Approval to hold a stake in a financial sector company of more than 15%
Financial Sector (Shareholdings) Act 1998
SINCE
- Freedom Insurance Investments Pty Ltd ABN 27 164 463 987 (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 NobleOak Life Limited ABN 85 087 648 708 (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, Stephen Glenfield, a delegate of the Treasurer, under subsection 14(1) of the Act, APPROVE the applicant holding a stake in the Company of 19.99 %.
This Approval commences on the date it is signed and remains in force indefinitely. Dated: 29 May 2015
[Signed]
Stephen Glenfield General Manager
Specialised Institutions Division South West Region
Interpretation Document ID: 218021
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 address the potential risks to the financial stability of Australia arising from excessive shareholdings in financial sector companies. The Act aims to prevent unacceptable shareholding situations, where the concentration of ownership could undermine the prudential standards and regulatory oversight necessary to protect the financial system. The Australian Parliament enacted this legislation to ensure that significant shareholdings in financial sector companies do not lead to undue influence or risk to the national financial system. This legislative framework is designed to maintain the integrity and stability of the financial sector by regulating substantial shareholdings and providing the Treasurer with the authority to approve, condition, vary, or revoke such holdings in the national interest.
Scope and Application
The Financial Sector (Shareholdings) Act 1998 applies to any person or entity seeking to acquire or hold a stake in a financial sector company that exceeds 15%. This includes natural persons, corporate entities, and other forms of organisations that meet the criteria of a financial sector company under the Act. The Act’s jurisdiction is national, as it is a Commonwealth Act. It is designed to regulate significant shareholdings in entities that are integral to the Australian financial system to ensure stability and compliance with national financial interests. The Act does not specify exclusions or thresholds beyond the 15% shareholding limit, except for those granted specific approvals by the Treasurer. The Act allows for the Treasurer to impose conditions on approvals, vary those conditions, or revoke approvals if deemed necessary in the national interest. Furthermore, the Treasurer has the authority to adjust the approved percentage of shareholding in specific circumstances, reinforcing the Act’s adaptability to changing economic conditions.
Key Provisions
The Financial Sector (Shareholdings) Act 1998 primarily governs the approval process for significant shareholdings in financial sector companies. Under section 13, an applicant must apply to the Treasurer for approval to hold a stake exceeding 15% in a financial sector company. Once the Treasurer is satisfied that it is in the national interest, they can approve the shareholding under section 14. The approval is valid indefinitely, as seen in the given example where the approval was granted for a 19.99% stake in NobleOak Life Limited. This approval process is crucial as it ensures that significant stakes in financial sector companies are subject to scrutiny and regulatory oversight to protect the national financial system.
The Act imposes several obligations on parties holding significant stakes in financial sector companies. Section 16 allows the Treasurer to impose or vary conditions on the approval, ensuring ongoing compliance with national interest considerations. Additionally, under section 17, the applicant can apply to vary the percentage of the approved shareholding if circumstances change. The Treasurer also has the power to vary the percentage on their own initiative if deemed necessary for the national interest. These provisions ensure that the shareholding remains aligned with national financial stability and regulatory requirements.
Breaches of the Act can lead to significant legal consequences. Section 11 of the Act outlines that a person or group can commit an offence if they acquire shares in a company leading to an unacceptable shareholding situation, or if they increase an existing unacceptable shareholding situation recklessly. The penalties for such offences are substantial, with a maximum penalty of 400 penalty units for individuals and 2,000 penalty units for corporate bodies, as specified under subsection 4B(3) of the Crimes Act 1914. Furthermore, an offence under section 11 of the Financial Sector (Shareholdings) Act 1998 is classified as an indictable offence, meaning it can be prosecuted in a higher court and carries more severe penalties compared to summary offences.