Approval to hold a stake in a financial sector company of more than 20%
Financial Sector (Shareholdings) Act 1998
To: Togethr Trustees Pty Ltd ABN 64 006 964 049 ATF MyLifeMyMoney Superannuation Fund ABN 50 237 896 957 (Trustee) and Togethr Holdings Pty Ltd ABN 11 604 515 791 (Holdings)
SINCE
- On 16 August 2019, Trustee and Holdings applied to the Treasurer under section 13 of the Financial Sector (Shareholdings) Act 1998 (the Act) for approval to each hold a stake of more than 20% in MyLifeMyFinance Limited ABN 54 087 651 750 (MLMF), a financial sector company under the Act; and
B. I am satisfied it is in the national interest to approve Trustee and Holdings each holding a stake in MLMF of more than 20%,
I, Adrian Rees, a delegate of the Treasurer, under paragraph 14(1)(a) of the Act, APPROVE Trustee and Holdings each holding a 100% stake in MLMF.
Under subsection 16(1) of the Act, this Approval is subject to the conditions set out in the attached Schedule.
This instrument comes into force on the date that Trustee and Holdings acquire a 100% stake in MLMF and remains in force indefinitely.
Dated 3 October 2019
[Signed]
……………………………
Adrian Rees
General Manager
Diversified Institutions Division
Interpretation
In this Notice:
100% subsidiary has the meaning given in section 3 of the Act.
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) 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 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 subsection 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.
Schedule – the conditions imposed on this Approval
The aggregate market value of MLMF’s total assets must not at any time exceed 5% of the aggregate market value of the total assets of the MyLifeMyMoney Superannuation Fund.
Overview
The Financial Sector (Shareholdings) Act 1998 was enacted to regulate the acquisition of significant shareholdings in financial sector companies, ensuring that such acquisitions do not lead to unacceptable shareholding situations that could undermine the stability and integrity of the financial sector. The Act, which was passed by the Parliament of Australia, aims to maintain public confidence in the financial sector by preventing undue concentration of ownership and control within financial institutions. The Act requires entities to seek approval from the Treasurer before acquiring a stake of more than 20% in a financial sector company, with the objective of safeguarding against potential conflicts of interest and ensuring that financial sector companies are managed in the national interest.
On 16 August 2019, Togethr Trustees Pty Ltd and Togethr Holdings Pty Ltd applied to the Treasurer for approval to hold a 100% stake in MyLifeMyFinance Limited, a financial sector company. Following the application, Adrian Rees, as a delegate of the Treasurer, approved the acquisition under section 14 of the Act, subject to conditions outlined in the attached Schedule. The approval is in force from the date Togethr Trustees and Togethr Holdings acquire their 100% stake in MyLifeMyFinance Limited and remains in effect indefinitely. The Treasurer retains the authority to impose additional conditions, vary existing conditions, or revoke the approval if it is deemed no longer in the national interest.
Scope and Application
The Financial Sector (Shareholdings) Act 1998 applies to entities seeking to hold a stake exceeding 20% in financial sector companies, with a focus on maintaining financial stability and national security. This Act, which operates at the Commonwealth level, mandates that entities such as Togethr Trustees Pty Ltd and Togethr Holdings Pty Ltd must obtain approval from the Treasurer before acquiring a significant stake in a financial sector company like MyLifeMyFinance Limited. The approval process ensures that such acquisitions are in the national interest and are subject to specific conditions, which may be varied or revoked by the Treasurer. The Act also imposes penalties for reckless acquisitions that result in unacceptable shareholding situations. The Act's jurisdiction is limited to financial sector companies, and its application extends to related entities through mechanisms like flow-on approvals. The approval granted to Togethr Trustees Pty Ltd and Togethr Holdings Pty Ltd to hold a 100% stake in MyLifeMyFinance Limited is subject to conditions that ensure the financial stability of the superannuation fund in relation to the target company's asset value.
Key Provisions
The Financial Sector (Shareholdings) Act 1998 (the Act) regulates shareholdings in financial sector companies, ensuring stability and protection in the financial sector. Section 13 of the Act allows entities to apply to the Treasurer for approval to hold a stake of more than 20% in a financial sector company. Section 14 enables the Treasurer to grant such approval if satisfied it is in the national interest. The Act stipulates that the approval can be subject to specific conditions, as outlined in the attached Schedule.
Under this Act, Togethr Trustees Pty Ltd and Togethr Holdings Pty Ltd applied for and received approval to hold a 100% stake in MyLifeMyFinance Limited, a financial sector company. This approval is conditional, as evidenced in the attached Schedule, which imposes specific limitations and requirements on the entities’ shareholding. These conditions are integral to the approval and must be adhered to by the entities to maintain compliance with the Act. The entities are required to notify the Treasurer of any changes in their shareholding percentage and may be subject to further conditions or variations by the Treasurer.
The Act imposes strict obligations on the parties governed by it. The entities must ensure their shareholding in the financial sector company does not exceed the approved percentage and must comply with any conditions imposed by the Treasurer. Failure to adhere to these conditions or to notify the Treasurer of any changes in shareholding can lead to serious consequences. The Act also mandates that the Treasurer must be informed of any proposed changes in shareholding percentage by the entities, ensuring transparency and accountability.
Breaches of the Act or its conditions can result in significant penalties and consequences. Section 11 of the Act outlines that an unacceptable shareholding situation, which can occur due to reckless acquisition of shares, is an indictable offence. The maximum penalties include 400 penalty units for individuals and up to 2,000 penalty units for bodies corporate. Additionally, under section 32(3) of the Act, the Federal Court can grant an injunction to restrain any conduct in contravention of the conditions of an approval. These provisions underscore the importance of compliance with the Act and its conditions.