Approval to hold a stake in a financial sector company of more than 15%
Financial Sector (Shareholdings) Act 1998
SINCE
- Bendigo and Adelaide Bank Limited 11 068 049 178 (the applicant) has applied to the Treasurer under section 13 of the Financial Sector (Shareholdings) Act 1998 (the Act), for approval to hold a stake of more than 15% in MCU Ltd 52 087 650 995 (the Company), a financial sector company under the Act; and
B. I am satisfied that it is in the national interest to approve the applicant holding a stake in the Company of more than 15%,
I, Louis Serret, a delegate of the Treasurer, under subsection 14(1) of the Act, APPROVE the applicant holding a stake in the Company of 95 %.
This Approval commences on the date it is signed and remains in force indefinitely. Dated: 29 June 2018
[Signed]
Louis Serret General Manager
Specialised Institutions Division
Interpretation Document ID: 229952
In this Notice:
financial sector company has the meaning given in section 3 of the Act.
stake in relation to a company, has the meaning given in clause 10 of Schedule 1 to the Act.
unacceptable shareholding situation has the meaning given in section 10 of the Act.
Note 1 Under paragraph 16(2)(a) of the Act, the Treasurer may, by written notice given to a person who
holds an Approval under section 14, impose one or more conditions or further conditions to which the Approval is subject. Under paragraph 16(2)(b) of the Act, the Treasurer may revoke or vary any condition imposed under paragraph 16(2)(a) of the Act or specified in the Notice of Approval. The Treasurer’s power under subsection 16(2) of the Act may be exercised on the Treasurer’s own initiative or on application made to the Treasurer in accordance with the requirements of subsection 16(4) of the Act, by the person who holds the Approval (see subsection 16(3) of the Act).
Note 2 A person who holds an Approval under section 14 may apply to the Treasurer under section 17(1) of
the Act, to vary the percentage specified in the Approval.
Note 3 Under subsection 17(6) of the Act, the Treasurer may, on the Treasurer’s own initiative, by written
notice given to a person who holds an Approval under section 14, vary the percentage specified in the Approval if the Treasurer is satisfied that it is in the national interest to do so.
Note 4 The circumstances in which the Treasurer may revoke a person’s Approval under section 14 are set
out in subsection 18(1) of the Act.
Note 5 Section 19 of the Act provides for flow-on approvals. If an Approval has been granted for the
holding of a stake in a financial sector company and the financial sector company is a holding company for an authorised deposit-taking institution or an authorised insurance company, then an approval is taken to exist for the holding of a stake of equal value in each financial sector company that is a 100% subsidiary of the holding company.
Note 6 Under section 14 of the Act, the Treasurer must give written notice of this Approval to the applicant
and financial sector company concerned, and must publish a copy of this Notice in the Gazette.
Note 7 Under section 11 of the Act, a person or 2 or more persons under an arrangement are guilty of an
offence if the person(s) acquires shares in a company and the acquisition has the result, in relation to a financial sector company, that:
(i) an unacceptable shareholding situation comes into existence; or
(ii) if an unacceptable shareholding situation already exists in relation to the company and in relation to a person – there is an increase in the stake held by the person in the company;
and the person(s) was reckless as to whether the acquisition would have that result. A maximum penalty of 400 penalty units applies or by virtue of subsection 4B(3) of the Crimes Act 1914, in the case of a body corporate, a penalty not exceeding 2,000 penalty units. By virtue of section 39 of the Act, an offence against section 11 is an indictable offence.
Overview
The Financial Sector (Shareholdings) Act 1998 was enacted to regulate the ownership and control of financial sector companies by ensuring that they remain sound and stable. This legislation was introduced by the Australian Parliament to address the potential risks posed by excessive concentration of shareholdings in financial institutions, which could threaten the stability of the financial system. The Act aims to maintain the integrity and soundness of the financial sector by preventing unacceptable shareholding situations, thereby protecting the interests of consumers, depositors, and the broader economy. The Treasurer, as the relevant authority under the Act, has the power to approve, impose conditions on, or revoke approvals for shareholdings exceeding 15% in financial sector companies, ensuring that such holdings do not compromise the national interest.
Scope and Application
The Financial Sector (Shareholdings) Act 1998 applies to entities and individuals seeking to hold a stake of more than 15% in financial sector companies, which are defined under section 3 of the Act. This legislation is of Commonwealth reach, thereby impacting entities and individuals across Australia. The Act allows the Treasurer to grant an Approval for such shareholdings, which in the case of Bendigo and Adelaide Bank Limited, permits them to hold a stake of up to 95% in MCU Ltd. This approval is issued considering it is in the national interest and is subject to potential conditions, variation, or revocation by the Treasurer. The Act also provides for flow-on approvals if the company in question is a holding company for an authorised deposit-taking institution or an authorised insurance company. Any person or group of persons who recklessly acquire shares resulting in an unacceptable shareholding situation can face criminal charges under the Act, with penalties reaching up to 400 penalty units for individuals and 2,000 penalty units for corporate entities.
Key Provisions
The Financial Sector (Shareholdings) Act 1998 (the Act) primarily governs the acquisition and holding of shares in financial sector companies. Section 13 of the Act outlines the process by which an applicant, such as Bendigo and Adelaide Bank Limited, can apply for approval to hold a stake in a financial sector company exceeding 15%. This is exemplified in the scenario where Bendigo and Adelaide Bank Limited has applied for approval to hold a 95% stake in MCU Ltd, a financial sector company. Section 14 provides the framework for the Treasurer to approve such applications if it is deemed to be in the national interest, as in the case of the Approval Notice issued for Bendigo and Adelaide Bank Limited’s shareholding in MCU Ltd. This Approval is effective from the date of signing and remains in force indefinitely, unless otherwise modified or revoked.
Under the Act, the obligations imposed on the parties involved are significant. The applicant must apply for approval to hold a stake exceeding 15% in a financial sector company, and the Treasurer must consider whether such approval aligns with national interests. Once granted, the approval holder must comply with any conditions imposed by the Treasurer, which can include varying the percentage of the shareholding or imposing additional conditions. The Act also mandates that the Treasurer notify the applicant and the relevant financial sector company of the Approval and publish a copy in the Gazette, ensuring transparency and public awareness. Moreover, section 19 facilitates flow-on approvals, ensuring that any holdings in subsidiary companies are also accounted for under the same regulatory framework.
The Act delineates specific offences and penalties for non-compliance. Section 11 of the Act criminalises the acquisition of shares that result in an "unacceptable shareholding situation," defined in section 10, if done recklessly. An "unacceptable shareholding situation" refers to a scenario where a person's shareholding in a financial sector company reaches or exceeds 15% without prior approval. The penalties for such offences are severe; individuals face a maximum penalty of 400 penalty units, while corporate entities can be fined up to 2,000 penalty units. These penalties reflect the critical importance of adhering to the regulatory framework governing shareholdings in the financial sector. Furthermore, under section 39 of the Act, an offence against section 11 is classified as an indictable offence, indicating the seriousness with which the law treats violations of these provisions.