penalty units

6

Subsection 30(1)

200 penalty units

7

Subsection 32(2)

100 penalty units

8

Subsection 33(4)

100 penalty units

9

Subsection 34(3)

50 penalty units

10

Subsection 35(3)

50 penalty units

11

Subsection 41(1)

50 penalty units

12

Subsection 42(1)

50 penalty units

13

Subsection 43(4)

50 penalty units

14

Subsection 46(2)

100 penalty units

27  Application of amendments

General

(1) The amendments made by this Act (except for those mentioned in the following subitems) apply, in relation to a PDF, from the beginning of the PDF’s 1999‑2000 income year (the transition time).

(2) In subitem (1):

income year has the same meaning as in the Income Tax Assessment Act 1997.

Registration decisions

(3) The amendment made by item 5 applies to a decision about registration that the Board makes after the transition time, even if the application for registration was made before that time.

Notification of initial investments

(4) The amendments made by items 14 and 26 apply to investments made after this item commences.

Interposed entities

(5) The amendment made by item 15 applies to investments made after 4 August 1999.

(6) However, the Board may determine that that amendment does not apply to a particular investment if the Board is satisfied that the relevant PDF, or the interposed entity that is to make the investment, was already under a legal obligation to make the investment at the end of 4 August 1999.

Annual returns

(7) The amendments made by items 21 and 22 apply to annual returns for the 1999‑2000 financial year and all later financial years.

Revocation power

(8) The amendments made by items 23, 24 and 25 apply to contraventions of this Act, or of a condition of a PDF’s registration, that happen after this item commences.

 

 

[Minister’s second reading speech made in—

House of Representatives on 8 December 1999

Senate on 13 April 2000]

 

 

 

(226/99)


 

Overview

The Pooled Development Funds Amendment Act 2000 (C2004A00656) was enacted to amend the Pooled Development Funds Act 1992, addressing various gaps and updating certain provisions to better support the development of small and medium-sized Australian enterprises. This legislation was enacted by the Parliament of Australia and assented to on 22 June 2000. The primary policy objective of this Act is to refine and enhance the regulatory framework for Pooled Development Funds (PDFs), ensuring that these funds can more effectively provide patient equity capital, including venture capital, to eligible businesses. This is achieved through amendments that aim to improve the clarity and effectiveness of the existing legislative provisions, while maintaining the core objective of fostering investment in Australian enterprises. The enacting body, the Parliament of Australia, introduced these amendments to address specific issues and to better align the legislative provisions with the evolving needs of the market for equity capital in small and medium-sized enterprises. By updating definitions, clarifying investment conditions, and modifying the registration and reporting requirements, the Act seeks to streamline the operations of PDFs and ensure they can continue to play a vital role in supporting business growth and innovation within Australia.

Scope and Application

The Pooled Development Funds Amendment Act 2000 amends the Pooled Development Funds Act 1992, establishing a scheme for companies providing patient equity capital, including venture capital, to small or medium-sized Australian enterprises engaged in eligible businesses. This Act applies to companies that become pooled development funds (PDFs), which are entitled to more competitive tax treatment. The legislation defines a widely-held complying superannuation fund and specifies the types of investments a PDF can make, such as subscribing for or buying shares, acquiring non-transferable options, and lending money to companies. The amendments apply from the beginning of the PDF’s 1999-2000 income year, with specific transition provisions for different amendments. The Act also includes provisions for PDFs to notify the Board of initial investments, indirect investments, and the ability for PDFs to merge. Penalties are set for various contraventions of the Act. The amendments cater to the evolving needs of small and medium-sized enterprises seeking equity capital and provide clear guidelines on the types of investments PDFs can make. By allowing PDFs to merge and invest through interposed entities, the Act aims to enhance the flexibility and efficiency of the equity capital market in Australia. The specified penalties for non-compliance ensure adherence to the regulatory framework established by the Act.

Key Provisions

The Pooled Development Funds Amendment Act 2000 amends the Pooled Development Funds Act 1992, primarily to enhance the scheme for providing patient equity capital to eligible small or medium-sized Australian enterprises. The main sections of the amending Act introduce new definitions, alter eligibility criteria, and specify permissible investments for pooled development funds (PDFs). Section 3 of the amended Act redefines the object of the Act to more clearly state its purpose, which is to develop and demonstrate the potential of the market for providing patient equity capital to eligible businesses through a scheme that provides tax incentives for PDFs. The amending Act also introduces a new definition of a "widely-held complying superannuation fund" in section 4A, which must satisfy certain criteria to qualify as such. The obligations imposed by the amending Act on the entities it governs are significant. PDFs must adhere to specific investment criteria, which now include subscribing for or buying shares, acquiring non-transferable options to buy shares, and lending money to companies, as outlined in sections 20, 20A, and 20B respectively. These investments must be made in accordance with the provisions of Division 1 of Part 4, and certain thresholds and conditions must be met. For instance, a PDF must hold at least 10% of the paid-up share capital in an investee company before it can acquire non-transferable options or lend money to the company. Moreover, PDFs are required to notify the Board of initial investments within 30 days of making them, as stipulated in section 27A. Additionally, the amending Act introduces new reporting requirements, including details on the proportion of issued share capital held by the PDF, profits and losses from investments, and dividends paid to shareholders, as specified in sections 21 and 41. The amending Act also delineates the offences, penalties, and consequences for breaches of the legislation. Contraventions of the Act or conditions of a PDF’s registration can result in penalties. For example, investments not made in accordance with Division 1 of Part 4 other than section 27A can incur a penalty of 500 penalty units, while failure to notify the Board of initial investments can result in a penalty of 50 penalty units, as outlined in the penalties table. Other sections, such as those dealing with mergers of PDFs and indirect investments, also specify penalties for non-compliance. These penalties underscore the importance of adhering to the provisions set out in the amended Act. The application of the amendments varies depending on the specific provision. Most amendments apply from the beginning of a PDF’s 1999-2000 income year, with certain exceptions. For instance, the amendments related to the registration decisions apply to decisions made after the transition time, even if the application for registration was made before that time. Similarly, the amendments related to the notification of initial investments apply to investments made after the amending Act commences. The application of these amendments ensures a smooth transition for PDFs while introducing necessary changes to the regulatory framework governing their operations.

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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.