Comprehensive Risk Management For Australian Family Offices
Following the economic downturn in 2008 and now again during the Novel Coronavirus pandemic, many affluent families and their professional advisors have concentrated their focus on how their controlled processes and investments have been managed, the resiliency they have displayed during down markets and where returns are being generated, taking into account the degree of exposure to systematic risks and the uncertainties faced by all.
As well as maintaining a focus on risk management precautions, family governance requirements and balance sheet provisions, comprehensive risk management for Australian Family Offices has also come to mean remaining informed about doing business across borders, preparing for technological disruptions and forecasting the overall consequences of an increased frequency of financial repression by central banks around the world.
Uncovering such risks and determining what opportunities matter to all within a family group has led to more comprehensive decision making for the future. This ultimately requires anticipating change and preparing for rare events; an increasingly difficult task when attempting to anticipate future technological, economic, social and environmental developments.
The Australian Family Office Developments In Focus Series provides contemporary insights, hands-on methods, practical ideas and timely examples, shared by some of Australia’s preeminent leaders in this community.
Risk Management In The Era Of COVID-19
Australian Family Office: Downside Protection Methods – Methodology, Process and Strategy (2020 Edition)
Responsible Investing Optimisation (2020 Edition) Handbook
For Australian Family Offices & Private Investment Companies (PICs) – Positive Environmental, Social & Governance (ESG) Impact: Methodology, Implementation & Accountability
Eran Reinisch Interview, Founder of Israeli Multi-Family Office, Excaliber Capital
Australian Standfirst Investment Committee Member, Eran Reinisch (Founder of Israeli Multi-Family Office, Excaliber Capital) & Kwame Owusu (Australian Standfirst) discussing Global Family Office Investment Management in 2020 recorded at Australian Standfirst’s Infinity Black Digital Studio.
Australia:- Australian Discretionary Trusts Distributing Capital Gains To Non-Residents
https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/2020/2020fca0597
The recent Federal Court decision in Peter Greensill Family Co Pty Ltd (trustee) v Commissioner of Taxation [2020] FCA 559 creates significant issues for non-resident beneficiaries of Australian discretionary trusts, by imposing capital gains tax on trustees distributing capital gains to non-residents, even if the gains relate to assets which are not taxable Australian property. Going forward, the role of discretionary trusts as a holding vehicle for family groups with non-resident beneficiaries will need to be considered carefully. This will likely impact the use of discretionary trusts for asset protection, flexibility and succession planning, and raises the spectre of legislative change being tabled to address the discrepancy in treatment between fixed and discretionary trusts.
USA:- SEC Announces Roundtable On China
https://www.sec.gov/news/press-release/2020-116
On May 19, the US’s Securities Exchange Commission, or SEC, announced a roundtable will be held on 9 July 2020 to discuss investment relations with China and other Emerging Markets, or EMs. SEC Chairman, Jay Clayton, issued a statement announcing the roundtable this summer to gather the views of investors, other market participants, regulators and industry experts in an effort to continue raising investor awareness about the risks of investing in China. The SEC also established an Emerging Markets Roundtable Website with information regarding the roundtable, including links for submitting comments and accessing related documents and information. The SEC weblink highlights that in particular, as a result of the growth of the Chinese economy (a 128% increase in GDP from 2009 to 2019; rising from the 3rd largest economy to the 2nd largest economy) and related expansion in Chinese domestic and international capital markets activity, US investors are more exposed to companies with significant operations in China.
Please refer to ASIC’s 08-193 SEC, Australian authorities sign mutual recognition agreement.
Australia:- FIRB Changes May Effect Private Equity (PE) Funds
https://firb.gov.au/guidance-resources/guidance-notes/gn53
As part of Australia’s response to the COVID-19 pandemic, the Federal Government recently announced temporary changes to Australia’s foreign investment regime. The main change is reducing the monetary screening thresholds to nil for any transactions which are classified as ‘significant actions’ or ‘notifiable actions’ for the purposes of the Foreign Investments and Takeovers Act 1975 (Cth) (the Act) – the main pillar of Australia’s foreign investment regime. These temporary changes were announced and effective from 29 March 2020 and are explained in detail in a guidance note (Guidance Note No. 53) issued by the Foreign Investment Review Board (FIRB) on 24 April 2020. The Foreign Acquisitions and Takeovers Amendment (Threshold Test) Regulations 2020 introduced these temporary changes.
European Union:- Germany’s Foreign Direct Investments (FDI) Law
Seen as a move to ringfence Russian and Chinese foreign interference, the European and German Foreign Direct Investment (“FDI”) screening mechanisms have recently seen several legislative amendments which were followed by increased scrutiny by national administrations. Still, all EU Member States decide on their own whether they want to establish a proper system to screen FDI leading to a potential takeover of their national companies. To date, only fourteen of twenty-seven EU Member States have established FDI screening mechanisms, which vary broadly in terms of procedures, review and tools for national governments to interfere with, mitigate or even block a takeover.
Australia:- Regulator New Regulatory Framework For Foreign Financial Services Providers
https://www.legislation.gov.au/Details/F2020L00237
The Australian Securities and Investments Commission (ASIC) released the new regulatory framework for foreign financial services providers (FFSPs) supplying financial services to wholesale clients in Australia.
Australia:- Federal Government has announced amendments to the ministerial guidelines which will encourage ancillary funds to increase their granting in financial years 2019-20 and 2020-21.
Ministerial guidelines for public and private ancillary funds to provide a credit for funds that make total distributions in financial years 2019-20 and 2020-21 that are at least four percentage points above the minimum required distributions. The credit, equal to half the percentage points by which the distributions exceed the minimum, may be used to reduce the minimum distribution by up to one percentage point in 2021-22 and future financial years until the credit is exhausted.
Space:- Venture Capital (VC) Funds Legal Frameworks
https://www.nasa.gov/specials/artemis/#how
NASA announced a new set of principles to govern the civil exploration and use of outer space called the “Artemis Accords”, which are named after its “Artemis” programme to return astronauts to the moon. It is intended that space agencies that join NASA in the Artemis programme will execute bilateral agreements reflecting the principles of the Artemis Accords. The principles cover a wide range of issues relating to space exploration, such as interoperability, deconfliction and the extraction and utilisation of resources on the Moon, Mars, and asteroids.
According to US officials, the Accords set the way for the US to pursue a new international legal framework to allow companies to own resources that they extract in space. This in turn followed the earlier issue of Executive Order 13914 on 6 April 2020, which asserts the right of Americans to “engage in commercial exploration, recovery, and use of resources in outer space“.
Switzerland:- New Swiss Natioanlised Tax Regime Begins
https://www.efd.admin.ch/efd/en/home/dokumentation/legislation/abstimmungen/staf.html
Cantonal tax privileges for holding companies and other status companies will be abolished. Switzerland is thus responding to international pressure and at the same time, internationally accepted privileges have been introduced, including the Patent Box and the increased research deduction.
On 1 January 2020, the Federal Act of 28 September 2018 on Tax Reform and AHV Financing came into force. The previous tax law allowed various tax privileges in the cantons for what are referred to as status companies, i.e. companies whose business activity was the management of stocks (holding companies), which mainly carried out administrative activities, or whose business activities were mainly related to foreign countries. Following pressure from abroad, these tax privileges have now been abolished. In order to prevent the migration of status companies from Switzerland, the tax reforms create room for new tax privileges.
Infinity Black Guests Vedran Drakulic OAM & Paul Wheelton AM KSJ
Australian Standfirst Guests, Vedran Drakulic OAM (CEO, Gandel Philanthropy) & Paul Wheelton AM KSJ (Wheelton Social Impact), discussing Australian Family Office Wealth Management and Philanthropy at Australian Standfirst’s Infinity Black Digital Studio.
Infinity Black Guests Dr Jane Goodall & Tabitha Lovett
Australian Standfirst Guests, Dame Jane Goodall DBE (UN Messenger of Peace) & Tabitha Lovett (CEO, Besen Family Foundation) discussing conservation, education, the environment and primatology at Australian Standfirst’s Infinity Black Digital Studio.
Infinity Black Guests Natalie Elliott & Louise Walsh
Australian Standfirst Guests, Natalie Elliott (CEO, Cooper Family Office) & Louise Walsh (CEO, Future Generation), discussing Australian Family Office Wealth Management and Philanthropy at Australian Standfirst’s Infinity Black Digital Studio.
Infinity Black Guests Vedran Drakulic OAM & Geoff Harris
Australian Standfirst Guest, Vedran Drakulic OAM (CEO, Gandel Philanthropy) & Geoff Harris (Harris Capital) discussing Australian Philanthropy at Australian Standfirst’s Infinity Black Digital Studio.
Geoff’s social enterprises book, “Dollars and Sense” can be found at www.dollarsandsense.website
Infinity Black Guests Damon Kitney & Alec Margolin
Australian Standfirst Guests, Alec Margolin (Australian Standfirst) & Damon Kitney (Victorian Business Editor, The Australian) discussing UHNW wealth, mental health in 2018 and intergenerational wealth transfer challenges at Australian Standfirst’s Skunkworks Infinity Black Digital Studio.