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CATCHWORDS: Review of business sponsorship rejection - temporary business entry scheme - improved technology - ability to comply with undertakings. . This is an application for review of a decision made by a delegate of the Minister for Immigration and Multicultural and Indigenous Affairs (the delegate). Einstein Solutions Pty Limited (ABN 12 066 366 381) (the review applicant), applied for approval as a business sponsor on 9 October 2001. The delegate's decision to reject the application for approval was made on 2 January 2002.

EINSTEIN SOLUTIONS PTY LTD [2003] MRTA 7006 (15 October 2003)

EINSTEIN SOLUTIONS PTY LTD [2003] MRTA 7006 (15 October 2003)
Last Updated: 8 December 2003

[2003] MRTA 7006

CATCHWORDS: Review of business sponsorship rejection - temporary business entry scheme - improved technology - ability to comply with undertakings.

REVIEW APPLICANT: Einstein Solutions Pty Limited

TRIBUNAL: Migration Review Tribunal

PRESIDING MEMBER: Lucinda Wright

MRT FILE NUMBER: N02/00776

DEPT FILE NUMBER: OPF2002/000015

DATE OF DECISION: 15 October 2003

AT: Sydney

DECISION: The Tribunal sets aside the decision under review and substitutes a decision that the review applicant be approved as a standard business sponsor. The instrument of approval is attached to this statement.

STATEMENT OF DECISION AND REASONS.

APPLICATION FOR REVIEW

1. This is an application for review of a decision made by a delegate of the Minister for Immigration and Multicultural and Indigenous Affairs (the delegate). Einstein Solutions Pty Limited (ABN 12 066 366 381) (the review applicant), applied for approval as a business sponsor on 9 October 2001. The delegate's decision to reject the application for approval was made on 2 January 2002.

JURISDICTION AND STANDING

2. The review applicant lodged a valid application for review with the Tribunal on 4 February 2002. This was one working day after the prescribed date of 1 February 2002. However the Tribunal is satisfied that the decision is reviewable by the Tribunal and the application for review has been validly made by a person with standing to apply for review. The Tribunal accepts that the wording of the notification of the Department's decision was ambiguous as it stated that the application `within [21] plus [7] working days of the date of this letter. The letter was dated 2 January 2002.

LEGISLATION AND POLICY

3. The Migration Regulations 1994 (the Regulations), provide for approval of persons as business sponsors. This is part of a scheme called temporary business entry. The scheme involves three stages:

A person (the employer) seeking approval as a business sponsor.

An approved business sponsor seeking approval of a nomination of an activity in which an individual is proposed to be employed in Australia.

A person applying for a temporary visa (subclass 457) on the grounds that the visa applicant proposes to be employed by an approved business sponsor in an activity that is the subject of an approved business nomination.

4. In conducting a review, the Tribunal is bound by the Migration Act 1958 (the Act), the various Regulations made under the Act, and written directions issued by the Minister under section 499 of the Act. Some matters may be the subject of policy, as found in publications such as the Procedures Advice Manual 3 (PAM3) and the Migration Series Instructions (MSIs), produced by the Department of Immigration and Multicultural and Indigenous Affairs (the Department). The Tribunal is required to have regard to policy and apply it unless there are cogent reasons for departing from policy.

5. The Tribunal has the power to affirm a decision to refuse to approve a business sponsorship, or to set the decision aside and substitute another decision.

6. Regulation 1.20D contains the criteria for approving a person as a business sponsor, and there are guidelines set out in PAM3. The Tribunal generally has regard to the Regulations as they stood at the time of lodgement of an application for approval. However, subsequent amendments may apply in some circumstances.

7. The relevant parts of regulation 1.20 are as follows

Regulation 1.20D. Approval as business sponsors

1.20D. (1)...

(2) The Minister must approve an application for approval as a pre-qualified business sponsor, or as a standard business sponsor, made in accordance with regulation 1.20C if:

(a) the Minister is satisfied that the applicant for approval is lawfully operating in Australia a business in which the employment of the holder of a Subclass 457 (Business (Long Stay)) visa would contribute to:

(i) the creation or maintenance of employment for Australian citizens or Australian permanent residents; or

(ii) expansion of Australian trade in goods or services; or

(iii) the improvement of Australian business links with international markets; or

(iv) competitiveness within sectors of the Australian economy; and

(b) in respect of each visa applicant who seeks to satisfy the primary criteria for a Subclass 457 visa to be granted on the basis that:

(i) the applicant for approval is the employer referred to in subclause 457.223 (4) of Schedule 2 in relation to the visa application; and

(ii) the visa applicant satisfies the requirements of that subclause;

the Minister is satisfied that:

(iii) the applicant for approval proposes to be the direct employer in Australia of the visa applicant as the holder of the visa (in this subregulation called the visa holder); or

(iv) if the applicant for approval is a body corporate - the applicant for approval is, under section 50 of the Corporations Law, related to the body corporate that proposes to be the direct employer in Australia of the visa holder; and

(c) the Minister is satisfied that the applicant for approval:

(i) will introduce to, or utilise or create in, Australia new or improved technology or business skills; or

(ii) has a satisfactory record of, or a demonstrated commitment towards, training Australian citizens and Australian permanent residents in the business operations of the applicant in Australia; and

(d) the Minister is satisfied that nothing adverse is known to Immigration about the business background of the applicant for approval; and

(e) the Minister is satisfied that where relevant, the applicant for approval has a satisfactory record of compliance with the immigration laws of Australia; and

(f) the Minister is satisfied that while there is in effect a Subclass 457 visa granted on the basis that:

(i) the applicant for approval is the employer referred to in subclause 457.223 (4) of Schedule 2 in relation to a visa application; and

(ii) the visa holder satisfies the requirements of that subclause;

the applicant for approval is able, in relation to each visa holder, to comply with the undertakings given by the applicant in accordance with form 1067.

EVIDENCE

8. The Tribunal had before it the MRT and DIMIA case files and conducted a hearing on 13 May 2003. The review applicant was not represented but Mr David Masters, the Managing Director gave evidence.

9. The review applicant claims to be a business that provides business services to small and medium enterprises. Its core business is providing assistance to these enterprises to produce a business plan and information memorandum to prepare for and seek venture and investment capital.

10. The review applicant has applied for approval as a standard business sponsor (seeking entitlement to make one nomination of business activities within a 12 month period). A separate application for review has been lodged with the Tribunal in relation to a related visa refusal (MRT case number N02/00774).

11. In processing the application the delegate requested that the review applicant provide information on how the employment of temporary business applicants would be of benefit to Australia within the meaning of paragraph 1.20D(2)(a), details of staff, evidence that the review applicant would be the direct employer of the proposed visa holder and a statement addressing the criteria in paragraph 1.20(2)(c). The review applicant provided this information on 20 November 2001.

12. The delegate decided not to approve the review applicant as a business sponsor on the basis that the review applicant did not satisfy the requirements of paragraph 1.20(2)(c). The delegate was not satisfied that the review applicant's claims it would introduce new and improved business technologies and skills had been substantiated. The delegate also found that the review applicant had not made any claims that it had a satisfactory training record or a demonstrated commitment to training Australian citizens and Australian permanent residents.

13. The review applicant submitted evidence of recent business activities when submitting the application for review as well as details of subsidiary companies and related business enterprises. That material is on the Tribunal file. Information was also submitted disclosing that Mr Masters and the visa applicant, Ms Beverly Bowman, held 75% and 25% respectively of the shares of the review applicant.

14. A hearing was held on 13 May 2003 and the review applicant was invited to bring additional information to the hearing. In particular the review applicant was asked to bring up to date financial statements for the review applicant and details of staff.

15. In his evidence Mr Masters stated that financial reports for the review applicant for the year ending 30 May 2002 were still being finalised. He submitted a Profit and Loss Statement which showed that the business had a net loss of $245.53. Income from consulting fees was $17,000 and Directors' fees of $8,500 were paid. Total equity was $3,003. Its reports for 2001 showed that the total income was $33,219 with an operating loss of $694.

16. The only full time employee of the review applicant is Mr Masters. He is also a director. Ms Bowman now held 50% of the shares.

17. Mr Master said that of the various business enterprises that were described in earlier submissions the review applicant had been most occupied with the start up of the Australian Private Companies Exchange Pty Limited which had recently been launched. This was a business that had been formed to create an organisation for small to medium business to provide them with resources and assistance when they sought venture or other capital or other means of expanding their business. The review applicant had used its intellectual property in its solutions developed for small businesses and incorporated that into technical solutions. Some $300,000 and more had been invested in the Exchange and it was envisaged that the review applicant would become a 55% shareholder in the Exchange in June 2003. It was envisaged that the review applicant would provide consulting services to the Exchange and receive royalties from the Exchange.

18. An article from the Australia Venture Capital Journal was submitted by Mr Masters. The article reviews technology that the Exchange developed to enable companies seeking capital, business introductory services and other investment firms to access each other's data bases without a breach of confidentiality. The Exchange would notify the clients of any potential matches to their enquiry.

19. The review applicant had also been developing a program in conjunction with the NSW State Department of State and Regional Development designed to improve business performance for regional companies and businesses. The review applicant and the State Department had joint ownership and copyright of the program. The review applicant hoped to register the program as the review applicant's copyright and eventually intellectual property.

20. Mr Masters said that under the joint enterprise with the State Department he had participated in some 300 seminars in New South Wales to explain the program to small and medium enterprises, lawyers and accountants so that they could assist their clients in raising private equity and investment.

21. Mr Masters gave a brief outline of his own assets and those of his mother who is also expected to become a share holder in Einstein Solutions and to contribute to the capital of the company.

22. Mr Masters was asked to provide additional documents confirming the enterprise with the NSW Department of State and Regional Development, financial statements for 2002 when they were available, as well as a further statement on the progress of the development of the Australian Private Companies Exchange Pty Ltd and its projected revenue.

23. Additional documentation as requested by the Tribunal was provided to the Tribunal on 18 July 2003. The review applicant's tax return for 2002 showed an income of $17,000 and an operating loss of $141. A letter from Pam Lawrence, Mr Masters' mother, gives details of the amounts she has invested in the review applicant and the Exchange and states that she does not intend to call in the loans. She reserved the right to become a shareholder at a later date.

FINDINGS AND REASONS

24. To be approved as a business sponsor, the review applicant must meet the criteria set out in regulation 1.20D. These are addressed under the following headings.

Is the applicant for approval actively and lawfully operating in Australia?

25. The Tribunal is satisfied that the review applicant is lawfully and operating in Australia. It is registered with ASIC. It is carrying on business activities in the financial sector through related enterprises. It is also engaged in a training programme with NSW Department of State and Regional Development.

Would the proposed employment contribute to employment for Australian citizens and permanent residents, or contribute to expansion of Australian trade, or contribute to improvement of Australian business links, or contribute to competitiveness within sectors of the Australian economy?

26. The review applicant currently employs one person and proposes to employ the visa applicant. It has a number of affiliated enterprises whose activities, together with those of the review applicant, contribute to the competitiveness of the Australian economy. The review applicant is involved in various enterprises that are raising venture capital for small and medium enterprises. It also conducts training seminars in a joint program with the NSW State and Regional Development Department.

Who will be the direct employer?

27. The question of whether the review applicant would be the direct employer was raised by the delegate. The review applicant submitted a letter of offer to the visa applicant offering her employment of `Director of Creative" at a base salary of $37,5000. The visa applicant is also a shareholder of the review applicant.

Will the applicant for approval introduce, utilise or create new or improved technology or business skills, or, alternatively, has the applicant for approval a satisfactory record or demonstrated commitment towards training Australian citizens and permanent residents?

28. The review applicant has made no claims to meet the training requirements although part of its core business is a training program it conducts with the NSW State and Regional Development Department as part of a regional development forum to support emerging business in regional New South Wales.

29. It claims instead that it is introducing and utilising new or improved business skills and technology by its establishment of enterprises such as the Australian Private Companies Exchange. At the time of the application the Exchange was still in the development stage but has now been launched. Its IT infrastructure is being further developed and built. An article published in the Australian Venture Capital Journal in March 2003 quotes Mr Masters and describes the Exchange as having developed technology that permitts users access to a much larger network of investors and companies that had been possible previously. The software developed permits the identification of investors and companies registered by number and for searches of the network to be made without breaching the confidentiality of the databases. The technology had potential to create regional or State wide network for business matching.

30. The Tribunal is satisfied that the technology described above, if not new, is being utilised in an innovative and creative way to launch a new service to foster the development of small and medium enterprises and enable them to match their business with suitable business advisory and development partners. The Exchange currently employs five people although it is not expected to become profitable until 2004.

31. The Tribunal finds therefore that the review applicant meets the criterion in subparagraph 1.20D(2)(c)(i) and that it will introduce to or utilise improved technology in Australia.

Is there any adverse information known about the business background of the applicant for approval or related persons?

32. There is no adverse information before the Tribunal about the business background of the review applicant or persons related to it.

Does the applicant for approval have a satisfactory record of compliance with immigration laws?

33. There is no information before the Tribunal to suggest that the review applicant does not have a satisfactory record of compliance with immigration laws. The review applicant has not previously applied for approval as a business sponsor.

Is the applicant for approval able to comply with undertakings in respect to visa holders?

34. The financial reports submitted by the review applicant show that it has not operated profitably for several years. To some extent it seems to have relied on the many other financial and business enterprises that it has established on its own or with business partners. On its own the review applicant would appear to have difficulty in meeting its financial undertakings with regard to the visa applicant. However the Tribunal has also taken into account the number of new enterprises that the review applicant is associated with particularly the Exchange which was launched this year. These have involved capital investment and are likely not to show a profit within the first year of business operations.

35. The review applicant is a relatively small family business and in that context is relying on the capital provided by family members. The Tribunal is satisfied that the loans to the business will be maintained by members of the family and that there is financial backing available to the review applicant should it require more. The visa applicant is also a shareholder and as such has a stake in maintaining the business activities of the review applicant.

36. On the basis of this material the Tribunal is satisfied that the review applicant has the ability to comply with its undertakings set out in form 1067.

37. The Tribunal finds therefore that the review applicant does meet the criteria to be approved as a business sponsor as they are set out in regulation 1.20D.

CONCLUSION

38. The review applicant meets the requirements to be approved as a business sponsor. The necessary next step is for the review applicant to lodge a nomination with the Department in respect of the activity in which the review applicant proposes to employ the visa applicant.

39. In finding that the review applicant meets these criteria the Tribunal has taken into account that the review applicant is a relatively new company that has innovative business proposals in the financial and business world. Its training and development initiatives have been recognised by the NSW State and Regional Development Department as a useful support program for fostering regional businesses and development. Although the successful outcome of some the enterprises that it has launched or is associated with, will not be known for some time the Tribunal has also taken into account the financial backing given by family members to the company.

DECISION

40. The Tribunal sets aside the decision under review and substitutes a decision that the review applicant is a standard business sponsor. The instrument of approval is attached to this statement.


INSTRUMENT UNDER MIGRATION REGULATION 1.20D


APPROVAL AS A BUSINESS SPONSOR

On 15 October 2003 the Migration Review Tribunal approved the application of Einstein Solutions Pty Ltd for approval as a standard business sponsor.

The sponsorship number for this approval is to be provided by the Department of Immigration and Multicultural and Indigenous Affairs.

The maximum number of nominations of business activities that may be approved under this sponsorship, while it is in effect, is one.

This approval has effect:

* until the number of subclass 457 visas granted to primary applicants under this sponsorship equates to the maximum number of business nominations specified above; or

* for 12 months from the date of this instrument; or

* until revoked under regulation 1.20F;

Whichever happens first.

Lucinda Wright 15 October 2003

Presiding Member Date
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