Want to be a TAANZ Member?

It is important that before they are committed to the purchase or establishment of a travel agency prospective members satisfy themselves that they will be able to meet TAANZ bonding requirements.

Details of those requirements are set out in the section TAANZ Membership and Bonding Criteria. Prospective members and their financial advisers need to be familiar with those requirements.

In particular, we emphasise three areas which commonly give rise to bonding problems for applicants and new members.  These relate to financial statements and minimum shareholders funds, security requirements and accounting for customers advance payments (refer separate notes). 

In addition we set out conditions of bonding that apply to new businesses.

The requirement for a minimum of $40,000 of shareholders equity (paid up capital and reserves) is often taken to also represent the maximum required for membership.  That is not the case.  The Bonding Authority often has to request that applicants provide more capital in order to bring a company to a satisfactory financial position e.g. where a business is acquired the level of shareholders equity needs to be sufficient to cover not only working capital and fixed assets but also any goodwill paid for.

Bonding cannot be approved until The Bonding Authority is satisfied that the company has sufficient shareholders equity to meet establishment costs and operate the business.  Some funding may come from bank overdrafts or loans but the bulk of funds must be provided by way of share capital. 

The provision of an opening statement of financial position (balance sheet) is a mandatory requirement for bonding.  This statement should be prepared or reviewed by a chartered accountant.  Inadequate accounts often lead to delays in bonding.  The statement must clearly disclose the level of shareholders equity [paid up capital and reserves but (not including loans from shareholders to the company) after deducting any advances from the company to shareholders or associates].  The establishment costs should also be disclosed.

It is a TAANZ requirement that security be provided to support the indemnities given by new members.  Security can be by way of bank indemnity, 1^st or 2^nd mortgage over property, cash deposit or partially by one of the above with 50% covered by an insurance indemnity. 

The security can come from the shareholders or from a third party. 

Prospective members need to be sure that they can provide adequate security.  The minimum level of security is $50,000 but it can be as high as $750,000 for larger businesses. 

Where the property provided as security is owned jointly or by a family trust, all owners or trustees will need to be parties to the Deed of Indemnity. 

Note that only 80% of a property’s value is accepted for TAANZ security purposes.  In addition there must be sufficient equity to cover TAANZ security after deducting the priority requirements of any 1^st mortgagee – which should include interest and charges and these are limited to 24 months. 

Prospective members should find out the set up and ongoing costs involved with each type of security.  Please note that legal fees are charged by the TAANZ lawyer and payable by the prospective member for mortgage security.

CONDITIONS OF BONDING FOR NEW BUSINESSES

Once a new business is bonded the following requirements are applied for a minimum period of 18 months: