Approval to hold a stake in a financial sector company of more than 15%
Financial Sector (Shareholdings) Act 1998
SINCE
- Taishin Financial Holding Co., Ltd. (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 Taishin International Bank Co., Ltd. ABN 30 165 085 638 (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, Louis Serret, a delegate of the Treasurer, under subsection 14(1) of the Act, APPROVE the applicant holding a stake in the Company of 100 %.
This Approval commences on the date it is signed and remains in force indefinitely. Dated: 23 May 2017
[Signed]
Louis Serret
Acting Executive General Manager Specialised Institutions Division
Interpretation Document ID: 226454
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 issue of excessive foreign ownership in Australian financial institutions, thereby ensuring the stability and integrity of the financial sector. The Commonwealth Parliament established this legislation to maintain a robust financial system by preventing unacceptable shareholding situations that could potentially compromise national security or financial stability. The policy objective is to ensure that the interests of Australia are safeguarded by regulating foreign ownership in financial sector companies. The Act empowers the Treasurer to approve or disapprove shareholdings exceeding 15% in financial sector companies, ensuring that such decisions align with the national interest. This legislative framework provides the Treasurer with the authority to impose conditions, vary percentages, and revoke approvals as necessary, maintaining the stability and security of the financial sector.
Scope and Application
The Financial Sector (Shareholdings) Act 1998 applies to any person or entity seeking to hold a stake of more than 15% in a financial sector company, as defined in the Act. This legislation operates on a Commonwealth level, governing the approval process for significant shareholdings in entities that fall within the financial sector. The Act aims to ensure that such shareholdings do not lead to unacceptable situations that could threaten the stability and integrity of the financial system. The Act provides the Treasurer with the authority to approve, impose conditions on, vary, or revoke approvals for significant shareholdings, reflecting the importance of maintaining oversight in this area. The Act’s application extends through subordinate instruments which allow for the imposition of conditions and modifications to existing approvals, providing flexibility to respond to changing circumstances. Notably, the Act also encompasses flow-on approvals, ensuring that related entities within a financial sector company structure are similarly regulated. However, the Act does not specify exclusions or exemptions; rather, it delineates strict penalties for reckless acquisitions that result in unacceptable shareholding situations.
Key Provisions
The Financial Sector (Shareholdings) Act 1998 (the Act) primarily governs the shareholdings in financial sector companies, particularly when they exceed a 15% stake. Section 13 allows an applicant, such as Taishin Financial Holding Co., Ltd., to apply to the Treasurer for approval to hold more than 15% in a financial sector company. Section 14 empowers the Treasurer to grant such approval if it is deemed to be in the national interest, which is exactly what occurred in this case with the approval for a 100% stake. This approval is published in the Gazette and notified to the applicant and the company concerned.
Under this Act, entities like Taishin Financial Holding Co., Ltd. must comply with several obligations. They must apply for approval from the Treasurer if they intend to hold more than a 15% stake in a financial sector company. The Treasurer has the discretion to impose conditions on the approval, vary those conditions, or even revoke the approval if it is deemed no longer in the national interest. Additionally, the Act allows the Treasurer to vary the percentage specified in the approval on their own initiative if it is in the national interest to do so. Furthermore, the Act mandates that the Treasurer must notify both the applicant and the financial sector company of any such approval and publish a copy of this notice in the Gazette.
The Act imposes strict penalties for certain actions. Section 11 outlines an offence if a person or group acquires shares in a company resulting in an unacceptable shareholding situation or an increase in an existing unacceptable shareholding situation, done recklessly. An unacceptable shareholding situation, as defined in section 10, refers to the acquisition of a stake in a financial sector company by a person or group that might threaten the stability of the financial system. The maximum penalty for this offence is 400 penalty units for individuals and 2,000 penalty units for corporate bodies, as per the Crimes Act 1914. This offence is considered an indictable offence under section 39 of the Act.