Approval to hold a stake in a financial sector company of more than 15°/o
Financial Sector (Shareholdings) Act 1998
To: Board of Trustees of the State Public Sector Superannuation Scheme ABN 32 125 059 006 (the Board) and QSuper Limited ABN 50 125 248 286 (QSuper Limited) (the applicants).
SINCE
- The applicants have applied for approval under section 13 of the Financial Sector (Shareholdings) Act 1998 (the Act) for QSuper Limited to hold a 100% stake in Qinsure Limited ABN 79 607 345 853 (Qlnsure), an authorised insurance company, and for the Board to hold a 100% stake in QSuper Limited, a holding company of Qlnsure; and
B. I am satisfied it is in the national interest for the applicants to hold the requested stakes in Qlnsure and QSuper Limited,
I, Keith Chapman, a delegate of the Treasurer, under subsection 14(1) of the Act, APPROVE QSuper Limited to hold a 100% stake in Qlnsure and APPROVE the Board to hold a 100% stake in QSuper Limited.
This instrument comes into force on 1 July 2016. The Approval under the instrument remains in force indefinitely.
Dated 17 May 2016
[Signed]
.
Keith Chapman
Executive General Manager Specialised Institutions Division
Interpretation
In this Notice:
authorised insurallce company has the meaning set out in section 3 of the Act
holding company has the meaning given by section 4 of the Act.
stake in relation to a company, has the meaning given in clause 10 of Schedule 1 to the Act.
Note I 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 ensure the stability and integrity of Australia's financial sector by controlling significant shareholdings in financial sector companies. This legislation was introduced to address the potential risks associated with concentrated ownership and control in the financial sector, which could adversely affect the financial system's stability and public confidence. The Act was enacted by the Parliament of Australia, reflecting a policy objective to safeguard the national interest by preventing unacceptable shareholding situations in financial sector companies. Under this Act, the Treasurer has the authority to approve or reject significant shareholdings, and the Board of Trustees of the State Public Sector Superannuation Scheme and QSuper Limited sought approval to hold a 100% stake in Qinsure Limited and QSuper Limited, respectively. The approval granted ensures these shareholdings are in the national interest, with the conditions and potential for variation or revocation set out in the Act to maintain oversight and adapt to changing circumstances.
Scope and Application
The Financial Sector (Shareholdings) Act 1998 applies to entities and individuals who wish to acquire or hold a stake in a financial sector company, specifically an authorised insurance company or a deposit-taking institution. This Act regulates the acquisition of shareholdings in such companies to ensure that they do not result in an unacceptable shareholding situation, which could potentially threaten the financial stability of the company and, by extension, the national financial system. The Act is of Commonwealth jurisdiction, meaning it applies across Australia, but its primary focus is on ensuring that no single entity or group of entities gains undue control over financial sector companies, which could lead to conflicts of interest or undue market influence. The Act allows the Treasurer to approve certain shareholdings if it is deemed to be in the national interest, subject to conditions that may be imposed, varied, or revoked by the Treasurer. Exclusions or exemptions from the Act's provisions are not explicitly stated in the text, but the Act does provide for the imposition of conditions on approvals and the potential for varying these conditions or revoking approvals altogether if circumstances change. The Act also extends its reach through flow-on approvals, which automatically apply to 100% subsidiaries of approved holding companies, ensuring a consistent regulatory approach across related entities.
Key Provisions
The Financial Sector (Shareholdings) Act 1998 governs the approval process for holding stakes in financial sector companies, particularly those exceeding 15%. Under this Act, the key sections involved in the approval of shareholdings are sections 13, 14, 16, 17, 18, and 19. Section 13 provides the framework for the application process, whereby entities such as QSuper Limited and the Board of Trustees of the State Public Sector Superannuation Scheme can apply for approval to hold significant stakes in financial sector companies like Qlnsure. Section 14 allows the Treasurer to grant such approvals if it is deemed to be in the national interest. Section 16 details the conditions that may be imposed on such approvals, while section 17 covers the variation of the percentage specified in an approval. Section 18 outlines the circumstances under which an approval may be revoked, and section 19 deals with flow-on approvals for subsidiaries of approved companies.
Entities granted approval under section 14 of the Act are required to comply with any conditions imposed by the Treasurer. These conditions may include requirements to maintain certain financial health metrics, governance standards, or reporting obligations. The entities must also notify the Treasurer of any changes in their shareholding structure that could affect their approved status. Failure to comply with these conditions or to report changes as required could lead to the revocation of their approval, potentially impacting their operations and financial stability.
The Act imposes several offences and penalties for non-compliance. Under section 11, any person or group of persons who recklessly acquire shares that result in an unacceptable shareholding situation in a financial sector company commits an offence. This includes situations where an unacceptable shareholding already exists and the stake held by a person increases. The penalties for these offences can be substantial, with a maximum penalty of 400 penalty units for individuals and up to 2,000 penalty units for bodies corporate. These offences are classified as indictable under section 39 of the Act, meaning they can be prosecuted in a higher court. Additionally, under section 32(3), the Federal Court may grant an injunction to restrain any conduct in contravention of the conditions of an approval.
In summary, the Financial Sector (Shareholdings) Act 1998 provides a comprehensive framework for the approval and regulation of significant shareholdings in financial sector companies. It mandates strict compliance with approval conditions and imposes significant penalties for non-compliance, thereby ensuring that such shareholdings do not pose undue risks to the national financial system. The Act also allows for the variation and revocation of approvals, as well as the imposition of additional conditions to maintain the integrity and stability of the financial sector.