Approval to hold a stake in a financial sector company of more than 15% - Integrity Group Holdings Limited

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

Financial Sector (Shareholdings) Act 1998

To: Integrity Group Holdings Limited ABN 33 159 865 666 (IGH) and the persons listed in Schedule 1 (IGH Associates)

 

SINCE

 

  1. On 12 December 2017, IGH and the IGH Associates applied to the Treasurer under section 13 of the Financial Sector (Shareholdings) Act 1998 (the Act) for the following approvals (the Approvals):

 

(i)       IGH and the IGH Associates to hold a 100% stake in QBE Life (Australia) Limited ABN 83 089 981 073 (QBE Life), a financial sector company under the Act; and

 

(ii)     the IGH Associates to hold a 100% stake in IGH, a financial sector company under the Act; and

 

B. I am satisfied it is in the national interest to grant the Approvals.

 

I, Adrian Rees, a delegate of the Treasurer:

 

(a)     under subsection 14(1) of the Act, APPROVE:

 

(i)       IGH and the IGH Associates to hold a 100% stake in QBE Life; and

 

(ii)     the IGH Associates to hold a 100% stake in IGH.

 

This instrument comes into force on the date it is signed.  The Approvals under this instrument remain in force indefinitely.

 

Dated: 15 December 2017

 

 

[Signed]

 

 

Adrian Rees

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. 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 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 1 – IGH Associates

 

  1. Bruce Sherlock
  2. Prudential Life Company Pty Limited ABN 98 154 705 772 ATF Cloudlands Superannuation Fund ABN 24 145 118 582
  3. NAS Corporation Super Pty Limited ACN 161 210 386 ATF Sherlock Family Super Fund ABN 39 579 607 802
  4. Jireh Super Pty Limited ABN 30 161 287 985 ATF Jireh Superannuation Fund ABN 19 190 768 405
  5. Andrew McKirdy
  6. Grant & Belinda McKirdy ATF The Grabel Superannuation Fund ABN 70 733 019 818
  7. SME Invest Pty Limited ACN 128 597 982 ATF Global Trident Consulting ABN 13 307 533 113
  8. Leslie Jones
  9. Leslie Frederick Stuart Jones ATF L.F.S. Jones Family Trust
  10. Christopher Powell
  11. Claritas Investments Pty Limited ACN 606 211 474 ATF Powell Family Trust
  12. Thominat Pty Limited ACN 090 481 600 ATF Powell Super Fund

Overview

The Financial Sector (Shareholdings) Act 1998 was enacted to regulate significant shareholdings in financial sector companies, aiming to maintain the stability and integrity of Australia’s financial system. This legislation was introduced to address the potential risks associated with large stakes in financial institutions, ensuring that such holdings do not undermine the safety and soundness of the financial sector. The Act empowers the Treasurer to approve or disapprove significant shareholdings, reflecting the government's commitment to safeguarding the national interest. The Act, enacted by the Parliament of Australia, explicitly states its policy objective as ensuring that financial sector companies do not fall under control that could jeopardise their stability and, by extension, the broader financial system.

Scope and Application

The Financial Sector (Shareholdings) Act 1998 applies to entities seeking to hold a stake in a financial sector company exceeding 15%, which encompasses a broad range of financial institutions. This Act operates at the Commonwealth level, imposing stringent requirements on both domestic and foreign entities looking to acquire significant stakes in Australian financial sector companies. The Act applies to specific entities such as Integrity Group Holdings Limited and its associates listed in Schedule 1, and it mandates that these entities must obtain approval from the Treasurer to hold more than a 15% stake in a financial sector company. The approval process under the Act ensures that the shareholding situation does not result in an unacceptable scenario, thereby safeguarding the national financial system. Notably, the Act includes provisions for the Treasurer to impose, vary, or revoke conditions on the approvals granted, thereby offering flexibility in managing financial sector stakes. Additionally, the Act extends its applicability to 100% subsidiaries of holding companies and includes provisions for flow-on approvals. The Act also delineates strict penalties for non-compliance, highlighting its serious intent in regulating financial sector shareholdings. Exclusions and exemptions are minimal under the Act, with the primary focus being on maintaining the stability and integrity of the financial sector. The Act does, however, allow for certain adjustments to the percentage of approved stakes through applications to the Treasurer or on the Treasurer's own initiative, subject to national interest considerations. The Act’s provisions are further extended through subordinate instruments, enabling the Treasurer to impose or modify conditions, and to revoke approvals as necessary. This comprehensive legislative framework underscores the importance of controlled and approved shareholdings in the financial sector to protect Australia's economic interests.

Key Provisions

The Financial Sector (Shareholdings) Act 1998 (the Act) provides a framework for the regulation of significant shareholdings in financial sector companies. Under section 14, the Treasurer has the authority to approve, subject to conditions, the holding of a stake exceeding 15% in a financial sector company if it is deemed to be in the national interest. This applies to both individuals and entities such as Integrity Group Holdings Limited (IGH) and its associates, as listed in Schedule 1 (IGH Associates). In this case, the Treasurer has granted approval for IGH and the IGH Associates to hold a 100% stake in QBE Life (Australia) Limited and for the IGH Associates to hold a 100% stake in IGH (section 14(1)). These approvals are in effect indefinitely from the date they are signed. The obligations imposed by the Act on parties holding such stakes include compliance with any conditions imposed by the Treasurer, which may include restrictions on further acquisitions or sales of shares, reporting requirements, and other operational constraints (section 16). Additionally, the Act mandates that the Treasurer must notify the applicant and the relevant financial sector company of the approval and publish the notice in the Gazette (section 14 and Note 6). The Act also provides for the variation or revocation of approvals under certain conditions, allowing the Treasurer to impose new conditions, revoke existing ones, or adjust the approved percentage based on what is deemed to be in the national interest (sections 16 and 17). Failure to comply with the Act’s provisions can result in significant legal consequences. Under section 11, any person or group of persons who acquire shares in a company, resulting in an unacceptable shareholding situation, commits an offence if they do so recklessly. This offence carries a maximum penalty of 400 penalty units for individuals and 2,000 penalty units for corporate entities (Note 7). Additionally, section 32(3) of the Act allows the Federal Court to grant an injunction to restrain any conduct that contravenes a condition of an approval, at the application of the Treasurer. These measures underscore the importance of adhering to the Act’s requirements to avoid severe penalties and legal repercussions.

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Financial Regulation
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Gazette Notice
Concepts
Definitions & Interpretation
Offence Provisions
Regulatory Standards
Licensing & Registration
Catchwords
unacceptable shareholding situation

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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.