Lindsay Tanner (Melbourne, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

I move:

That this bill be now read a second time.

This bill will provide the Australian Business Investment Partnership Ltd with an exemption from a requirement for it to hold an Australian financial services licence (AFSL).

Under the Corporations Act 2001, an AFSL authorises a company or its representatives to provide financial services to clients.

Without an AFSL, a company generally cannot carry on a financial services business.

A company will provide financial services if it: provides financial product advice; deals in a financial product; makes a market for a financial product; operates a registered scheme; or provides a custodial or depository service.

The Australian Business Investment Partnership (ABIP) will be providing refinancing for loans relating to commercial property assets in Australia where finance relating to those assets is not available from commercial providers (other than ABIP), and the asset is financially viable.

ABIP will also provide financing arrange-ments in other areas of commercial lending if circumstances necessitate and those arrangements are unanimously agreed to by the members of ABIP.

Whilst the statutory concept of providing a financial service in section 766A of the Corporations Act would not extend to the provision of credit per se, it is arguable that activities of the Australian Business Investment Partnership that may be incidental to its provision of credit would constitute providing a financial service within the meaning of section 766A of the Corporations Act.

Requiring ABIP to obtain an AFSL for its borrowing and lending activities would be disproportionate given the sophisticated nature of its possible client base and the limited scope and duration of its activities, noting that:

• ABIP will only have five shareholders;
• ABIP is only intended to lend for two years; and
• its functions are limited by the proposed legislation providing for its incorporation.

In that context, it is appropriate for there to be an exemption from the AFSL requirements in relation to any activity of Australian Business Investment Partnership Ltd which constitutes the carrying on of a financial services business in this jurisdiction under subsection 911A(2) of the Corporations Act 2001.

I commend the bill to the House.

Debate (on motion by Mr Hartsuyker) adjourned.