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Maddocks acted for IDP Education Australia on its transformation from a not-for-profit organisation to a profit-making enterprise. IDP is owned by all of Australia’s 38 universities and…

Maddocks acted for IDP Education Australia on its transformation from a not-for-profit organisation to a profit-making enterprise. IDP is owned by all of Australia’s 38 universities and recruits international students from overseas.

Following an extraordinary shareholders’ meeting, and approval of a new business plan for the company by all but three of the universities, IDP can now take in new investors and pay dividends. The decision was made after the universities again had to contribute significant sums to keep the organisation running.

The company can now raise capital through the private equity markets. Maddocks’ commercial partner Craig Ng said it was unusual for a company to change from a not-for-profit structure to a profit driven one because of the tax implications.

The transition was designed to increase the focus on running the company effectively and efficiently. “It was a challenge to come up with a tax effective structure in the context of a not-for-profit environment.

“The other challenge was that [we were dealing with] 38 universities with divergent views.” It was difficult to settle on a framework that was acceptable from everyone’s perspective, he said.

On the other side, it had been a “fantastic idea” to turn the organisation into a for-profit company, “get the private sector to put money in and run it in its own right”.

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