Agribusiness collapses drive call for change

THE government's corporate advisory body has called for sweeping changes to the laws on agribusiness investment schemes, after a string of collapses in the sector left tens of thousands of investors out of pocket.

THE government's corporate advisory body has called for sweeping changes to the laws on agribusiness investment schemes, after a string of collapses in the sector left tens of thousands of investors out of pocket.

Under the plan, operators would be banned from using the legal structure employed by failed timber plantation groups Great Southern and Timbercorp.

Some $8 billion is held in managed investment schemes, which are commonly used in passive investments such as managed share funds.

However, there have been calls for changes after the collapses of forestry groups Great Southern and Timbercorp in 2009, which affected thousands of investors.

In a report out today, the Corporations and Markets Advisory Committee calls for a ban on new "common enterprise" schemes, where members play an "entrepreneurial" role for tax reasons.

With forestry schemes, for instance, investors could receive hefty tax deductions if they were able to show they were closely involved with the plantations.

But the committee, made up of independent corporate law experts, said this created a minefield of complexity when the schemes ultimately collapsed.

There was an "intermingling of the affairs and property of the scheme with that of its members", the report said, and this sparked confusion after the schemes had imploded.

"CAMAC considers that this intermingling problem could be avoided if only pooled investment schemes were permitted, where members act in a matter similar to shareholders in a company," it said.

The Australian Securities and Investments Commission has also said it will target managed investment schemes in agribusiness.

Earlier this year, ASIC said 138 agribusiness schemes worth more than $4 billion had collapsed since 2009, affecting 93,000 investors.

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