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Southern Cross Institute (SCI) Pty Ltd: Registration and Accreditation 1 June 2022

Registration

Report on registration of Southern Cross Institute (SCI) Pty Ltd

On 1 June 2022, TEQSA:

  • granted, under section 21 of the Tertiary Education Quality and Standards Agency Act 2011 (TEQSA Act), the application by Southern Cross Institute (SCI) Pty Ltd for registration in the category of Institute of Higher Education, for a period of 5 years until 1 June 2027.
  • accredited, under section 49 of the TEQSA Act, the following course offered by Southern Cross Institute (SCI) Pty Ltd, for a period of 5 years until 1 June 2027:
    • Bachelor of Business.
  • imposed, under section 32 of the TEQSA Act, the following conditions on the registration of Southern Cross Institute (SCI) Pty Ltd as an Institute of Higher Education:

Condition 1: Evidence of additional share capital

Within 35 calendar days of being registered and prior to enrolling any students, SCI must provide TEQSA with documented evidence that SCI has purchased the additional share capital and made the resultant equivalent funds available to SCI in the SCI ANZ Bank account. For the purposes of this condition:

  1. The additional share capital is the amount stated in the execution page of the Shareholder Agreement signed by the shareholders on 26 April 2022 and provided to TEQSA on 27 April 2022.
  2. The evidence should be in the form of an ASIC Extract (Current and Historical) report, supported by a bank balance showing the equivalent funds made available to SCI in the SCI bank account as a result of the purchase of the share capital.
  3. The bank account should be that specified by SCI in its Clarification of Financial Evidence REQ06178 document, provided to TEQSA on 27 April 2022.

Condition 2: Corporate Monitoring and Accountability

For the first 4 years after registration, SCI must report to TEQSA if any of the following events occur, based on board accepted management accounts as of 30 June and 31 December:

  1. The Current Ratio, defined as Current Assets divided by Current Liabilities (excluding related party transactions), is less than 1.0.
  2. The Net Operating Cash Flow is less than it was projected to be in the sensitised forecast of SCI's finances by a margin of 10 per cent or greater.
  3. EBITDA, defined as Earnings Before Interest Tax Depreciation and Amortisation, are less than what they were projected to be in the sensitised forecast of SCI's finances by a margin of 10 per cent or greater.
  4. Loan repayments are not consistent with the financial feasibility conditions stated in SCI's Convertible Loan Agreement provided to TEQSA on 27 April 2022, the clarified by SCI on 4 May 2022.

The reporting, if any of these events occur, must be within 60 days of 30 June or 31 December respectively, based on the board approved management accounts.

Content of reports

In respect of any event, the report must be based on SCI's board approved management accounts (which must be provided to TEQSA) and otherwise include business plan, revised financial projections and all actions and short timeframes planned for correcting negative elements.

Definition of the sensitised forecast

For this condition, the sensitised forecast is the forecast contained in the Statement of Reasons report provided with the Notice of Decision.

Condition 3: Corporate Monitoring and Accountability

For the first 4 years after commencing the delivery of accredited course(s), within 60 days of 30 June and 31 December, SCI must provide TEQSA with the following board approved information:

  1. The number of commencing and continuing students for the 6-month period (domestic and international), and
  2. the equivalent full time student load (EFTSL, domestic and international).

For both the number of students enrolled and the EFTSL, SCI must provide the actual figures for the 6-month period compared to those projected in the sensitised forecast, as well as the budget for the 6-month period.

Content of reports

The reporting to include a business plan and all actions with timeframes planned for correcting any shortfall in student numbers compared to the sensitised forecast.

Definition of the sensitised forecast

For this condition, the sensitised forecast is the forecast contained in the Statement of Reasons report provided with the Notice of Decision.

Main reasons for the decisions

TEQSA made these decisions on the basis that it was satisfied that SCI meets the Provider Registration Standards and Provider Course Accreditation Standards of the HES Framework. However, TEQSA considered that there remained a risk related to SCI's capacity to meet the Threshold Standards in the future.

On this basis, TEQSA agreed that it was appropriate to register SCI for a period of five years until 1 June 2027, and to accredit SCI's Bachelor of Business course for the same period. The five-year period of registration and accreditation is consistent with the basic principles of regulation and reflects risks associated with an applicant for initial registration intending to offer a higher education course without a history in the provision of higher education.

TEQSA also agreed it was appropriate to impose three conditions on SCI' registration.

Application to withdraw conditions

In accordance with section 32 of the TEQSA Act, TEQSA may vary or revoke a condition imposed on the registration of a higher education provider, either on its own initiative or upon application by the provider for variation or revocation.