Approval to hold a stake in a financial sector company of more than 15%
Financial Sector (Shareholdings) Act 1998
SINCE
A. Woori Finance Holdings Co., Ltd and the person(s) named in the attached Schedule (the applicants) have 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 Woori Bank (the Company), a financial sector company under the Act; and
B. I am satisfied that it is in the national interest to approve the applicants holding a stake in the Company of more than 15%,
I, Brandon Kong Leong Khoo, a delegate of the Treasurer, under subsection 14(1) of the Act, APPROVE the applicants holding a stake in the Company of 100 %.
This Approval commences on the date it is signed and remains in force indefinitely.
Dated: 10 December 2012
[Signed]
Brandon Kong Leong Khoo Executive General Manager Specialised Institutions Division
Interpretation Document ID: 205117
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.
Schedule -the person(s) who applied for approval
Korea Deposit Insurance Corporation
Overview
The Financial Sector (Shareholdings) Act 1998 was enacted by the Parliament of Australia to regulate the ownership and control of financial sector companies, ensuring that such entities are not unduly influenced by large or concentrated shareholdings. This Act aims to safeguard the stability and integrity of the financial sector, which is critical to the national economy. In 2012, the Treasurer, under delegation from the Minister for Finance, approved an application by Woori Finance Holdings Co., Ltd and the Korea Deposit Insurance Corporation for approval to hold a stake exceeding 15% in Woori Bank, a financial sector company. The approval was granted as it was deemed to be in the national interest, reflecting the policy objective of maintaining financial stability and preventing unacceptable shareholding situations that could compromise the operations of financial institutions.
Scope and Application
The Financial Sector (Shareholdings) Act 1998 applies to individuals and entities seeking to hold a stake of more than 15% in a financial sector company, specifically targeting those within the Commonwealth jurisdiction of Australia. This Act mandates that any acquisition of shares that would result in an unacceptable shareholding situation must be approved by the Treasurer. The legislation encompasses any person or group of persons acting under an arrangement that leads to such shareholdings, thereby ensuring that significant stakes in financial sector companies are subject to scrutiny and regulation. The Act extends its application through subordinate instruments, allowing the Treasurer to impose conditions, vary these conditions, or revoke the approval under specific circumstances outlined in the Act. Notably, the Act provides for flow-on approvals, meaning that if an approval is granted for a stake in a holding company, it extends to its 100% subsidiaries within the financial sector. Exclusions and exemptions are not explicitly stated in the text, but the Act's focus is on preventing and managing unacceptable shareholding situations within the financial sector.
Key Provisions
The Financial Sector (Shareholdings) Act 1998, as referenced in the gazette, contains several key provisions. Section 13 of the Act allows applicants such as Woori Finance Holdings Co., Ltd, and Korea Deposit Insurance Corporation, to apply to the Treasurer for approval to hold a stake in a financial sector company exceeding 15%. If the Treasurer is satisfied that the approval is in the national interest, they may grant such approval under section 14 of the Act. The approval in this case grants Woori Finance Holdings Co., Ltd, and Korea Deposit Insurance Corporation permission to hold a 100% stake in Woori Bank, effective from the date of signing. This approval remains in force indefinitely unless altered or revoked under the Act.
Under the Act, the obligations placed on parties such as Woori Finance Holdings Co., Ltd, and Korea Deposit Insurance Corporation include adhering to the terms and any conditions imposed by the Treasurer. Section 16(2) allows the Treasurer to impose or vary conditions on the approval at their discretion or on application by the approved parties. Furthermore, section 17(1) permits the applicant to request a variation in the percentage of the approved stake, while section 17(6) grants the Treasurer the authority to unilaterally vary the percentage if deemed in the national interest. Additionally, the Treasurer may revoke the approval if specific circumstances warrant it, as outlined in section 18(1) of the Act.
The Act also includes provisions for offences and penalties. Section 11 imposes criminal liability on individuals or entities who acquire shares in a company, resulting in an "unacceptable shareholding situation" without due regard to the potential outcome. The penalty for such an offence can reach up to 400 penalty units for individuals or 2,000 penalty units for corporate bodies, as stipulated in section 4B(3) of the Crimes Act 1914. Under section 39, an offence under section 11 is classified as an indictable offence, indicating the seriousness with which the Act treats breaches of its provisions. These provisions ensure compliance and the maintenance of financial stability within the sector.