Approval to hold a stake of more than 20% in a financial sector company No. 18 of 2021

Administered by Department of the Treasury

Legislation au F2021N00225 Not in force Notifiable Instrument

Legislation content

 

 

 

Approval to hold a stake of more than 20% in a financial sector company No. 18 of 2021

Financial Sector (Shareholdings) Act 1998

 

To: Liberty Financial Group Limited ABN 59 125 611 574 and the other persons named in the schedule (the applicants)

 

SINCE:

 

  1. the applicants have applied to the Treasurer under subsection 13(1) of the Financial Sector (Shareholdings) Act 1998 (the Act) for approval to hold a stake of more than 20% in the financial sector company, Avenue Hold Limited ABN 50 628 071 198 (the NOHC);

 

B.            I have considered the matters prescribed in the Financial Sector (Shareholdings) Rules 2019; and

 

C.            I am satisfied that the criteria in subsection 14A(1) of the Act are met in relation to the applicants and the NOHC,

 

I, Therese McCarthy Hockey, a delegate of the Treasurer, under paragraph 14(1)(b) of the Act, APPROVE the applicants holding a stake of 70% in the NOHC.

 

Under subsection 16(1) of the Act, the approval is subject to the conditions set out in the schedule.

 

This instrument commences on the day it is made and remains in force for the period worked out under section 15A of the Act.

 

 

Dated: 7 September 2021

 

 

Therese McCarthy Hockey Executive Director Banking Division

Interpretation

In this instrument:

APRA means the Australian Prudential Regulation Authority.

financial sector company has the meaning given in section 3 of the Act.

relevant licensed 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.

 

Notes

This instrument will be registered on the Federal Register of Legislation as a notifiable instrument.

The Treasurer or the Treasurer’s delegate is required to give a copy of this instrument to the financial sector company and, where applicable, the relevant licensed company.

Section 16A of the Act sets out conditions that apply to an approval under paragraph 14(1)(b) of the Act.

Section 19A of the Act provides for flow-on approvals for an approval under paragraph 14(1)(b) of the Act. If the approval relates to a financial sector company that is a holding company of the relevant licensed company for the approval, subsection 19A(1)(a) provides for flow-on approvals that relate to the relevant licensed company and to each financial sector company that is both a 100% subsidiary of the holding company and a holding company of the relevant licensed company. If the approval is held by a company, subsection 19A(4) provides for flow-on approvals to be held by each officer of the company.

 

 

Schedule – the applicants

 

  1. Liberty Financial Group Limited ABN 59 125 611 574
  2. US Trust Company of Delaware (3185789, Delaware, USA) as trustee of the Ma Family Trust
  3. Hestia Vesta LLC (4515326, Delaware, USA)
  4. Zayucel Limited (14613, British Virgin Islands)
  5. Isocrates Limited (123699, British Virgin Islands) as trustee of the Isocrates Trust
  6. Z-LF Holdco LLC (7701992, Delaware, USA)
  7. Hestia Holdings BV (Netherlands)
  8. Vesta Financial BV (Netherlands)
  9. Vesta Funding BV (Netherlands)
  10. Sherman Ma
  11. Alexandra Crammond
  12. Colin Morgan
  13. George Confos
  14. Stephen Rix

 

Schedule – the conditions

Conditions on LFG

 

  1. LFG must not carry on, and must also ensure that no subsidiary of LFG other than the ADI carries on, lending business after the end of 2 years after the threshold day if:

(a)          the value of the total resident assets of the ADI has exceeded its asset threshold under subsection 14A(6) of the Act;

(b)          LFG, in accordance with subsections 15A(2) or 15A(3) of the Act, has applied for approval under paragraph 14(1)(a) of the Act in respect of LFG’s stake in the NOHC; and

(c)           approval has been granted to LFG under paragraph 14(1)(a) of the Act in respect of LFG’s stake in the NOHC.

 

2.             LFG must provide the following information to APRA on APRA’s request within 14 days of the request or as otherwise agreed with APRA:

(a)          information relevant to APRA’s prudential assessment of the ADI;

(b)          information regarding any matters or issues that may present a risk to the ADI’s financial stability or the viability of the ADI’s banking business; and

(c)           details of any material business events relating to the ADI.

 

3.             LFG must not accept funding from the NOHC, any of the NOHC’s subsidiary entities or any other entity that receives funding from the NOHC’s corporate group, for the purpose of any of LFG’s debt instruments or ‘special purpose vehicles’ (including but not limited to securitisation trusts and warehouse facilities) or any other credit/lending arrangement.

 

4.             LFG must not vary the Subscription Agreement – Series B entered into with the NOHC on 3 June 2021 or enter into any other share subscription agreement with the NOHC, unless LFG has obtained prior written approval from APRA to do so.

 

5.             LFG must:

(a)          operate its business activities independently of the NOHC and the NOHC’s subsidiaries;

(b)          not share any services or staff with the NOHC or any of the NOHC’s subsidiaries; and

(c)           not share any management or business strategies with the NOHC or any of the NOHC’s subsidiaries except in relation to the “White Label savings and transactional accounts” specified in the Subscription Agreement – Series B entered into with the NOHC on 3 June 2021,

unless LFG obtains APRA’s prior written consent to do otherwise.

 

Limits on individual shareholdings

 

  1. Z-LF Holdco LLC (7701992, Delaware, USA), Zayucel Limited (14613, British Virgin Islands) and Isocrates Limited (123699, British Virgin Islands) as trustee of the Isocrates Trust must not individually hold a direct control interest of more than 25% in the NOHC without prior approval from the Treasurer or a delegate of the Treasurer.

 

2.             Sherman Ma, US Trust Company of Delaware (3185789, Delaware, USA) as trustee of the Ma Family Trust and Hestia Vesta LLC (4515326, Delaware, USA) must not individually hold a direct control interest of more than 35% in the NOHC without prior approval from the Treasurer or a delegate of the Treasurer.

 

3.             Hestia Holdings BV (Netherlands), Vesta Financial BV (Netherlands) and Vesta Funding BV (Netherlands) must not individually hold a direct control interest of more than 55% in the NOHC without prior approval from the Treasurer or a delegate of the Treasurer.

 

4.             Alexandra Crammond, Colin Morgan, George Confos and Stephen Rix must not individually hold a direct control interest of more than 20% in the NOHC without prior approval from the Treasurer or a delegate of the Treasurer.

Interpretation

In this schedule:

banking business has the meaning given in 5 of the Banking Act 1959.

direct control interest has the meaning given in clause 11 of Schedule 1 to the Act.

LFG means Liberty Financial Group Limited.

the ADI means Avenue Bank Limited.

threshold day means the day that the value of the total resident assets of the ADI first exceeds the assets threshold for the ADI under subsection 14A(6) of the Act.

Overview

The Financial Sector (Shareholdings) Act 1998 was enacted to address the need for stringent oversight of shareholdings in financial sector companies in Australia, particularly to ensure financial stability and protect the interests of consumers and the broader economy. The Act provides a framework for the Treasurer to approve or disapprove shareholdings exceeding specified thresholds in financial sector companies. This legislative instrument, F2021N00225, approved by Therese McCarthy Hockey on behalf of the Treasurer, grants Liberty Financial Group Limited and associated entities the approval to hold a stake of more than 20% in Avenue Hold Limited, subject to certain conditions. The approval process involves a thorough assessment of the applicants against the criteria set out in the Act, ensuring that the approval aligns with the policy objective of maintaining the integrity and stability of the financial sector. This notifiable instrument is a manifestation of the Treasurer's authority under the Act to manage significant shareholdings in financial institutions, thereby safeguarding the financial system's robustness and public confidence.

Scope and Application

The Financial Sector (Shareholdings) Act 1998 applies to entities and individuals seeking to hold a stake of more than 20% in a financial sector company, and its associated rules and regulations extend to the Commonwealth of Australia. The act governs the approval process for significant shareholdings in financial sector companies, ensuring that such stakes do not pose a risk to the financial system's stability. This notifiable instrument specifically addresses the application by Liberty Financial Group Limited and other named entities for approval to hold a 70% stake in Avenue Hold Limited, subject to certain conditions. The approval granted by the Treasurer's delegate, Therese McCarthy Hockey, is contingent on compliance with the conditions set out in the schedule, which include restrictions on business activities, information provision to the Australian Prudential Regulation Authority (APRA), and limitations on individual shareholdings to prevent excessive control. The instrument provides detailed conditions applicable to Liberty Financial Group Limited and other specific entities and individuals, ensuring that their stakes remain within approved limits and that they do not engage in activities that could compromise the financial stability of the involved companies.

Key Provisions

This notifiable instrument concerns the approval for Liberty Financial Group Limited and its affiliates to hold a stake of more than 20% in Avenue Hold Limited (NOHC), a financial sector company. Under section 13(1) of the Financial Sector (Shareholdings) Act 1998 (the Act), the applicants sought approval from the Treasurer, and the Treasurer's delegate, Therese McCarthy Hockey, has granted the approval on the condition that the criteria in section 14A(1) of the Act are met (subsection 14(1)(b) of the Act). This approval permits Liberty Financial Group Limited to hold a 70% stake in NOHC, subject to the conditions detailed in the accompanying schedule (subsection 16(1) of the Act). The Act imposes several obligations on the applicants. Liberty Financial Group Limited (LFG) must refrain from conducting a lending business after two years from the threshold day if the value of the total resident assets of the Authorised Deposit-taking Institution (ADI) exceeds the asset threshold specified under section 14A(6) of the Act, provided LFG has applied for and received approval regarding its stake in NOHC (Schedule, Condition 1). LFG must also provide information to the Australian Prudential Regulation Authority (APRA) within 14 days of any request, or as otherwise agreed, concerning APRA's prudential assessment of the ADI, any risks to the ADI's financial stability, and any material business events relating to the ADI (Schedule, Condition 2). Furthermore, LFG must operate its business independently from NOHC and its subsidiaries, refrain from sharing services, staff, or management strategies unless expressly approved by APRA (Schedule, Conditions 3, 4, and 5). Additionally, the instrument sets forth specific limits on individual shareholdings. For instance, Z-LF Holdco LLC, Zayucel Limited, and Isocrates Limited must not individually hold more than 25% direct control interest in NOHC without prior approval from the Treasurer (Schedule, Condition 1). Similarly, Sherman Ma, US Trust Company of Delaware as trustee of the Ma Family Trust, and Hestia Vesta LLC must not individually hold more than 35% direct control interest (Schedule, Condition 2). Hestia Holdings BV, Vesta Financial BV, and Vesta Funding BV must not individually hold more than 55% direct control interest (Schedule, Condition 3). Lastly, Alexandra Crammond, Colin Morgan, George Confos, and Stephen Rix must not individually hold more than 20% direct control interest (Schedule, Condition 4). Failure to comply with the conditions set out in this instrument may result in civil or criminal consequences. The specific penalties for breach of the Act are not detailed in this notifiable instrument, but generally, the Act allows for significant penalties for non-compliance. Civil penalties may include substantial fines, while criminal penalties could involve imprisonment. The exact penalties would be determined based on the nature and severity of the breach, in accordance with the relevant sections of the Financial Sector (Shareholdings) Act 1998.

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Financial Regulation
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Notifiable instrument
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Reporting & Disclosure Obligations
Licensing & Registration
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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.