Approval to hold a stake in a financial sector company of more than 20% - Cuscal Limited

Administered by Department of the Treasury

Legislation au C2019G00672 In force Gazette

Legislation content

 

Approval to hold a stake in a financial sector company of more than 20%

Financial Sector (Shareholdings) Act 1998

 

SINCE:

 

A. Cuscal Limited ABN 95 087 822 455 (the applicant) has applied to the Treasurer under section 13 of the Financial Sector (Shareholdings) Act 1998 (the Act) for approval to hold a 100% stake in 86400 Holdings Pty Ltd ABN 36 621 802 097 and 86400 Ltd ABN 13 621 804 813 (the companies), which are financial sector companies under the Act; and
 

B. I am satisfied that it is in the national interest to approve the applicant holding a stake in the companies of more than 20%,

 

 

I, Brandon Khoo, a delegate of the Treasurer, under paragraph 14(1)(a) of the Act, APPROVE the applicant holding a 100% stake in the company.

 

Under subsection 16(1) of the Act, this Approval is subject to the conditions set out in the attached Schedule.

 

This approval has effect from the date it is signed and remains in force in accordance with the conditions imposed under subsection 16(1) of the Act.

 

 

Dated:   18 July 2019

 

[Signed]

 

 

 

…………………

Brandon Khoo

Executive General Manager

Diversified Institutions Division


Interpretation

In this Schedule:

 

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) 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.  Under subsection 19(1), if an Approval has been granted for the holding of a stake in a financial sector company that 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. Under subsection 19(3), if an Approval has been granted for a company to hold a stake in a financial sector company there is taken to be in force at that time an approval for each officer of the company to hold the same percentage stake in the financial sector 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 conditions

 

  1. The approval under this notice remains in force until the applicant’s total exposures, including capital support, to the 86400 group exceeds $100 million or a greater amount agreed in writing by APRA.[1]
  2. An application to increase the total exposures permitted under condition 1 in this Schedule must demonstrate that the applicant has sufficient capital for its future needs after the proposed investment and include a forecast showing the applicant’s projected future capital position after the proposed investment. The forecast should extend for at least two years.

 

In this Schedule:

 

APRA means the Australian Prudential Regulation Authority.

 

86400 group means 86400 Holdings Pty Ltd and its subsidiaries.

 

 

 

 

[1] This written agreement must be authorised by a General Manager or Executive General Manager of the Diversified Institutions Division or Specialised Institutions Division of APRA.

Overview

The Financial Sector (Shareholdings) Act 1998 was enacted by the Commonwealth Parliament to address the problem of potentially excessive concentrations of shareholding in financial sector companies, which could lead to risks in the financial system. The Act provides a framework for the Treasurer to assess and approve shareholdings in financial sector companies that exceed certain thresholds, aiming to protect the stability and integrity of the financial sector. This legislative measure ensures that significant stakes in financial entities are held under conditions that safeguard against risks to financial stability. Under the Act, the Treasurer may approve or impose conditions on shareholdings exceeding 20% in financial sector companies, and has the authority to vary or revoke these approvals if necessary to protect the national interest. The Act also includes provisions for offences related to reckless acquisitions of shares that result in unacceptable shareholding situations, with associated penalties to deter non-compliance.

Scope and Application

The Financial Sector (Shareholdings) Act 1998 applies to individuals or entities seeking to hold a stake in a financial sector company that exceeds 20%. The Act governs the acquisition and holding of shares in entities within Australia's financial sector, ensuring that such shareholdings do not result in unacceptable situations that could compromise the stability and integrity of the financial system. This Commonwealth legislation applies to all entities within the designated financial sector, regardless of their location within Australia, and mandates that any person or entity seeking to acquire a significant stake must obtain approval from the Treasurer. The Act delineates an "unacceptable shareholding situation" as one where the acquisition of shares results in an individual or entity holding more than 20% of a financial sector company, unless an exemption or special circumstances apply. The Act also allows for the Treasurer to impose, modify, or revoke conditions on the approval through subordinate instruments, and includes provisions for flow-on approvals in cases where the approved entity is a holding company for other subsidiaries. This ensures a cohesive regulatory approach across interconnected financial entities.

Key Provisions

The Financial Sector (Shareholdings) Act 1998 provides a framework for the approval and regulation of significant shareholdings in financial sector companies. Under this Act, specific sections outline the process and requirements for obtaining approval to hold a stake in a financial sector company. For instance, section 13 allows a person to apply to the Treasurer for approval to hold a stake in a financial sector company, while section 14 empowers the Treasurer to grant such approval under certain conditions. In the given case, Cuscal Limited has applied for and received approval to hold a 100% stake in 86400 Holdings Pty Ltd and 86400 Ltd, both of which are classified as financial sector companies under the Act. The Act imposes several obligations on the parties it governs. For example, section 14(1)(a) requires the Treasurer to consider whether it is in the national interest to approve the shareholding. In this instance, the delegate of the Treasurer, Brandon Khoo, has approved the application on the basis that it is in the national interest. Additionally, section 16(1) mandates that any approval granted by the Treasurer is subject to specific conditions, which in this case are detailed in the attached Schedule. These conditions must be adhered to for the approval to remain valid. Breach of the provisions under this Act can lead to significant consequences. Section 11 of the Act stipulates that any person or group of persons who acquire shares in a financial sector company in a manner that results in an unacceptable shareholding situation, or an increase in an existing unacceptable shareholding situation, commits an offence if they do so recklessly. The maximum penalty for this offence is 400 penalty units for an individual and 2,000 penalty units for a body corporate. Furthermore, subsection 4B(3) of the Crimes Act 1914 specifies that penalty units are to be converted into monetary amounts as per the Criminal Code Act 1995. The Schedule to the approval also imposes specific conditions that the applicant must comply with, such as not exceeding total exposures to the 86400 group of $100 million, or a higher amount agreed upon in writing by the Australian Prudential Regulation Authority (APRA). Failure to comply with these conditions may result in the revocation of the approval, as stipulated in section 18(1) of the Act.

Legal classification tags

Area of Law
Financial Regulation
Instrument
Gazette Notice
Concepts
Definitions & Interpretation
Regulatory Standards
Offence Provisions
Catchwords
Approval
Financial Sector Company
Unacceptable Shareholding Situation

Interactions

Authorises

All Versions

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.