Approval to hold a stake in a financial sector company of more than 20% - Swiss Re Asia Holding Pte. Ltd. (SRAHL)

Administered by Department of the Treasury

Legislation au C2019G00722 In force Gazette

Legislation content

 

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

Financial Sector (Shareholdings) Act 1998

To: Swiss Re Asia Holding Pte. Ltd. (SRAHL)

 

SINCE

 

  1. SRAHL 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 Swiss Re Asia Pte. Ltd. (SRAL);

 

B.     SRAL has applied for authorisation to carry on insurance business in Australia under subsection 12(2) of the Insurance Act 1973 (the Insurance Act);

 

C.     The approvals are required as SRAHL will become a holding company of SRAL (a financial sector company under the Act) from the time, if any, SRAL is authorised to carry on insurance business in Australia under subsection 12(2) of the Insurance Act;

 

D.     I am satisfied that it is in the national interest to approve SRAHL to hold a 100% stake in SRAL;

 

I, Brandon Kong Leong Khoo, a delegate of the Treasurer under paragraph 14(1)(a) of the Act, APPROVE SRAHL to hold a 100% stake in SRAL from the time, if any, SRAL is authorised under subsection 12(2) of the Insurance Act to carry on insurance business in Australia.

 

This instrument comes into force from the date it is signed and remains in force indefinitely. 

Dated: 12 August 2019

 

 

[Signed]

………………………

Brandon Kong Leong Khoo

Executive General Manager

Diversified Institutions Division

 


Related Approvals

Each of Swiss Re Ltd (SRL), Swiss Reinsurance Company Ltd (SRZ) and Swiss Re Reinsurance Holding Company Ltd (SRRH) is a holding company of SRAHL. Each company has approval under paragraph 14(1)(a) of the Act to hold a 100% stake in a holding company of SRAL (in SRZ, SRRH and SRAHL respectively). The approval is taken under subsection 19(1) of the Act to grant each of SRL, SRZ and SRRH a flow-on approval to hold a 100% stake in SRAL from the time, if any, SRAL becomes a financial sector company. The approval in respect of SRL was granted on 16 May 2011 and the approvals in respect of SRZ and SRRH were granted on 24 September 2018.

 

Interpretation

In this Notice:

100% subsidiary has the meaning given in section 3 of the Act

authorised insurance company has the meaning given in section 3 of the Act

financial sector company has the meaning given 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.

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.  If an Approval has been granted under paragraph 14(1)(a) 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 applicants 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 by the Parliament of Australia to regulate significant shareholdings in Australian financial sector companies, aiming to maintain the stability and integrity of the financial system. The Act addresses the problem of excessive concentration of ownership in financial institutions, which could potentially lead to risks for the financial system and the broader economy. By requiring approvals for substantial shareholdings, the Act ensures that entities holding significant stakes in financial sector companies, such as banks, insurance companies, and other financial institutions, are subject to scrutiny and oversight. This legislative framework helps in mitigating potential conflicts of interest and systemic risks that could arise from concentrated ownership structures. The approval process under the Act is overseen by the Treasurer, who is responsible for determining whether it is in the national interest to grant or vary the approval for a particular shareholding. The policy objective of the Act is to protect the financial system from undue influence or control by entities that might not align with the broader economic and financial stability goals of the nation. The Treasurer's powers include imposing conditions on approvals, varying these conditions, and revoking approvals if necessary. These measures ensure that the Act remains a dynamic tool in safeguarding Australia's financial sector against potential risks posed by significant shareholdings.

Scope and Application

The Financial Sector (Shareholdings) Act 1998 applies to entities, including corporate entities such as Swiss Re Asia Holding Pte. Ltd. (SRAHL), seeking approval to hold a stake in a financial sector company exceeding 20%. This approval is critical when the entity intends to become a holding company of a financial sector company that operates in Australia, such as Swiss Re Asia Pte. Ltd. (SRAL), which seeks authorisation to carry on insurance business. The Act's jurisdiction covers the entire Commonwealth of Australia, ensuring that any entity intending to hold significant stakes in financial sector companies must comply with the Commonwealth's regulatory framework. The Act also includes provisions for imposing conditions on approvals, varying those conditions, and revoking approvals if necessary to protect the national interest. Notably, the Act allows for flow-on approvals where a holding company of an authorised deposit-taking institution or insurance company is involved, streamlining the regulatory process. The Act's scope and enforcement are further extended through subordinate instruments, which can impose conditions or vary existing approvals, thereby providing flexibility in managing shareholdings that may impact national financial stability.

Key Provisions

The Financial Sector (Shareholdings) Act 1998, as evidenced in the Notice, outlines the procedures and conditions under which a foreign entity, such as Swiss Re Asia Holding Pte. Ltd. (SRAHL), may acquire a significant stake in a financial sector company in Australia. Section 13 of the Act requires SRAHL to apply to the Treasurer for approval to hold a stake in Swiss Re Asia Pte. Ltd. (SRAL) exceeding 20%. Given SRAHL's application, and considering SRAL's application to carry on insurance business in Australia under the Insurance Act 1973, the Act stipulates that SRAHL must obtain approval to hold a 100% stake in SRAL. The approval is contingent upon SRAL receiving authorisation to operate as an insurance company in Australia, which is specified under subsection 12(2) of the Insurance Act. Once approved, SRAHL can hold a 100% stake in SRAL, provided that it aligns with the national interest as determined by the delegate of the Treasurer. The Act imposes several obligations on entities like SRAHL. Firstly, it mandates that any entity seeking to hold a significant stake in a financial sector company must apply for and receive approval from the Treasurer. This approval process ensures that the acquisition aligns with national interests and regulatory standards. Additionally, the Act requires the delegate of the Treasurer to notify the applicants and the relevant financial sector company of the approval and to publish the notice in the Gazette, as stipulated in section 14. The approval process also includes the possibility of imposing or varying conditions on the approval, as outlined in sections 16 and 17, and the potential for revocation under section 18. The Act also outlines consequences for non-compliance with its provisions. Under section 11, any person or group of persons who recklessly acquires shares in a financial sector company, resulting in an unacceptable shareholding situation, commits an offence. This includes both the creation of such a situation and any increase in a person’s stake if an unacceptable situation already exists. The maximum penalty for such an offence is 400 penalty units for individuals and 2,000 penalty units for bodies corporate, as per subsection 4B(3) of the Crimes Act 1914. Furthermore, under section 32(3), the Federal Court has the authority to grant injunctions to prevent or require certain actions in cases where a person is contravening a condition of their approval, further enforcing compliance with the Act’s provisions.

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Area of Law
Financial Services Law
Instrument
Gazette Notice
Concepts
Definitions & Interpretation
Reporting & Disclosure Obligations
Offence Provisions
Enforcement Powers
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.