Approval to hold a stake in a financial sector company of more than 15% - Enstar Group Limited (Enstar) and Kenmare Holdings Limited (Kenmare)

Administered by Department of the Treasury

Legislation au C2015G01744 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

 

  1. Enstar Group Limited (Enstar) and Kenmare Holdings Limited (Kenmare) have applied for approval under section 13 of the Financial Sector (Shareholdings) Act 1998 (the Act) for:

 

(i)     Enstar and Kenmare to each hold a stake of 100% in Poseidon Insurance Co Pty Ltd ABN 25 000 162 649 (Poseidon), a financial sector company under the Act; and

 

(ii)  Enstar to hold a stake of 100% in Kenmare from the time Kenmare becomes a holding company of Poseidon; and

 

B.     I am satisfied it is in the national interest to approve each of Enstar and Kenmare holding the proposed stakes;

 

I, Stuart Bingham, a delegate of the Treasurer, under subsection 14(1) of the Act, APPROVE Enstar and Kenmare to each hold a stake of 100% in Poseidon and Enstar to hold a stake of 100% in Kenmare from the time Kenmare becomes a holding company of Poseidon.

 

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

Dated 20 October 2015

 

 

[Signed]

 

Stuart Bingham

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.

 

 

 

 

Overview

The Financial Sector (Shareholdings) Act 1998 was enacted to address the need for oversight and regulation of significant shareholdings in financial sector companies, ensuring the stability and integrity of Australia's financial institutions. The Act empowers the Treasurer to approve or reject proposals where entities seek to hold stakes in financial sector companies, thereby preventing unacceptable shareholding situations that could compromise the national financial system. The enactment of this Act by the Parliament of Australia aims to safeguard the financial sector from undue influence and potential risks associated with concentrated ownership. In the case of Enstar Group Limited and Kenmare Holdings Limited, the Act facilitated the approval process for their proposed shareholdings in Poseidon Insurance Co Pty Ltd, ensuring compliance with national interests and regulatory standards.

Scope and Application

The Financial Sector (Shareholdings) Act 1998 applies to any person or entity seeking to acquire a stake in a financial sector company exceeding 15%. In this context, a financial sector company is defined under section 3 of the Act, while the term "stake" is clarified in clause 10 of Schedule 1. The Act has a Commonwealth jurisdiction, meaning it applies nationally across Australia. The Act is intended to regulate significant shareholdings in financial entities to ensure the stability and integrity of the financial sector. There are specific provisions that allow the Treasurer to impose conditions on approvals, vary these conditions, or revoke the approval altogether if deemed necessary in the national interest. Furthermore, the Act allows for flow-on approvals where a holding company has subsidiaries, ensuring a comprehensive regulatory approach. The Act also provides penalties for reckless acquisitions leading to unacceptable shareholding situations, with maximum penalties outlined in the Crimes Act 1914. This legislative framework ensures that significant financial sector shareholdings are subject to rigorous oversight and control.

Key Provisions

The main sections of the Financial Sector (Shareholdings) Act 1998 (the Act) at play in this context are sections 11, 13, 14, 16, 17, 18, and 32. Section 11 outlines the offence of acquiring shares in a company in a way that results in an unacceptable shareholding situation (section 10). Section 13 allows for applications for approval to hold a stake in a financial sector company, which is defined in section 3 of the Act. Section 14 pertains to the Treasurer's power to approve such shareholdings, and section 16 provides for the imposition of conditions or variations to those conditions. Section 17 allows for applications to vary the percentage of a shareholding, and section 18 allows for the revocation of approvals. Finally, section 32 empowers the Federal Court to grant injunctions against conduct that contravenes a condition of an approval. The obligations imposed by the Act on the entities governed by it include the requirement to apply for approval from the Treasurer to hold a stake in a financial sector company (section 13). Once approval is granted, the entities must comply with any conditions imposed by the Treasurer (section 16) and must not engage in conduct that contravenes any conditions of the approval (section 32). Additionally, entities must ensure that their shareholdings do not result in an unacceptable shareholding situation (section 11). The Act also provides for penalties and consequences for breaches of its provisions. Section 11 makes it an offence to acquire shares in a financial sector company in a way that results in an unacceptable shareholding situation, with a maximum penalty of 400 penalty units for individuals and 2,000 penalty units for bodies corporate (subsection 4B(3) of the Crimes Act 1914). The offence is indictable under section 39 of the Act. Further, under section 32, the Federal Court may grant an injunction to restrain conduct that contravenes a condition of an approval and may require the person to do something if it is deemed desirable. This provides for both civil and criminal consequences for non-compliance with the Act.

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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.