Approval to hold a stake in a financial sector company of more than 15%

Administered by Department of the Treasury

Legislation au C2018G00970 In force Gazette

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Approval to hold a stake in a financial sector company of more than 15%

Financial Sector (Shareholdings) Act 1998

 

SINCE:

A. International Insurance Company of Hannover SE ABN 58 129 395 544 (the company) is a financial sector company under the Financial Sector (Shareholdings) Act 1998 (the Act);

B. On 21 November 2008 a delegate of the Treasurer, under subsection 14(1) of the Act, approved HDI Haftpflichtverband der Deutschen Industrie Versicherungsverein auf Gegenseitigkeit (HDI VaG), Talanx AG, Hannover Ruck SE and Hannover Finance (UK) Limited (collectively, the 2008 stakeholders) holding a 100% stake in the company (2008 Approval);  

C. HDI VaG, HDI Global SE and the persons named in the attached Schedule (the applicants) have applied to the Treasurer under section 13 of the Act for approval to hold greater than 15% stakes in the company (Application);

D. The 2008 stakeholders have applied for the 2008 Approval to be revoked; and

E. I am satisfied that it is in the national interest to approve the applicants holding a stake in the company of more than 15%,

 

I, Nigel Boik, a delegate of the Treasurer:

(a)          under subsection 18(3) of the Act, REVOKE the 2008 Approval; and

(b)          under subsection 14(1) of the Act, APPROVE the applicants holding a 100% stake in the company.

 

This Notice has effect on from the date it is signed and remains in force indefinitely.

 

Dated: 29 November 2018

 

[Signed]

 

 

…………………

Nigel Boik

General Manager

Diversified Institutions Division

 

Interpretation

 

In this Notice:

 

100% subsidiary has the meaning given in section 3 of the Act.

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 conditions imposed under paragraph 16(2)(a) of the Act or specified in the Notice of Approval. The Treasurer’s powers 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 of the Act may apply to the Treasurer under subsection 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 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. By operation of subsection 19(3), if a company has an approval to hold a stake in a financial sector company of more than 15%, each officer of the approval company is taken to have an approval to hold the same percentage stake in the financial sector company.

 

Note 6   Under section 14 of the Act, the Treasurer must give written notice of this Approval to the applicants 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.

 

Note 8   Under subsection 32(3) of the Act, if a person has engaged in or is proposing to engage in any conduct in contravention of a condition to which an approval under section 14 is subject, the Federal Court may, on the application of the Treasurer, grant an injunction:

 

(i)          restraining the person engaging in the conduct; and

(ii)         if in the Court’s opinion, it is desirable to do so, requiring the person to do something.

Schedule – the person(s) who applied for approval

  1.  HDI Haftpflichtverband der Deutschen Industrie Versicherungsverein auf Gegenseitigkeit
  2. Talanx AG
  3. Hannover Ruck SE
  4. HDI Global SE

Overview

The Financial Sector (Shareholdings) Act 1998 was enacted to address the need for oversight and regulation of shareholdings in financial sector companies, ensuring that such holdings do not compromise the stability and integrity of the financial system. The Act provides the Treasurer with the authority to approve or disapprove shareholdings exceeding a specified threshold, in this case 15%, within financial sector companies, thereby maintaining control over potentially significant influences on these entities. The enactment of this Act by the Parliament of Australia reflects a policy objective to safeguard the financial sector from undue foreign control and to prevent unacceptable shareholding situations that could endanger the economic stability of the country. Through the establishment of this legislative framework, the Act enables the Treasurer to manage and mitigate risks associated with large shareholdings, ensuring that the financial sector remains resilient and capable of supporting Australia's economic objectives. The Act also provides mechanisms for the imposition, variation, or revocation of approvals, allowing for a dynamic response to changing circumstances and potential threats to financial stability.

Scope and Application

The Financial Sector (Shareholdings) Act 1998 applies to any entity or individual who seeks to acquire a stake in a financial sector company exceeding 15%. The Act encompasses a range of entities, including companies, unincorporated associations, and individuals, that are engaged in financial services within Australia. It specifically targets the acquisition of stakes in entities classified as financial sector companies under the Act, which includes banks, insurance companies, and other financial institutions. The geographic scope of the Act extends across the Commonwealth of Australia, thereby affecting both domestic and foreign entities that seek to engage in financial transactions within Australia. The Act allows for certain exclusions and exemptions, and its application can be extended or restricted through subordinate instruments issued by the Treasurer. For instance, the Treasurer can impose conditions on approvals or revoke existing approvals if it is deemed to be in the national interest. This legislative framework ensures that significant shareholdings in financial institutions are subject to scrutiny and approval, thereby safeguarding the stability and integrity of the financial sector.

Key Provisions

The main operative sections of the Financial Sector (Shareholdings) Act 1998 (the Act) concern the regulation of shareholdings in financial sector companies. Section 14 of the Act allows the Treasurer to approve, by written notice, an entity holding a stake of more than 15% in a financial sector company if it is in the national interest. Section 17(1) permits the variation of the percentage specified in an approval, while section 18(1) outlines the circumstances under which the Treasurer may revoke such an approval. Furthermore, section 19 deals with flow-on approvals, whereby the approval extends to each officer of the approving company. The Act imposes several obligations and requirements on parties and entities it governs. Firstly, under section 14, entities must apply to the Treasurer for approval to hold a stake exceeding 15% in a financial sector company. The Treasurer may impose conditions on the approval (subsection 16(2)(a)) and may revoke or vary those conditions (subsection 16(2)(b)). Additionally, section 11 imposes criminal liability for reckless acquisition of shares that results in an unacceptable shareholding situation. The Act also mandates that the Treasurer must notify applicants and the relevant financial sector company of the approval and publish a copy in the Gazette (section 14). The Act further requires the Treasurer to provide written notice to the applicants and the financial sector company concerned, and to publish a copy of the notice in the Gazette (section 14). The Act outlines several offences, penalties, and civil/criminal consequences for breaches. Under section 11, an individual or group of individuals can be found guilty of an offence if they acquire shares in a financial sector company, resulting in an unacceptable shareholding situation or an increase in an existing unacceptable shareholding situation, while being reckless about the consequences. The maximum penalty for individuals is 400 penalty units, and for bodies corporate, 2,000 penalty units (subsection 4B(3) of the Crimes Act 1914). This offence is indictable under section 39 of the Act. Furthermore, under subsection 32(3), the Federal Court may grant an injunction to restrain a person from engaging in conduct in contravention of a condition of an approval, or to require the person to do something if deemed desirable by the Court.

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Financial Sector Law
Instrument
Gazette Notice
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Reporting & Disclosure Obligations
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Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.