The Australian Private Equity and Venture Capital Association (AVCAL) supports the federal government’s decision to extend the consultation period for proposed changes to rules for superannuation funds, rules that if implemented, could have a negative impact on startups.
AVCAL chief executive Yasser El-Ansary says the proposed changes, which require commercially sensitive information to be published by super funds, have the potential to stifle potential investment in startups by super funds.
The new rules were due to start this year but are now set to go into effect in a little over a year’s time, on July 1, 2015.
The proposal requires superannuation funds to disclose every investment held, along with the relative market valuation of that investment every six months.
“We want to ensure the policy and regulatory frameworks support and facilitate as much investment into the startup and venture capital sector as possible,’’ El-Ansary says.
He says the proposed changes are an attempt to improve the level of access, transparency and disclosure of information to super fund members.
“The policy objectives are pretty clear, and not really objectives that many would debate or argue.”
He says a balance needs to be struck in how much and what type of information is provided.
“What we’re concerned about especially is that the circumstances that an asset is held by a private equity or venture capital fund that is about to be sold, either through market or trade sale; requiring the disclosure of that asset could have the effect of jeopardising the capacity of the venture capital or private equity fund to realise the best price of the asset.
“For private equity and venture capital funds, these rules are the equivalent of asking the vendor of a property to tell everyone what their reserve price is before the auction.”
In a statement yesterday, the Finance Minister Mathias Cormann said the government remains “fully committed to these reforms as part of our efforts to improve the efficiency, transparency and competitiveness of our superannuation system”.
According to El-Ansary, the proposed rules are at odds with those in the US, which recently examined the issue and concluded it is in the interests of fund members to keep some information confidential.
“The US may well provide a good yardstick that we can measure our own framework against,’’ he says.
El-Ansary says it’s difficult to know whether the government will be convinced by AVCAL’s arguments before implementing any of the proposed changes.
“What I can say is the arguments we’ve put forward to the government over the past few months have been well received. The context of what we’re trying to do here is to design the framework that strikes the right balance, meets objectives and boosts engagement with super fund levels,’’ he says.