National Science and Innovation Agenda Released

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The National Science and Innovation Agenda (NISA) “will help to create a modern, dynamic, 21st century economy for Australia” Prime Minister Malcolm Turnbull has said.bulb

The $1.1 billion reform package, which was unveiled on 7 December, includes a number of measures to help businesses embrace risk and incentivise early stage investments in start-ups, the most noteworthy of which are detailed below.

Tax Reform and Entrepreneur Visas

The government will outlay $106 million in tax concessions for early stage investors in start-ups over a four year period (commencing in 2016). Under the new measures, investors will receive a 20% tax offset based on the amount of their investment, which will be capped at $200,000 per year. Further, investors who hold a stake in start-ups for more than 3 years can realise a capital gains tax exemption.

The scheme is based on the Seed Enterprise Investment Scheme in the United Kingdom, which has resulted in over $500 million of early stage investment to almost 2,900 companies in its first two years.

An Entrepreneur Visa will also be introduced to attract innovative talent from overseas.

The Minister for Immigration and Border Protection Peter Dutton stated that ideas, skills and talent were essential to a high performing economy.

“The visa system is a key enabler of Australia’s ability to attract and capitalise on the expertise and ideas of foreign innovators within a global marketplace” Mr Dutton said.

Reforms to Employee Share Schemes

There will be limits placed on the requirement for disclosure documents given to employees under an employee share scheme (ESS) to be made available to the public.

Currently, a company that is not eligible for existing disclosure relief must lodge the documents with ASIC, with the information then being made available through ASIC’s registers. Compliance with this requirement can be particularly burdensome for small companies, as it can result in the release of commercially sensitive information. The documents are also costly to produce.

The purpose of the amendment is to make ESS more attractive and user-friendly for innovative start-ups, giving these companies the chance to compete with established organisations and attract the best talent from overseas.

Insolvency Safe Harbour for Directors

The proposed changes also include a safe harbour for Directors of struggling companies.

In Australia, Directors have a positive duty to prevent a company trading while insolvent, and breach of this duty can result in civil penalties, compensation proceedings and even criminal charges.

The threat of personal liability can discourage sensible risk taking in times of financial difficulty, and thus the development of business and enterprise. Directors are encouraged to err on the side of caution by appointing administrators and liquidators, as opposed to implementing internal strategies in an effort to improve the organisation’s performance.

The “safe harbour” defence is intended to provide protection from liability where a restructuring adviser has been appointed to develop a turnaround plan for the company. Directors must be able to demonstrate that they took all reasonable steps to pursue the plan and the company must still be solvent at the time of the appointment.

The particulars of the defence are yet to be determined, however there are several elements which will be key to its design, states Australian Institute of Company Directors (AICD) Managing Director John Brogden:

  • It must apply to all companies and not be restricted only to those which fall into the category of “entrepreneurial ventures”, as innovation and the economic benefits it generates are not limited to start-ups;
  • It must be an uncomplicated mechanism that is not wrapped up in technicalities which restrict its practical application ; and
  • It should also extend to any advisers consulted by Directors.

You can read about the above initiatives and others here.

 

 

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