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Guides & Guidelines as made
These guidelines are to be complied with by the CEO of Austrade in making decisions for the purposes of determining who is an associate of a person and forming an opinion whether a person or any associate is a fit and proper person to receive a grant.
Administered by: Foreign Affairs and Trade
Registered 30 Jun 2015
Tabling HistoryDate
Tabled HR10-Aug-2015
Tabled Senate10-Aug-2015

Explanatory Statement

 

Issued by the authority of the Minister for Trade and Investment

 

Export Market Development Grants Act 1997

 

Export Market Development Grants (Associate and Fit and Proper Person) Guidelines 2015

 

Guidelines to be complied with by the CEO of Austrade in:

·         making decisions for the purposes of section 79A of the Export Market Development Grants Act 1997 (which deals with excluded consultants);

·         determining who is an associate of a person for the purposes of section 87AA of the Export Market Development Grants Act 1997; and

·         forming, for the purposes of section 87AA of the Export Market Development Grants Act 1997, an opinion whether a person or any associate is a fit and proper person to receive a grant.

 

The Export Market Development Grants Act 1997 (EMDG Act) provides for grants to specified Australian businesses which have incurred specified expenses promoting the export of their Australian goods, services, intellectual property rights and know-how.  The grant is a partial reimbursement of the expenses incurred.

 

The Export Market Development Grants (Associate and Fit and Proper Person) Guidelines 2015 (the guidelines) are made to replace the Export Market Development Grants (Associate and Fit and Proper Person) Guidelines 2004 (the 2004 guidelines) which are due to sunset under the Legislative Instruments Act 2003 on 1 April 2016.  The guidelines are the same in substance as the 2004 guidelines. 

 

The guidelines address two reasons why a grant to which an applicant would otherwise be entitled may not be payable.

 

The first reason is that, under section 79B of the EMDG Act, the CEO of Austrade must reject an application for a grant if the CEO becomes aware that a person who prepared or helped prepare the application was an 'excluded consultant' at the time the application was made, or has since become an 'excluded consultant'.  The applicant can re-apply (section 79D of the EMDG Act).

 

Subsection 79A(1) of the EMDG Act provides that the CEO of Austrade may determine that a person is an 'excluded consultant' if:

·         the person is or has been an Export Market Development Grants consultant or an associate of an Export Market Development Grants consultant; and

·         the CEO has formed the opinion, in accordance with the guidelines, that the person, or an associate of the person, is not a fit and proper person.

 

The guidelines are made for the purpose of paragraph 101(1)(bab) of the EMDG Act.  This paragraph provides that the Minister must determine, by legislative instrument, guidelines to be complied with by the CEO of Austrade in making a decision for the purposes of subsection 79A(1).

 

The second reason is that, under subsection 87AA(1) of the EMDG Act, a grant is not payable if the CEO of Austrade forms the opinion that the applicant or an associate of the applicant is not a fit and proper person to receive a grant.

 

The guidelines are made for the purpose of paragraph 101(1)(bb) of the EMDG Act.  This paragraph provides that the Minister must determine, by legislative instrument, guidelines to be complied with by the CEO of Austrade:

·         in determining who is an associate of a person for the purposes of subsection 87AA(1); and

·         in forming, for the purposes of subsection 87AA(1), an opinion whether a person or any such associate of the person is a fit and proper person to receive a grant.

 

Under section 79E of the EMDG Act, an excluded consultant can apply to the CEO of Austrade to revoke the determination in relation to the excluded consultant.  Decisions under sections 79A, 79E and 87AA are subject to reconsideration and Administrative Appeals Tribunal review under sections 97 to 99 of the EMDG Act.

 

The intention of the guidelines is to ensure that there is an appropriate test for determining who is an associate and that relevant matters are considered in determining whether persons are 'fit and proper' for the relevant provisions of the EMDG Act.

 

The guidelines repeal the 2004 guidelines.  Under subsection 33(3) of the Acts Interpretation Act 1901, where an Act confers a power to make, grant or issue any instrument of a legislative or administrative character (including rules, regulations or by-laws), the power shall be construed as including a power exercisable in the like manner and subject to the like conditions (if any) to repeal, rescind, revoke, amend, or vary any such instrument.

 

The guidelines are a legislative instrument for the purposes of the Legislative Instruments Act 2003.

 

The Office of Best Practice Regulation has advised that a Regulation Impact Statement is not required (OBPR reference ID: 19213).

 

No specific consultation was undertaken in relation to the guidelines. Consultation in relation to the guidelines was not necessary because, as the guidelines replace the 2004 guidelines and are the same in substance, the effect of this instrument is minor or machinery in nature and does not substantially alter existing arrangements.  Over the past 6 months, a significant round of general consultation has been undertaken as part of the review of the EMDG scheme required under section 106A of the EMDG Act.  This has included seeking submissions from the public, public meetings and undertaking a survey of grant recipients and businesses who have not used the EMDG scheme.  Interested parties had the opportunity to raise issues in relation the legislation for, and administration of, the EMDG scheme, including in relation to the 2004 guidelines.

 

 

 

 

Details of the guidelines

 

Part 1 – Preliminary

 

Section 1.1 – Name

 

This section provides that the name of the guidelines is Export Market Development Grants (Associate and Fit and Proper Person) Guidelines 2015.

 

Section 1.2 – Commencement

 

This section provides that the guidelines commence on 1 July 2015.

 

Section 1.3 – Definitions

 

This section defines the following terms used in the guidelines:

·                   Act;

·                   director;

·                   executive officer;

·                   relative;

·                   responsible officer; and

·                   voting share.

 

A number of terms are defined by reference to the Corporations Act 2001 (as in force from time to time) (available at www.comlaw.gov.au).  In the 2004 guidelines, 'executive officer' was defined by reference to the Corporations Act 2001.  However, as that defined term has been removed from the Corporations Act 2001, the same definition of 'executive officer' has been included in section 1.3.

 

Under section 13 of the Legislative Instruments Act 2003, other expressions used in the guidelines have the same meaning as in the EMDG Act.  For example, terms such as 'association', 'Australian law', 'CEO of Austrade', 'co-operative', 'Export Market Development Grants consultant', 'grant', 'grant year', 'partnership', 'person' and 'under insolvency administration' are defined in section 107 of the EMDG Act.

 

Part 2 – Guidelines about who is an associate

 

Section 2.1 – Guidelines about associates

 

Subsection (1) clarifies that Part 2 sets out guidelines for the purposes of paragraph 101(1)(bab) and subparagraph 101(1)(bb)(i) of the EMDG Act to be complied with by the CEO of Austrade in determining who is an associate of a person for subsections 79A(4) and 87AA(3) of the EMDG Act.

 

Subsections (2) and (3) provide that the CEO must determine that two persons are associates of each other if another provision of Part 2 applies.  The classes of persons who are 'associates' are different depending on whether the CEO is applying section 79A or section 87AA of the EMDG Act. Section 2.3 applies only for the purposes of the section 79A fit and proper test for Export Market Development Grants consultants (EMDG consultants), while section 2.4 applies only for the purposes of the section 87AA fit and proper test for applicants. Section 2.2 applies to both EMDG consultants and to applicants.

 

Section 2.2 – Associatesgeneral

 

This section applies to decisions regarding EMDG consultants and applicants.  It has the effect that the CEO of Austrade must determine that two persons are associates in the following situations:

·                   the second person is a relative of the first person;

·                   the first person is accustomed or under an obligation to act in accordance with the directions, instructions or wishes of the second person (being a body corporate) or its directors;

·                   the second person has a commercial relationship with the first person relating to the preparation of applications for grant;

·                   the first person is a body corporate and the second person is an executive officer or director of the body corporate, a relative of an executive officer or director of the body corporate or a person who holds a substantial interest in the body corporate (as defined in section 2.5); or

·                   the first person is an association, co-operative or partnership and the second person is a member (or a relative of a member) of first person, an executive officer or director of a body corporate that is a member of the first person, or a person or body (or member of a person or body) that participates in managing and conducting the affairs of the first person.

 

Section 2.3 – Associates fit and proper test for export market development consultants

 

This section applies to decisions regarding EMDG consultants.  It has the effect that the CEO of Austrade must determine that two persons are associates if:

·                   the second person manages or conducts activities that the first person engages in as an EMDG consultant;

·                   the second person is in a position to direct or influence the preparation or making of applications in relation to which the first person acts as an EMDG consultant; or

·                   the second person is an associate of another person who is an associate of the first person, provided that, for the purposes of this paragraph, whether persons are associates is based on determinations of the CEO of Austrade under subsection 2.1(2) other than determinations made because of this paragraph.

 

Section 2.4 – Associatesfit and proper test for grant recipients

 

This section applies to decisions regarding applicants.  It has the effect that the CEO of Austrade must determine that two persons are associates if:

·                   the second person participates in (or is a member of a person or body that participates in) managing or conducting the affairs of the first person's business to which a grant to the first person would relate;

·                   the second person is an associate of another person who is an associate of the first person, provided that, for the purposes of this paragraph, whether persons are associates is based on determinations of the CEO of Austrade under subsection 2.1(3) other than determinations made because of this paragraph;

·                   the first person is a joint venture and the second person is a member of the joint venture; or

·                   the first person is a joint venture and the second person is an associate of a member of the joint venture (because of a determination of the CEO of Austrade).

 

Section 2.5 – When a person holds a substantial interest in a body corporate

 

This section prescribes the circumstances in which a person will be considered to hold a substantial interest in a body corporate for the purposes of paragraph 2.2(2)(c).

 

A person will hold a substantial interest in a body corporate if that person, alone or together with any associates of that person (as determined by the CEO of Austrade) is in a position to control not less than 15% of the voting power, or potential voting power, of the body corporate.  Where this section uses the term 'voting power', this should be taken to mean effective control and decision making power.

 

A person will hold a substantial interest in a body corporate if that person, alone or together with any associates of that person (as determined by the CEO of Austrade) holds interests in not less than 15% of the issued shares in the body corporate, or would do so if shares were issued as a result of the exercise of all rights mentioned in subsection 11(2A) of the Foreign Acquisitions and Takeovers Act 1975 (which refers to rights under an instrument, agreement or arrangement, whether the right is exercisable presently or in the future and whether on the fulfilment of a condition or not, eg a convertible note).

 

For the purpose of determining the percentage of the interests in the issued shares that a person holds or would hold at a particular time, if the person has a right that if exercised might result in the person holding an interest in an issued share in the body corporate and it cannot be determined whether the exercise of the right would have that result, then assume that the right were exercised at that time.

 

Part 3—Guidelines about whether an applicant for a grant or an associate is a fit and proper person

 

Section 3.1 – Purpose of Part 3

 

This section clarifies that the purpose of Part 3 is to determine the guidelines, as required by subparagraph 101(1)(bb)(ii) of the EMDG Act, to be complied with by the CEO of Austrade when forming an opinion as to whether a person or any associate of the person is a fit and proper person to receive a grant for the purposes of subsection 87AA(1) of the EMDG Act.

 

Section 3.2 – Convictions

 

This section provides that the CEO of Austrade must have regard to whether the person or associate has been convicted of an offence under Australian law or a law of a foreign country.  The note to the section is a reminder that spent convictions are not to be considered.

 

Section 3.3 – Other proceedings

 

This section provides that the CEO of Austrade must have regard to proceedings in connection with the person or an associate under Australian law or the law of a foreign country. The CEO must have regard to whether:

·                   a civil penalty or administrative sanction has been imposed on the person or an associate, or the person or associate is involved in proceedings which may result in a civil penalty or administrative sanction;

·                   the person or associate has been the subject of a comment or assessment by a court, tribunal or an industry or professional regulatory body that the CEO is satisfied is critical of the person or associate; or

·                   the person or associate is the subject of other proceedings before a court, tribunal or an industry or professional regulatory body in which a comment or assessment critical of the person or associate may be made.

 

Section 3.4 – Insolvency administration

 

This section provides that the CEO of Austrade must have regard to whether the person or associate is, or has been, under insolvency administration (determined by reference to sections 87B and 87C of the EMDG Act).

 

Section 3.5 – Commercial performance

 

This section provides that the CEO of Austrade must have regard to whether the person or associate has been a responsible officer of, or otherwise in control of, a business that has failed and the circumstances in which the business failed, including the person or associate's conduct.

 

Section 3.6 – Other matters

 

This section provides that the CEO of Austrade must have regard to any matter not already mentioned that the CEO considers relevant to the personal, commercial, financial or professional character, status or reputation of the person or associate.

 

The reference to 'character' is intended to remove any doubt regarding whether the CEO can consider matters not in the public domain such as evidence of false or misleading information or statements by an applicant in the process of applying for a grant.

 

Part 4—Guidelines for determining that a person is an excluded consultant

 

4.1 – Determining that a person is an excluded consultant

 

Subsection (1) clarifies that the purpose of the section is to determine guidelines, as required by paragraph 101(1)(bab) of the EMDG Act, to be complied with by the CEO of Austrade when deciding whether a person is an excluded consultant and forming an opinion as to whether the person or any associate of the person is a fit and proper person for the purposes of subsection 79A(1) of the EMDG Act.

 

Subsection (2) provides that the CEO must have regard to the same matters as when determining whether an applicant for a grant or an associate is a fit and proper person set out in sections 3.2 to 3.6.

 

In addition, the CEO must have regard to:

·                   whether the person or associate is disqualified under section 78 of the EMDG Act from preparing applications for grant (which relates to conviction for specified offences);

·                   whether, in the opinion of the CEO, the person or associate:

·                    has been involved in activities for the purpose of an applicant obtaining an amount of grant to which the applicant is not entitled;

·                    has failed to take due care and diligence in relation to an application under the EMDG Act;

·                    has made a false or misleading statement, or provided false or misleading information or documents, in relation to an application under the EMDG Act; or

·                    is a party to a scheme or arrangement (or operates under a policy) with the purpose or effect of negating, avoiding or defeating particular provisions of the EMDG Act or the guidelines;  

·                   any failure or refusal by the person to comply with a request under subsection 79A(2) of the EMDG Act (which relates to the CEO asking for information, books, records, documents and consents for the purpose of determining whether the person is an excluded consultant); and

·                   if the person under consideration is an EMDG consultant, whether, in the opinion of the CEO, the person (or any associate who has particular involvement in relation to the person's EMDG consultant activities) has appropriate competence, skills, knowledge and experience.

 

Part 5—Repeal and saving

 

Section 5.1 - Repeal and saving

This section repeals the 2004 guidelines. 

However, for the purposes of section 87AA (and linked provisions such as subsection 72(2B)) the 2004 guidelines continue to apply when working out whether a grant is payable where the application for the grant was made before these new guidelines came into effect. 

For the purposes of section 87AA, these new guidelines apply to working out the amount of a grant where the application is made after 1 July 2015 (for example, the new guidelines will apply in relation to grants in respect of the 2014/15 grant year).

These new guidelines apply to decisions under section 79A made on or after 1 July 2015.

 

 

Statement of Compatibility with Human Rights

 

This Determination is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.