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Clean Energy Finance Corporation Bill 2012

Part 6 Investment function

Division 1 Investment function

58   Investment function

             (1)  The Corporation’s investment function is to invest, directly and indirectly, in clean energy technologies.

Note:          For clean energy technologies , see section 60.

             (2)  Without limiting subsection (1), the Corporation may perform its investment function by doing any or all of the following:

                     (a)  investing in businesses or projects for the development or commercialisation of, or in relation to the use of, clean energy technologies;

                     (b)  investing in businesses that supply goods or services needed to develop or commercialise, or needed for use in, clean energy technologies;

                     (c)  giving guarantees in accordance with section 69.

             (3)  In performing its investment function, the Corporation must ensure that, at any time on or after 1 July 2018, at least half of the funds invested at that time for the purposes of its investment function are invested in renewable energy technologies.

             (4)  The Corporation may perform its investment function by making investments itself (including as a participant in partnerships, trusts, joint ventures or similar arrangements), through subsidiaries or other investment vehicles or by any combination of these means.

             (5)  An investment may be an investment for the purposes of the Corporation’s investment function, regardless of the means by which it is made.

59   Complying investments

             (1)  The Board must take all reasonable steps to ensure that investments for the purposes (or purportedly for the purposes) of the Corporation’s investment function are at all times complying investments.

             (2)  Complying investments are investments that are:

                     (a)  in clean energy technologies (see section 60); and

                     (b)  solely or mainly Australian-based (see section 61); and

                     (c)  not in a prohibited technology (see section 62).

             (3)  As soon as practicable after the Board becomes aware that an investment for the purposes (or purportedly for the purposes) of the Corporation’s investment function has ceased to be, or never was, a complying investment, the Board must give the responsible Ministers a written statement:

                     (a)  informing the responsible Ministers; and

                     (b)  setting out the action that the Board proposes to take in order to ensure that all investments made for the purposes of the Corporation’s investment function are complying investments.

             (4)  If the responsible Ministers are satisfied that an investment has ceased to be, or was never, a complying investment, the responsible Ministers may (whether or not the Board has given the Ministers a statement under subsection (3)), by written notice given to the Board, direct the Board:

                     (a)  to give the responsible Ministers, within a period specified in the notice, a written explanation; and

                     (b)  to take action specified in the notice, within a period specified in the notice, in order to ensure that all investments for the purposes of the Corporation’s investment function are complying investments.

             (5)  The Board must comply with a direction under subsection (4).

             (6)  The fact that an investment has ceased to be, or never was, a complying investment, does not affect the validity of any transaction.

             (7)  For the purposes of paragraph (1)(a), an investment does not cease to be an investment in clean energy technology only because the technology to which the investment relates has, since the investment was made, ceased to qualify as a clean energy technology because:

                     (a)  its performance has not met reasonable expectations that existed at the time the investment was made; or

                     (b)  different standards for measuring clean energy technologies are being applied than were being applied at the time the investment was made.

             (8)  A direction under subsection (4) is not a legislative instrument.

60   Clean energy technologies

             (1)  Technologies that are any one or more of the following are clean energy technologies :

                     (a)  energy efficiency technologies;

                     (b)  low-emission technologies;

                     (c)  renewable energy technologies.

             (2)  Energy efficiency technologies includes technologies (including enabling technologies) that are related to energy conservation technologies or demand management technologies.

             (3)  Renewable energy technologies includes:

                     (a)  hybrid technologies that integrate renewable energy technologies; and

                     (b)  technologies (including enabling technologies) that are related to renewable energy technologies.

             (4)  A technology is a low-emission technology if the Board is satisfied, in accordance with guidelines made under subsection (5), that the technology is a low-emission technology.

             (5)  The Board must, by writing, make guidelines setting out the matters to which the Board will have regard in satisfying itself that a technology is a low-emission technology.

             (6)  The guidelines must not be inconsistent with the Investment Mandate.

             (7)  The Board must publish guidelines made under subsection (5) on the Corporation’s website.

             (8)  Guidelines made under subsection (5) are not a legislative instrument.

61   Australian-based investments

             (1)  An investment for the purposes of the Corporation’s investment function is solely or mainly Australian-based if the Board is satisfied, in accordance with guidelines made under subsection (2), that the investment is solely or mainly Australian-based.

             (2)  The Board must, by writing, make guidelines setting out circumstances, conditions or other matters to which the Board will have regard in satisfying itself that an investment is solely or mainly Australian-based.

             (3)  The guidelines must not be inconsistent with the Investment Mandate.

             (4)  The Board must publish guidelines made under subsection (2) on the Corporation’s website.

             (5)  Guidelines made under subsection (2) are not a legislative instrument.

62   Prohibited technology

                   An investment for the purposes of the Corporation’s investment function is an investment in a prohibited technology if it is an investment in:

                     (a)  technology for carbon capture and storage (within the meaning of the National Greenhouse and Energy Reporting Act 2007 ); or

                     (b)  nuclear technology; or

                     (c)  nuclear power.



 

Division 2 Performance of investment function

63   Financial assets

             (1)  Investments for the purposes of the Corporation’s investment function, made directly by the Corporation or directly by a subsidiary of the Corporation ( section 63 investments ), must only be made by way of acquisition of financial assets.

             (2)  A reference in this Act to a financial asset is a reference to:

                     (a)  an asset that, in accordance with GFS Australia, is treated as a financial asset for the purposes of the GFS system in Australia; or

                     (b)  an asset specified in regulations made for the purposes of this paragraph;

but does not include a reference to an asset that, under the regulations, is taken to be a non-financial asset for the purposes of this Act.

Note:          For specification by class, see subsection 13(3) of the Legislative Instruments Act 2003 .

             (3)  If an asset held by the Corporation for the purposes of the Corporation’s investment function ceases to be, or never was, a financial asset:

                     (a)  the Corporation must realise the asset as soon as practicable after the Corporation becomes aware that the asset has ceased to be, or never was, a financial asset; and

                     (b)  this Act (other than this subsection) applies in relation to the asset (including in relation to the realisation of the asset) as if the asset had been, or had remained, a financial asset, and an investment for the purposes of the Corporation’s investment function, at all times until the realisation.

             (4)  Subsection (3) applies to a subsidiary of the Corporation in the same way as it applies to the Corporation.

             (5)  Subsection (1) does not apply in relation to the giving of guarantees.

Note:          For guarantees, see section 69.

64   Investment Mandate

             (1)  The responsible Ministers may, by legislative instrument, give the Board directions about the performance of the Corporation’s investment function, and must give at least one such direction. The directions together constitute the Investment Mandate .

Note:          For variation and revocation, see subsection 33(3) of the Acts Interpretation Act 1901 .

             (2)  In giving a direction, the responsible Ministers must have regard to the object of this Act and any other matters the responsible Ministers consider relevant.

             (3)  Without limiting subsection (1), a direction may set out the policies to be pursued by the Corporation in relation to any or all of the following:

                     (a)  matters of risk and return;

                     (b)  technologies, projects and businesses that are eligible for investment;

                     (c)  the allocation of investments between the various classes of clean energy technologies;

                     (d)  making investments on concessional terms;

                     (e)  the types of financial instruments in which the Corporation may invest;

                      (f)  the types of derivatives which the Corporation may acquire;

                     (g)  the nature of the guarantees the Corporation may give and the circumstances in which they may be given;

                     (h)  broad operational matters;

                      (i)  other matters the responsible Ministers consider appropriate to deal with in a direction under subsection (1).

65   Limits on Investment Mandate

                   The responsible Ministers must not give a direction under subsection 64(1):

                     (a)  that has the purpose, or has or is likely to have the effect, of directly or indirectly requiring the Board to, or not to, make a particular investment; or

                     (b)  that is inconsistent with this Act (including the object of this Act).

66   Board to be consulted on Investment Mandate

             (1)  Before giving the Board a direction under subsection 64(1), the responsible Ministers must:

                     (a)  send a draft of the direction to the Board; and

                     (b)  invite the Board to make a submission to the responsible Ministers on the draft direction within a reasonable time limit specified by the responsible Ministers; and

                     (c)  consider any submission that is received from the Board within that time limit.

             (2)  If:

                     (a)  the responsible Ministers give the Board a direction under subsection 64(1); and

                     (b)  the Board made a submission to the responsible Ministers on a draft of the direction within the time limit specified by the responsible Ministers;

the submission is to be tabled in each House of the Parliament with the direction.

Note:          For tabling of the direction, see section 38 of the Legislative Instruments Act 2003 .

67   Compliance with Investment Mandate

             (1)  The Board must take all reasonable steps to ensure that the Corporation and its subsidiaries comply with the Investment Mandate.

             (2)  As soon as practicable after the Board becomes aware that the Corporation or one of its subsidiaries has failed to comply with the Investment Mandate, the Board must give the responsible Ministers a written statement:

                     (a)  informing the responsible Ministers; and

                     (b)  setting out the action that the Board proposes to take in order to ensure that the Corporation or subsidiary complies with the Investment Mandate.

             (3)  If the responsible Ministers are satisfied that the Corporation or one of its subsidiaries has failed to comply with the Investment Mandate, the responsible Ministers may (whether or not the Board has given the Ministers a statement under subsection (2)), by written notice given to the Board, direct the Board:

                     (a)  to give the responsible Ministers, within a period specified in the notice, a written explanation; and

                     (b)  to take action specified in the notice, within a period specified in the notice, in order to ensure that the Corporation or subsidiary complies with the Investment Mandate.

             (4)  The Board must comply with a direction under subsection (3).

             (5)  A failure to comply with:

                     (a)  the Investment Mandate; or

                     (b)  a direction under subsection (3);

does not affect the validity of any transaction.

             (6)  A direction under subsection (3) is not a legislative instrument.

68   Investment policies

             (1)  The Board must formulate written policies to be complied with by the Corporation in relation to the following matters:

                     (a)  the investment strategy of the Corporation;

                     (b)  benchmarks and standards for assessing the performance of the Corporation’s investments and of the Corporation itself;

                     (c)  risk management for the Corporation’s investments and for the Corporation itself;

                     (d)  a matter specified in the regulations.

Note:          For variation and revocation, see subsection 33(3) of the Acts Interpretation Act 1901 .

             (2)  The Board must ensure that the policies are consistent with the Investment Mandate.

             (3)  The Board must cause copies of the policies to be published on the Corporation’s website.

             (4)  The Board must ensure that the first policies are published as soon as practicable and in any event no later than 1 July 2013.

             (5)  The Board must conduct periodic reviews of the policies.

             (6)  If there is a change in the Investment Mandate, the Board must review any affected policies.

             (7)  The Corporation must comply with the policies.

             (8)  A failure to comply with a policy does not affect the validity of any transaction.

             (9)  A policy formulated under subsection (1) is not a legislative instrument.

69   Guarantees

             (1)  The Corporation may only guarantee repayment of a loan (including interest on the loan) made to a person if the loan is one that could have been made by the Corporation in performing its investment function.

             (2)  The giving of a guarantee under subsection (1) must be consistent with the investment strategy embodied in a policy formulated by the Board under subsection 68(1).

             (3)  A guarantee is void if, at the time the Corporation purports to give the guarantee, it would secure an amount that is more than the uncommitted balance of the Account at that time, less any liabilities of the Corporation at that time not already covered by paragraph (b) of the definition of uncommitted balance . To avoid doubt, the guarantee is wholly void regardless of whether a part of the amount it would secure could be covered by the uncommitted balance of the Account.

             (4)  A subsidiary of the Corporation must not give a guarantee.

70   Derivatives

             (1)  The Corporation may only acquire a derivative for the purpose of:

                     (a)  protecting the value of an investment of the Corporation (other than a derivative); or

                     (b)  protecting the return on an investment of the Corporation (other than a derivative); or

                     (c)  achieving indirect exposure to financial assets (other than derivatives) for a purpose in connection with the Corporation’s investment function; or

                     (d)  achieving transactional efficiency for a purpose in connection with the Corporation’s investment function;

but must not acquire a derivative for the purpose of:

                     (e)  speculation; or

                      (f)  leverage.

             (2)  The acquisition of a derivative under subsection (1) must be consistent with the investment strategy embodied in a policy formulated by the Board under subsection 68(1).