Complex Case involving Commercial Transaction & Migration Law

Problem

Mr Lee and his family applied for permanent resident visas in Australia. To attain the grant, Mr Lee entered into an agreement with the State that he will, amongst other conditions:

  1. Invest at least $1,500,000 into an “Eligible Business” in the State; and
  2. That the “Eligible Business” must employ at least five (5) full time employees who are either citizens or permanent residents of Australia.

Mr Lee looked at many possible investments in the State but repeatedly encountered the following problems:

  1. Language barrier – Mr Lee does not speak or understand English. Communication was a huge barrier.
  2. Cultural difference – Mr Lee operates a large enterprise in Asia and has many personnel to help manage and run his businesses. He was surprised to learn that businesses in Australia are often very “centralized” in their dealings, where owners are often the key person in all manners of business. Due to other commitments, it was not viable for him to commit 100% of his work and time into the Australian business.  Mr Lee was also concerned about the safety of his investment.
  3. Uncertainty of Process – Me Lee faced ongoing uncertainty as to which Australian businesses in particular satisfied the requirements of an “Eligible Business” under Australian Law. His hopes to invest were therefore stalled in that he was unsure whether investment would ultimately help him satisfy the migration requirements.

Mr Lee made the decision to invest with a property developer.  Mr Lee engaged with Tang Legal to advise and represent him.

Solution

We advised Mr Lee that his proposed venture and transaction be structured to achieve the overarching purposes of:

  1. Complying with Commonwealth migration requirements and Mr Lee’s Agreement with the State; and
  2. Securing his commercial interests and capital.

In terms of Commercial Law, Tang Legal took the following steps on behalf of Mr Lee:

  1. Formed legal structures so that he was able to safely and legally undertake the investment

Amongst other issues, segregation of risk, protection of personal assets, complying with migration requirements, and tax implications are important considerations in undertaking this task.

  1. Negotiated and formulated the transaction structure with the property developer

Amongst other considerations, specific focus was given to ownership structure, investment vehicle, investment structure and key personnel.

  • Required, role and obligations of Mr Lee and the property developer is important for migration compliance
  • Prepared the formal agreements required in order to put together the transaction
  • Carried out due diligence with the proposed investment and the property developer
  • Completed and achieved settlement of the agreed transactions

In terms of Migration Law, Tang Legal took the following steps on behalf of Mr Lee:

  1. Conducted a full review of Mr Lee’s initial business plan and Agreement with the State, and advised that – given the changes to his agreement with the State – he was required to notify and obtain approval from the State for the variation. Note: The formal agreements between the parties were made subject to Mr Lee obtaining an approval to amend Agreement with the State.
  2. Advised on which business qualified under Australian Law as an “Eligible Business”. An important issue that we managed to overcome was centred around the fact that investment in property is very often seen as a passive investment and does NOT qualify as an “Eligible Business”. Special attention was therefore given to how the transaction was structured to avoid complications.
  3. Given Mr Lee intended to increase the amount of investment into the “Eligible Business” of choice, we advised that he negotiate with the State for a more lenient requirement on the number of full time employees.

Outcome

Mr Lee and the property developer were successful in reaching an agreement. Through strategically structuring a mechanism into the transaction, we managed to achieve the overarching purposes of satisfying the migration requirements and protecting Mr Lee’s commercial interests.

For our conduct of legal due diligence and comprehensive checks on the proposed investment and the property developer, Mr Lee was satisfied with the results. He was also, through our help, able to negotiate a more favourable agreement with the State to reduce the number of employees from five to two.

The property project has since commenced.