Approval to hold a stake in a financial sector company of more than 15%
Financial Sector (Shareholdings) Act 1998
SINCE
- Taiwan Financial Holding Co., Ltd (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 Bank of Taiwan 71 608 940 718 (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 100 %.
This Approval commences on the date it is signed and remains in force indefinitely. Dated: 16 November 2017
[Signed]
Louis Serret
Acting Executive General Manager Specialised Institutions Division
Interpretation Document ID: 228451
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 by the Parliament of Australia to address the potential risks posed by significant shareholdings in financial sector companies, which could affect the stability and integrity of the financial system. The Act provides the Treasurer with the authority to approve or disapprove shareholdings exceeding 15% in financial sector companies, ensuring that such stakes do not compromise the national financial system's resilience. This legislative framework is designed to maintain the robustness of Australia's financial institutions by preventing concentrations of ownership that could lead to undue influence or systemic risk. The Act's policy objective is to safeguard the financial sector against unacceptable shareholding situations that could threaten its stability and public confidence.
Scope and Application
The Financial Sector (Shareholdings) Act 1998 applies to any person or entity seeking to hold a stake exceeding 15% in a financial sector company as defined under the Act. This legislation governs the acquisition of significant shares in entities that are classified as financial sector companies, ensuring that such acquisitions do not lead to unacceptable shareholding situations that could compromise the stability and integrity of the financial sector. The Act has a national reach and applies across Australia, overseen by the Commonwealth Treasurer who has the authority to grant or deny approvals for shareholdings over the specified threshold. The Treasurer may impose conditions on the approval, vary those conditions, or revoke the approval if deemed necessary in the national interest. Additionally, the Act provides for flow-on approvals, where an approval for a holding company extends to its 100% subsidiaries. The Act also includes provisions for the variation of the approved shareholding percentage and sets out the penalties for reckless acquisitions that result in unacceptable shareholding situations. Any person or entity that acquires shares in a financial sector company and thereby creates or exacerbates an unacceptable shareholding situation without due care may be subject to criminal penalties.
Key Provisions
The Financial Sector (Shareholdings) Act 1998, under which this approval was granted, primarily deals with the regulation of shareholdings in financial sector companies. Section 13 of the Act mandates that an application must be submitted to the Treasurer for approval to hold a stake exceeding 15% in a financial sector company. Section 14 then empowers the Treasurer to approve such shareholdings if deemed to be in the national interest. In this case, the delegate of the Treasurer, Louis Serret, has approved the applicant, Taiwan Financial Holding Co., Ltd, to hold a stake of 100% in Bank of Taiwan 71 608 940 718. This approval is valid indefinitely, starting from the date it was signed.
The Act imposes several obligations on entities seeking to hold significant stakes in financial sector companies. Firstly, applicants must submit a formal application to the Treasurer as per section 13. The Treasurer, upon considering the national interest, may impose conditions on the approval or even revoke it if necessary, as outlined in sections 16 and 18 respectively. Additionally, the Treasurer can vary the approved percentage under section 17 if deemed in the national interest. The Act also includes provisions for flow-on approvals, where a stake in a holding company extends to its subsidiaries, as described in section 19.
Breaching the provisions of the Financial Sector (Shareholdings) Act 1998 can lead to severe consequences. Section 11 stipulates that any person or group that recklessly acquires shares leading to an unacceptable shareholding situation can be found guilty of an offence. This includes situations where an existing unacceptable shareholding situation is exacerbated. The penalties for such offences are significant, with a maximum penalty of 400 penalty units for individuals and 2,000 penalty units for corporate bodies, as per subsection 4B(3) of the Crimes Act 1914. Furthermore, an offence under section 11 is classified as an indictable offence under section 39 of the Act, indicating the seriousness with which such breaches are treated.