Approval to hold a stake in a financial sector company of more than 15% - Berkshire Hathaway Inc, National Indemnity Company and Mr Warren Buffet

Administered by Department of the Treasury

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

Financial Sector (Shareholdings) Act 1998

 

SINCE

 

  1. Berkshire Hathaway Inc (Delaware) (BHI), National Indemnity Company (Nebraska) (NIC) and Mr Warren Buffet (the applicants) have each applied for an approval under section 13 of the Financial Sector (Shareholdings) Act 1998 (the Act), to hold a stake of 100% in the companies set out in the attached Schedule 1 (the Companies), financial sector companies under the Act;

 

B.     Mr Warren Buffet has also applied for an approval under section 13 of the Act, to hold a stake of 50% in BHI;

 

C.     I am satisfied it is in the national interest to approve the applicants to hold a 100% stake in each of the Companies and for Mr Warren Buffet to be given approval to hold a 50% stake in BHI,

 

I, Brandon Kong Leong Khoo, a delegate of the Treasurer, under subsection 14(1) of the Act, APPROVE the applicants holding a 100% stake in each of the Companies and APPROVE Mr Warren Buffet holding a 50% stake in BHI.

This instrument comes into force on the date it is signed.  The Approval under the instrument remains in force indefinitely.

 

Dated: 22 April 2015

[Signed]

 

 

 

Brandon Kong Leong Khoo

Executive General Manager

Diversified Institutions Division

Interpretation

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 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) may be exercised on the Treasurer’s own initiative or an 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.  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.

 

Note 8 Under section 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 1 – the persons who have applied for approval

 

  1. Mr Warren Buffet;
  2. Berkshire Hathaway Inc (Delaware);
  3. National Indemnity Company (Nebraska);

 

 

 

SCHEDULE 2 - the financial sector companies

 

  1. Berkshire Hathaway Inc (Delaware);
  2. National Indemnity Company (Nebraska);
  3. Berkshire Hathaway Specialty Insurance Company ABN 84 600 643 034

 

 

 

 

 

Overview

The Financial Sector (Shareholdings) Act 1998 was enacted to address the potential risks associated with significant shareholdings in financial sector companies, particularly to safeguard the stability and integrity of Australia's financial system. This Act was introduced to provide the Treasurer with the authority to approve or disapprove shareholdings that exceed certain thresholds in financial sector companies, thereby preventing any undue concentration of ownership that could compromise the sector's resilience. The Act is administered by the Commonwealth Parliament, and its policy objective is to ensure that the financial sector remains robust and is not unduly influenced by excessive shareholdings, which could pose systemic risks. The Act allows the Treasurer to impose conditions on approvals, revoke or vary these conditions, and manage flow-on approvals to maintain oversight and control over significant shareholdings in the financial sector.

Scope and Application

The Financial Sector (Shareholdings) Act 1998 applies to any person or entity seeking to hold a stake in a financial sector company that exceeds certain thresholds, specifically 15% for most companies and 5% for deposit-taking institutions and insurance companies. The Act is a Commonwealth statute, meaning it applies nationally across Australia. It requires individuals or entities to obtain approval from the Treasurer to hold a significant stake in financial sector companies, which are defined under the Act. The Act allows for the imposition of conditions on approvals, which can be varied or revoked by the Treasurer. Subordinate legislation can further extend or restrict the application of the Act, allowing for adjustments to the thresholds or conditions based on national interests or economic considerations. The Act also provides for penalties for reckless acquisitions of shares that lead to unacceptable shareholding situations, with maximum penalties of up to 400 penalty units for individuals and 2,000 penalty units for bodies corporate. Offences under the Act are indictable, and the Federal Court can grant injunctions to restrain conduct in contravention of approval conditions. The Act's provisions are designed to ensure that significant holdings in financial sector companies do not undermine the stability or integrity of the financial system.

Key Provisions

The Financial Sector (Shareholdings) Act 1998 (the Act) outlines the requirements and conditions for the acquisition and holding of stakes in financial sector companies. Section 13 of the Act allows the Treasurer to grant approval for an individual or entity to hold a stake exceeding 15% in a financial sector company, if it is deemed to be in the national interest (section 14). In this case, the applicants, Berkshire Hathaway Inc (Delaware) (BHI), National Indemnity Company (Nebraska) (NIC), and Mr Warren Buffet, have sought approval to hold a 100% stake in each of the Companies, which are financial sector companies as defined in section 3 of the Act. Additionally, Mr Warren Buffet has applied for approval to hold a 50% stake in BHI (section 13). The Act imposes several obligations on the parties it governs. Firstly, the applicants must apply for approval from the Treasurer before holding the specified stakes in the Companies (section 13). The Treasurer, upon being satisfied that the approval is in the national interest, must grant the approval and notify the applicants and the relevant financial sector company (section 14 and Note 6). Furthermore, the Act allows the Treasurer to impose, vary, or revoke conditions on an approval under subsection 16(2) and subsection 17(6) of the Act (Notes 1 and 3). Additionally, if an approval has been granted for the holding of a stake in a financial sector company, and that 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 (section 19). The Act also imposes penalties for breaches of its provisions. For instance, under section 11 of the Act, a person or group of persons under an arrangement is guilty of an offence if they acquire shares in a company, resulting in an unacceptable shareholding situation in relation to a financial sector company, and they were reckless as to whether the acquisition would have that result. The maximum penalty for an individual is 400 penalty units, while for a body corporate, the penalty is not exceeding 2,000 penalty units (Note 7). Additionally, the Federal Court may grant an injunction to restrain a person from engaging in conduct in contravention of a condition to which an approval under section 14 is subject, or requiring the person to do something if in the court's opinion it is desirable to do so (section 32(3) and Note 8).

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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.