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No. 1 of 1999 Directions/Other as made
This Direction sets out policies and practices to be followed by the Board in developing and administering the REEF program.
Administered by: Industry
Exempt from sunsetting by the Legislative Instruments Act 2003 s 54(2) item 46
Registered 28 Oct 2008
Gazetted 07 Apr 1999
Date of repeal 19 Mar 2014
Repealed by Spent and Redundant Instruments Repeal Regulation 2014

 

 

Commonwealth of Australia

 

Industry Research and Development Act 1986

 

 

Policies and practices of the IR&D Board in relation to the Renewable Energy Equity Fund  (REEF) Program

Direction No. 1 of 1999

 

 

 

I, NICHOLAS HUGH MINCHIN, Minister for Industry, Science and Resources of the Commonwealth   of Australia, acting under subsection 20(1) of the Industry Research and Development Act 1986, give    the following direction to the Industry Research and Development Board.

 

 

Dated     31 March    1999.

 

Nick Minchin

 

                                                Minister for Industry, Science and Resources

 

 

PART 1—PRELIMINARY

 

Citation

 

1.            This direction may be cited as the REEF program, Policies and Practices Direction No. 1 of 1999.

 

Commencement

 

2.            This direction commences on the day on which particulars of the direction are  published in the Gazette.

 

[NOTE: For the publication of the particulars, see s. 20 (3) of the Act.]

 

Interpretation

 

3.            In this direction:

 

“Act” means the Industry Research and Development Act 1986.

 

AGO” means the Australian Greenhouse Office or its successors.

 

“associate” will have the meaning determined by the Board, but will at least include related entities.  Without limiting the Board’s discretion, examples of associates may include directors and employees and their relatives, and related companies and trusts.

 

“Board” means the Industry Research and Development Board.

 

“Board may” is permissive and not mandatory.

 

“Commonwealth program capital” means amounts invested in or provided to a licensed fund by the Commonwealth or its nominee under the REEF program.

 

“committed capital” means amounts the Commonwealth or another person   undertakes to invest in or provide to a licensed fund, conditionally or unconditionally.

 

 

“Department” means the Department of Industry, Science and Resources.

 

“drawndown capital” means committed capital that has been invested in or provided to a licensed fund.

 

“eligible investee company” and “investee company” mean an enterprise which is a company or other incorporated body and which satisfies the criteria developed under part 5 of this direction.

 

“enterprise” includes a trust or other structure.

 

“equity” includes any form of debt financing that is approved by the Board which does not compel the borrower or debtor to pay the interest, the coupon or other charge in the nature of interest prior to the end of the term of the debt, except in the event of default.

 

“fund” includes a firm, body corporate, trust or other structure.

 

“Government sourced capital” has the meaning given in clause 19.

 

“include” “includes” and “including” do not limit the generality of the words which precede them or to which they refer.

 

“key personnel”, in relation to a fund manager, means those individuals determined    to be key personnel by the Board.

 

“licensed fund” means a fund whose manager has been granted a licence in respect of the fund in accordance with this direction.

 

“non-profit enterprise” means an enterprise whose governing documents prohibit the distribution of profits to its members.

 

“passive business” means an enterprise:

 

(a)              which is not engaged in a regular and continuous business operation (the  mere receipt of payments such as dividends, rents, lease payments, or royalties is not considered a regular and continuous business operation);

 

(b)             whose employees are not carrying on the majority of day to day operations, and the enterprise does not provide effective control and supervision, on a day to day basis, over persons employed under contract; or

 

(c)              which the Board considers is likely to pass substantially all of the proceeds  of the financing to another entity.

 

“person” includes a firm, body corporate, trust or other structure.

 

“private capital” means amounts invested in or provided to a licensed fund that are not Commonwealth program capital.

 

“privately sourced capital” means amounts invested in or provided to a licensed fund that are not, in the opinion of the Board, Government sourced capital.

 

“qualifying enterprise” means an enterprise that:

 

(a)           was established in Australia; and

 

(b)           is either:

 

(i)            an institution of higher education specified in section 4(1) of the Higher Education Funding Act 1988; or

 

(ii)           a wholly-owned Commonwealth, State or Territory enterprise which the Board considers has objects that include:

 

(A)             carrying out research and development activities as defined in the Industry Research & Development Act 1986;

 

(B)              carrying out services, or making available facilities, in relation to science or technology;

 

(C)              training, or assisting in the training of, persons in the field of scientific or technological research; or

 

(D)             collecting, interpreting or publishing information relating to science or technology; or

 

(iii)          a non-profit enterprise which satisfies the objectives of the REEF program as outlined in clause 5, and which the Board considers has objects that include any of those set out in paragraph (ii) of this definition.

 

“R&D activities” means research and development activities as defined in   section 4(1) of the Act.

 

REEF guidelines” means the guidelines developed by the Board under part 2 of this direction.

 

REEF program” means the Department’s Renewable Energy Equity Fund Program.

 

“related entity” of an entity, means an entity which is related to the first within the meaning of section 9 of the Corporations Law.

 

renewable energy technology” means direct or enabling technologies developed for the purpose of sustainably deriving energy from the sun, wind, geothermal, biomass  (not derived from fossil fuels), mini or micro hydro systems, waves, tides, the ocean or any other renewable energy source approved by the Board on the advice of the AGO.

 

“result”, in relation to research and development activities, means a result that is capable of being exploited as contemplated by the Act.

 

A reference in this direction to an Act or other instrument is a reference to that Act or other instrument as amended or replaced from time to time.

 

A reference in this direction to “the REEF guidelines, licensing agreement or other contractual documents” or similar words is a reference to any one or more or all of them.

 

A reference in this direction to the singular includes the plural and vice versa.

 

Purpose

 

4.            The REEF program has been established in order to encourage R&D activities for the purpose of promoting the development, and improving the efficiency and international competitiveness of Australian industry.  The purpose of this direction is to set out policies and practices to be followed by the Board in developing and administering the REEF program.

 

These policies and practices are designed to provide a basis for awarding licences and the ongoing oversight of licensed funds under the REEF program.

 

 

 

For the purposes of this direction and in implementing the REEF program, the Board may enter into such deeds, agreements and other documents as it thinks fit.

 

Board to have regard to certain policy objectives

 

5.            The Board must have regard to the following policy objectives in developing and administering the REEF program:

 

                (a)           to encourage the development of companies and other incorporated enterprises which are commercialising research and development in renewable energy technologies, by addressing capital and management constraints; and

                (b)           to develop fund managers with experience in the renewable energy industry.

 

 

PART 2—REEF GUIDELINES

 

6.            The Board must develop guidelines for the operation of the REEF program (including the requirements to be imposed on licensed funds, their managers or, if applicable, trustees) containing:

 

(a)           the matters contemplated by this direction; and

 

(b)           any other matters the Board thinks fit.

 

7.            Where this direction refers to matters to be included in the REEF guidelines or any  other document, those references are to be interpreted as a statement of general intent. The REEF guidelines or other documents may elaborate on, expand, define, constrain  or omit terms or concepts referred to in this direction, and may contain such other provisions as the Board considers appropriate having regard to the policy objectives.

 

8.            The Board may amend the guidelines from time to time, as it thinks fit, including   during the currency of any licensing round and after the applications have been  received.  The amended REEF guidelines apply in respect of that licensing round and   to those applicants notwithstanding the date on which the applications were made.

 

9.            The Board may:

 

(a)           include such of the REEF guidelines within the licence agreement or other contractual documents relating to a licensed fund as it thinks fit; and

 

(b)           where it considers it to be consistent with the policy objectives of the REEF program to do so, agree to provisions in the licence agreement or other contractual documents relating to a licensed fund as it thinks fit.

 

 

PART 3—AWARD OF LICENCES FOR FUND MANAGERS

 

Number of licensing rounds

 

10.          The number of licensing rounds will be determined by the Board.  The Board must publicise the closing dates for applications for each licensing round.

 

Application fees

 

11.          The Board must levy a fee to recover part or all of the costs incurred by the Board and the Department in assessing a licence application.  The Board may refuse to consider a licence application until such fee is paid.

 

 

Consideration of applications

 

12.          Applications invited by the Board must be considered by the Board as soon as practicable.

 

Award of Licences

 

13.          Without limiting clauses 7 and 9(b), the Board must consider applications by reference to the REEF guidelines.  The number of licences to be awarded by the Board, if any, will depend on:

 

(a)           the total amount of available Commonwealth program capital allocated by the Board in each licensing round;

 

(b)           the suitability of applicants in terms of the REEF guidelines;

 

(c)           the level of Commonwealth program capital requested within individual applications; and

 

(d)           any other matters which the Board thinks fit.

 

14.          The Board is not obliged to award a licence because an applicant satisfies the REEF guidelines or for any other reason.

 

 

Requirements concerning applicants

 

15.          Without limiting clauses 7 and 9(b), the REEF guidelines are to include criteria by reference to which the Board will consider applications.  Without limiting clause 16, those criteria must include:

 

(a)           a demonstrated ability to access the level of privately sourced capital required  according to the application for a licence;

               

(b)           an understanding of and experience in dealing with issues related to Australian and international renewable energy technology investments, products, services and    markets;

 

(c)           expertise and experience in actively seeking and investigating potential equity investments in small early stage renewable energy technology enterprises;

 

(d)           expertise and experience in developing and implementing equity investment strategies  to achieve returns by investing in small early stage renewable energy technology enterprises;

 

(e)           expertise and experience in the development and implementation of successful growth and recovery strategies for small early stage renewable energy technology enterprises;

 

(f)            expertise and experience in the successful management of investment portfolios;

 

(g)           experience in providing financial management advice to small early stage renewable energy technology enterprises;

 

(h)           expertise and experience in realising returns from investments through third party transactions such as later round financing, trade sales and initial public offerings;

 

(i)            experience in generating and maintaining a variety of financial data and reports on investment funds;

 

(j)            demonstrated good character and high ethical standards;

 

 

 

(k)           commitment to training and developing the skills of Australian based staff in all    aspects of making venture capital investments in small, early stage renewable energy technology enterprises;

 

(l)                  demonstrated willingness to operate within the intent of the REEF program;

(m)               expertise in renewable energy technology.

 

16.          The Board may, if it thinks fit, in respect of any one or more or all applications from time to time:

 

(a)           take into account experience, expertise, abilities and, without limitation, other matters the Board considers relevant when assessing an applicant; and

 

(b)           attribute to particular categories of experience, expertise, abilities or other matters set out in the criteria or taken into account under clause 16(a), a higher level of relative importance than other such categories or matters in considering an application for a licence.

 

17.          The Board must include in the REEF guidelines details of the information to be provided by applicants for a licence.  That information must include:

 

(a)           the key personnel of the proposed fund manager including their roles, terms of employment and responsibilities;

 

(b)           the amount of Commonwealth program capital required;

 

(c)           the amount and sources of the private capital raised or proposed to be raised; and

 

(d)           a business plan that includes details of:

 

(i)            the timing of investments;

 

(ii)           the level of annual fund management fees; and

 

(iii)          the scope of the management services to be provided to the fund for the fund management fee.

 

18.          Without limiting clause 8, the Board may, if it thinks fit from time to time, include   other requirements relating to applicants and applications in the REEF guidelines.

 

Government sourced capital

 

19.          The Board must regard as Government sourced capital amounts invested in or provided to a licensed fund by:

 

(a)           an entity or entities which is or are, in the opinion of the Board, funded directly or indirectly by the Commonwealth, a State or Territory; or

 

(b)           any person whom the Board considers is directly or indirectly in receipt of funding   from a source or combination of sources which are funded directly or indirectly by the Commonwealth, a State or Territory to such an extent that it is, in the opinion of the Board, appropriate to treat any amount invested in or provided to the fund by that  person as Government sourced capital,

 

but excluding any amount of that funding (whether under paragraph (a) or (b)) that, in the opinion of the Board, should not be treated as Government sourced capital.

 

 

PART 4—BASIS FOR THE LICENCE AGREEMENTS

 

Basis for agreements

 

20.          The Board must not enter into licence agreements with applicants under the REEF program except in accordance with this part 4.

 

Licences

 

21.          The Board may, within the limits under clause 13, offer licences to applicants whom   the Board considers have the highest relative merit.

 

22.          The Board must make an offer in writing and include words to the effect that an applicant may accept the offer by:

 

(a)           notifying the Board in writing;

 

(b)           demonstrating to the satisfaction of the Board that the privately sourced capital has   been committed;

 

(c)           executing a licence agreement in a form and containing terms acceptable to the Board and in accordance with this direction; and

 

(d)           complying with any other requirements of the Board as notified in the offer of a licence (including entering into documents).

 

23.          The Board must provide for the offer to lapse if acceptance does not occur within 6 months of the making of the offer, although the Board may grant an extension to a particular applicant if it considers appropriate.

 

24.          If in any particular licensing round an offer of a licence is not accepted or lapses  without being extended or renewed, the Board may offer a licence to the next applicant in that licensing round that the Board considers would best achieve the objectives of   the REEF program.

 

25.          The Board may vary the procedure set out in clauses 21 to 24 if it considers it appropriate to do so having regard to the policy objectives of the REEF program.

 

Pre-licence Investments

 

26.          The Board may make provision in the REEF guidelines for the conditions to apply for investments in or the provision of finance to eligible investee companies made or  agreed to be made following the lodgement of an application, but prior to the execution of the licence agreement.

 

 

PART 5—THE OPERATION OF LICENSED FUNDS

 

Eligible investee company

 

27.          The Board must make provision in the REEF guidelines, licensing agreement or other contractual documents relating to a licensed fund requiring the fund to invest in or otherwise provide finance only to eligible investee companies.  For an enterprise to be an eligible investee company, it must satisfy all of the following:

 

(a)           it is commercialising renewable energy technology or will, under the investment arrangement with the fund, be required to commercialise renewable energy technology;

 

(b)           at the time the fund first invests in or provides finance to the enterprise it is

at the seed, start-up or early expansion stage of its development;

 

 

(c)           it operates in the traded goods and services sector;

 

(d)           the product or service to which the commercialisation of the renewable energy technology relates is produced with the primary purpose of multiple sale to a variety of unrelated entities;

 

(e)           it has a majority of its employees (by number) and assets (by value) inside Australia at the time when the fund first invests in or provides finance to it;

 

(f)            at the time when the fund first invests in or provides finance to it, its average annual revenue over the previous 2 years of income does not exceed $4 million and the  revenue in either year is not in excess of $5 million unless the Board grants an exemption from this requirement.  The calculation of revenue for a year of income   must exclude abnormal items; and

 

(g)           at the time when the fund first invests in or provides finance to the enterprise, it is not, without the consent of the Board, related (within the meaning of section 50 of the Corporations Law) to an enterprise (other than a qualifying enterprise) which has an average annual revenue, over the previous 2 years of income, in excess of $4 million  per year.

 

28.          Factors indicating that an enterprise is in the seed stage of development include:

 

(a)           that the initial concept of its business is being formed;

 

(b)           prototypes or concepts of the enterprise’s products or services are being developed;

 

(c)           its management team is beginning to form; and

 

(d)           any other matters the Board thinks fit.

 

29.          Factors indicating that an enterprise is in the start-up stage of development include:

 

(a)           that the funds are necessary for product development, staffing, initial marketing and other start-up costs;

 

(b)           its management team is substantially in place;

 

(c)           the enterprise is setting itself up to sell its product or service commercially; and

 

(d)           any other matters the Board thinks fit.

 

30.          Factors indicating that an enterprise is in the early expansion stage of development include:

 

(a)           that the funding is necessary for working capital to help launch the manufacture and  sale of the enterprise’s products or services.  Typically, the enterprise is not profitable and frequently will be cash-flow negative; and

 

(b)           any other matters the Board thinks fit.

 

Excluded companies

 

31.          The Board must make provision in the REEF guidelines, licensing agreement or other contractual documents relating to a licensed fund to exclude enterprises that conduct  any of the following businesses from being eligible investee companies:

 

(a)           re-lending or re-investing;

 

(b)           passive businesses;

 

(c)           real estate businesses; or

 

 (d)          mining operations.

 

32.          The Board must make provision in the REEF guidelines, licence agreement or other contractual document relating to a licensed fund to require that the fund not, without   the prior approval of the Board, invest in or provide finance to enterprises who:

 

(a)           are associates of the fund manager;

 

(b)           are associates of any entity which provides over 10 percent of the privately sourced capital to the fund;

 

(c)           are controlled by an entity providing privately sourced capital to the fund;

 

(d)           have a director who is or has been an associate of the fund manager; or

 

(e)           have any other relationship with the fund that the Board considers inappropriate.

 

33.          The Board may make provision in the REEF guidelines, licensing agreement or other contractual documents relating to a licensed fund to exclude other persons from being eligible investee companies.  The Board may make those exclusions on the basis of activities, corporate structure, industry category, sources of revenue or any other generally applicable basis.

 

Determination of an eligible investment company

 

34.          Investment decisions will be made by fund managers, but fund managers may in any particular case request that the Board determine whether an enterprise is an eligible investee company and, subject to clause 36, the Board must make that determination.

 

35.          The Board is not limited in placing conditions, qualifications or disclaimers on a determination of whether or not an enterprise is an eligible investee company.

 

36.          The Board may levy fees that do not exceed the costs incurred by it and the Department in making a determination under clause 34.  The Board may refuse to consider a   request or to make or notify a determination under clause 34 until those fees are paid.

 

Control of an eligible investee company by a licensed fund

 

37.          The Board may make provision in the REEF guidelines, licensing agreement or other contractual documents relating to a licensed fund to limit the level of control exerted   by the fund or its manager on an eligible investee company.  In doing so the Board   must consider:

 

(a)           the objectives of the REEF program;

 

(b)           the capital generally required at the early stage of development and the cost of capital   at each stage of investment;

 

(c)           the ability of the fund to realise a return from an investment in small, early stage renewable energy technology enterprises;

 

(d)           the ability of the fund to protect its investment in small early stage renewable energy technology enterprises;

 

(e)           the role of the fund manager in providing advice, guidance and influence to small early stage renewable energy technology enterprises; and

 

(f)            any other matter the Board thinks fit.

 

 

Operation of licensed funds

 

38.          The Board must include requirements to the following effect in the REEF guidelines, licensing agreement or other contractual documents relating to a licensed fund:

 

(a)           the ratio of Government sourced capital to privately sourced capital contributed to a licensed fund will not exceed 2:1;

 

(b)           a licensed fund may be a unit trust, company or other structure approved by the Board.  A Pooled Development Fund cannot invest in or provide money to a licensed fund;

 

(c)           a licensed fund must not raise monies in the form of debt, or equity with features materially consistent with debt, with the exception of leasing equipment or short term debt for the purpose of maintaining the short term liquidity of the licensed fund,   without the consent of the Board;

 

(d)           a licensed fund must source at least 30% of its private capital from entities not associated with the fund manager.  The Board may place additional requirements in    the REEF guidelines which require a licensed fund to have a diversity of entities providing the private capital;

 

(e)           a licensed fund must provide funding to eligible investee companies only by means of equity purchase, with the exception of short term loans provided for temporary  purposes to an eligible investee company in which the fund has previously invested or  to which it has previously provided finance.  Unless otherwise approved by the Board,    the equity purchased must be a new issue;

 

(f)            at least 60% of a licensed fund’s committed capital must be invested within 5 years of the granting of the licence, unless the Board agrees otherwise;

 

(g)           a licensed fund must not invest in or provide to an eligible investee company more than $4,000,000 or 10% of the fund’s committed capital, whichever is the lesser, unless the Board agrees otherwise.  In addition to considering whether or not to agree to a greater level of investment in an investee company in a particular case, the Board may from time to time issue determinations increasing the permitted level of investment in   eligible investee companies generally or in particular classes of eligible invitee companies;

 

(h)           transactions carried out by a licensed fund in relation to eligible investee companies must be carried out at arm’s length;

 

(i)            a licensed fund and investee company, investor, trustee, director or manager of such a fund must avoid transactions where a conflict of interest exists.  Where such  transactions are unavoidable, the parties to the transaction must be able to demonstrate that the transaction was carried out on an arm’s length basis in a manner consistent   with Part 3.2 of the Corporations Law.  The fund or the investor must notify the Board of any such conflict of interest, the nature of the conflict, the nature of the transaction and the terms and conditions of the transaction within thirty days of entering into such   a transaction;

 

(j)            a person who has invested in or provided amounts to a licensed fund must not    influence or attempt to influence, the individual investment or financing decisions of   the fund manager;

 

(k)           a licensed fund must have an appropriate number of suitably qualified and experienced investment managers having regard to the size and type of the fund;

 

(l)            monies provided to an investee company must be applied to advance the company in  the commercialisation of renewable energy technologies via marketing, sales, distribution, administration, production, product development or development of a prototype; and

 

(m)          any other requirements the Board thinks fit.

 

 

PART 6—TIMING OF PROVISION OF CAPITAL TO LICENSED FUNDS

 

Drawdown of capital

 

39.          The Board must determine in the REEF guidelines, the licensing agreement or other contractual documents relating to a licensed fund, the process by which   Commonwealth program capital will be invested in or provided to the fund.  In determining that process, the Board must consider the following:

 

(a)           that Commonwealth program capital will be invested or expended within a reasonable period by the fund;

 

(b)           where it considers appropriate, the Board may withhold Commonwealth program  capital from being drawndown; and

 

(c)           any other matters the Board thinks fit.

 

 

PART 7—INFORMATION TO BE PROVIDED BY LICENSED FUNDS

 

Reporting

 

40.          The Board must make provision in the REEF guidelines, licensing agreement or other contractual documents relating to a licensed fund to require the fund to provide audited reports, as specified by the Board, within three months of the end of the fund’s year of income unless otherwise specified by the Board.

 

41.          The Board must make provision in the REEF guidelines, licensing agreement or other contractual documents relating to a licensed fund to allow the Board from time to time to request information from the fund for the purpose of:

 

(a)           monitoring the performance of the fund, its manager and (if applicable) trustee;

 

(b)           assessing the financial viability of the fund, its manager and (if applicable) trustee;

 

(c)           auditing the activities of the fund, its manager and (if applicable) trustee;

 

(d)           evaluating the performance of the fund, its manager and (if applicable) trustee and the REEF program;

 

(e)           investigating the activities of the fund, its manager and (if applicable) trustee in terms   of compliance with the licensing agreement and other contractual documents relating    to the fund; and

 

(f)            any other purpose the Board thinks fit.

 

Valuation

 

42.          The Board must make provision in the REEF guidelines for policies and methodologies to ensure a consistent, transparent and realistic valuation of licensed fund assets.    Where practicable these methodologies and policies are to reflect what is, in the   opinion of the Board, generally accepted practice in Australia.

 

Other Requirements

 

43.          Nothing in this part 7 limits the requirements that may be imposed under clause 22.

 

 

PART 8—INCOME DISTRIBUTION AND TERM

 

Distribution

 

44.          In determining the terms on which Commonwealth program capital is invested in a licensed fund, the Board must require the fund to distribute monies upon the receipt of earnings or the realisation of investments or other financings in the following manner:

 

(a)           first, an amount equal to the licensed fund’s total committed capital is to be divided amongst the Commonwealth and private investors pro rata according  to the amount subscribed by them, whether or not drawn down;

 

(b)           secondly, each investor (including the Commonwealth) is to be paid an   amount equal to the interest on the outstanding daily balance of the amount from time to time invested in or provided to the fund by that investor.  Interest ceases to be calculated in this way once the committed capital is “repaid”  under clause 44(a).  The interest rate is to be the 10 year Commonwealth bond rate prevailing on the date the offer of a licence is made by the Board and stipulated in the offer document;

 

(c)           thirdly, each investor (including the Commonwealth) is to be paid an estimate of a notional amount of interest that investors might otherwise have received  on amounts invested in or provided to the fund after the committed capital is “repaid” under clause 44(a).  The manner of calculation of the estimate is to   be determined by the Board; and

 

(d)           fourthly, any surplus is to be divided between the Commonwealth (as to 10%) and the other investors and the fund manager (as to 90%).

 

The Commonwealth has no priority as to distributions.

 

45.          The Board must make provision in the REEF guidelines, or in the licensing agreement or other contractual document relating to the operation of a licensed fund to allow the Board to determine the distribution of fund monies as between the other investors and the fund manager as contemplated by clause 44(d).  In making such a determination,   the Board will take into consideration any distribution mechanism agreed between the fund manager and the other investors.

 

 

Ten Year Term

 

46.          The Board must make provision for a licensed fund to be wound up no later than 10 years after the date Commonwealth program capital is first contributed, with all monies distributed in accordance with clauses 44 and 45, subject to an extended period to allow for the orderly and prudent disposal of the fund assets or for other reasons the Board thinks fit.

 

PART 9—FEES

 

Fund management fees

 

47.          The Board must determine and make provision in the REEF guidelines, licensing agreement or other contractual documents in relation to a licensed fund for an appropriate maximum level of fund management fees based on the amount of the   fund’s committed capital.  In determining this and any other fees, the Board must have regard to:

 

(a)           the level of resources for fund managers that the Board considers appropriate;

 

(b)           the scope of the management services to be provided by the fund manager to the fund and included in the fund management fee;

 

(c)           the interests of the investors in the fund, including the Commonwealth;

 

(d)           the objectives of the REEF program; and

 

(e)           any other matters the Board thinks fit.

 

Management Services

 

48.          The Board must include in the REEF guidelines, licensing agreement or other contractual document in relation to a licensed fund a requirement that any     management services provided to an investee company by the fund manager or an associate of the fund manager which are paid for by the investee company are charged  at no more than market rates, are optional, and are open to provision by a third party.

 

PART 10—REMOVAL OF FUND MANAGERS

 

49.          The Board must make provision in the REEF guidelines, licence agreement or other contractual document relating to the operation of a licensed fund, for the removal of   the fund manager in circumstances where the fund or its manager:

 

(a)           is or may become insolvent or suffers what the Board considers to be a substantial loss of capital;

 

(b)           is in breach of the licence agreement or other contractual document relating to the   fund;

 

(c)           has failed to achieve activity milestones contained within the licence agreement or   other contractual document relating to the fund;

 

(d)           a member of the key personnel ceases to be employed or otherwise retained by the fund in the manner stated in the application to be awarded a licence;

 

(e)           is in breach of any provision of the Act or any other law; or

 

(f)            in any other circumstances the Board thinks fit.

 

 

PART 11—LIQUIDATION

 

50.          The Board must make provision in the REEF guidelines, licence agreement or other contractual document relating to the operation of a licensed fund for the liquidation of the assets of the fund prior to the 10 year term referred to in clause 46 in circumstances where:

 

(a)           the Board is required to do so in compliance with a court order;

 

(b)           the Board considers that the fund is or may become insolvent or suffer what the Board considers to be a substantial loss of capital;

 

(c)           the Board agrees with a request from the investors in the fund to liquidate the assets of the fund; or

 

(d)           in other circumstances the Board thinks fit.

 

PART 12—TRANSFER OR WITHDRAWAL OF INVESTORS

 

51.          The Board must make provision in the REEF guidelines, licence agreement or other contractual document relating to the operation of a licensed fund for the conditions to apply upon any of the following circumstances occurring:

 

(a)           the withdrawal of a person who has invested in or provided amounts to the fund or the transfer of ownership of any part of that person’s interest in the fund;

 

(b)           where a person (other than the Commonwealth in respect of Commonwealth program capital) does not deliver committed capital in accordance with their obligations to do  so; and

 

(c)           the transfer of all or part of the Commonwealth program capital.

 

 

PART 13—EVALUATION

 

52.          The Board must make provision in the REEF guidelines, licence agreement or other contractual document relating to the operation of a licensed fund for the fund to co-operate in the evaluation of the REEF program.