Commonwealth Bank Act 1911

Overview

The Commonwealth Bank Act 1911 was enacted to establish a Commonwealth Bank of Australia, providing a central financial institution capable of supporting the nation's economic needs. This legislation was introduced to address the gap in Australia's financial system, which lacked a unified national bank that could facilitate government financial operations and provide a stable banking environment for the public. The Act was passed by the Australian Parliament and assented to by the King's representative on 22nd December 1911. It established the Commonwealth Bank of Australia as a body corporate with various powers, including carrying on the general business of banking, acquiring and holding land, receiving money on deposit, making advances by way of loan, discounting bills and drafts, and dealing in exchanges, specie, bullion, gold-dust, assayed gold, and precious metals. The Act also detailed the Bank's management structure, capital requirements, and the responsibilities of the Bank's officers, ensuring the institution's governance and operational framework were well-defined.

Scope and Application

The Commonwealth Bank Act 1911 establishes the Commonwealth Bank of Australia, defining its structure, governance, and operational parameters. The Act applies to the Commonwealth Bank as a corporate entity with perpetual succession and the capacity to hold land, sue, and be sued. The Bank's management is vested in the Governor and Deputy Governor, appointed by the Governor-General for a term of seven years, and the Bank can also appoint other officers necessary for its operations. The Commonwealth is responsible for the Bank's debts, although it cannot be sued in respect of those debts. The Bank is empowered to carry out various banking activities, including accepting deposits, making loans, and dealing in exchanges and precious metals, but it is prohibited from issuing notes for circulation. The Act also details the procedures for the establishment of savings bank departments, the management of savings accounts, and the issuance of debentures by the Bank, with specific provisions on interest rates, redemption periods, and penalties for forgery and unauthorized forms. Furthermore, the Commonwealth guarantees the payment of principal and interest on Bank debentures, and the Act includes provisions for the falsification of records and misappropriation of Bank funds, with corresponding penalties. The geographic reach of the Act is national, applying throughout the Commonwealth of Australia, with potential extensions to international branches subject to the Treasurer's consent.

Key Provisions

• The Commonwealth Bank Act 1911 outlines the establishment, management, and operations of the Commonwealth Bank of Australia. Section 5 establishes the Commonwealth Bank, while Section 6 incorporates it as a body corporate with perpetual succession and a common seal. The Bank is granted various powers under Section 7, including conducting general banking business, acquiring and holding land, receiving money on deposit, making loans, discounting bills and drafts, issuing bills and drafts, and dealing in exchanges, specie, bullion, gold-dust, assayed gold, and precious metals. The Bank is prohibited from issuing bills or notes for circulation under Section 8.
• The management of the Bank is detailed in Part III. Section 11 specifies that the Bank is to be managed by the Governor, who, along with the Deputy Governor, is appointed by the Governor-General (Section 12). The Governor and Deputy Governor have powers and duties prescribed by the Act or regulations (Section 14). The Governor is required to furnish quarterly statements of the Bank’s assets and liabilities to the Treasurer, who then publishes them (Section 18). The Bank’s affairs are subject to inspection and audit by the Auditor-General at least twice a year (Section 19). The Governor is responsible for preparing and submitting half-yearly balance-sheets to the Treasurer and to the President of the Senate and the Speaker of the House of Representatives (Section 20).
• Part V of the Act pertains to Savings Bank business. The Governor may establish Savings Bank departments, branches, or agencies (Section 35), and the Bank can receive deposits from various persons, including minors and married women (Sections 41 and 42). The Bank may allow interest on deposits, calculate interest annually, and require notice for withdrawals (Sections 38 and 40). Unclaimed deposits are transferred to an Unclaimed Fund after seven years (Section 51).
• The Act also addresses the issuance of debentures by the Bank (Part VI). The Bank can issue debentures up to a total of One million pounds (Section 53). Debentures must adhere to a prescribed form and be under the Bank’s common seal (Section 54). The Commonwealth guarantees the payment of the principal and interest on these debentures (Section 56).
• Offences and penalties are outlined in Part VII. Offences include the forgery of Bank securities (Section 59), falsification of books by Bank officers (Section 61), and misappropriation of Bank money or property (Section 62). Penalties for these offences include imprisonment for up to ten years for forgery and up to seven years for falsification or misappropriation. Regulations under this Act are to be made by the Governor-General and can cover matters necessary for the effective operation of the Bank (Section 63).

Legal classification tags

Area of Law

Corporate Law & Governance

Commercial Law

Instrument

Act

Concepts

Definitions & Interpretation

Commencement Provisions

Offence Provisions

Regulatory Standards

Reporting & Disclosure Obligations