Approval to hold a stake of more than 20% in a financial sector company No. 19 of 2021

Administered by Department of the Treasury

Legislation au F2021N00224 In force Notifiable Instrument

Legislation content

 

 

 

Approval to hold a stake of more than 20% in a financial sector company No. 19 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 Bank Limited ABN 24 628 073 085 (the ADI);

 

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 ADI,

 

I, Therese McCarthy Hockey, a delegate of the Treasurer, under paragraph 14(1)(b) of the Act, APPROVE the applicants holding a stake of 100% in the ADI.

 

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 General Manager

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. Avenue Hold Limited ABN 50 628 071 198
  3. US Trust Company of Delaware (3185789, Delaware, USA) as trustee of the Ma Family Trust
  4. Hestia Vesta LLC (4515326, Delaware, USA)
  5. Zayucel Limited (14613, British Virgin Islands)
  6. Isocrates Limited (123699, British Virgin Islands) as trustee of the Isocrates Trust
  7. Z-LF Holdco LLC (7701992, Delaware, USA)
  8. Hestia Holdings BV (Netherlands)
  9. Vesta Financial BV (Netherlands)
  10. Vesta Funding BV (Netherlands)
  11. Sherman Ma
  12. Alexandra Crammond
  13. Colin Morgan
  14. George Confos
  15. 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 entity 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 ADI 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 ADI 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 ADI 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 ADI 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 NOHC means Avenue Hold 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 by the Australian Parliament to regulate the shareholdings in financial sector companies, particularly to ensure that such companies remain stable and do not fall under undue control which could threaten financial stability. The Act was introduced to address concerns over the concentration of ownership in financial institutions and to prevent conflicts of interest or undue influence that could arise from significant shareholdings. This notifiable instrument, F2021N00224, was made under the authority of the Act, and it grants approval to Liberty Financial Group Limited and associated entities to hold a stake of more than 20% in Avenue Bank Limited, subject to specific conditions designed to maintain the financial stability and integrity of the banking sector. The approval process involved consideration of the prescribed matters and satisfaction of the criteria set out in the Act, ensuring that the approval aligns with the policy objective of safeguarding the financial system. This notifiable instrument is subject to the conditions outlined in the schedule and will be registered on the Federal Register of Legislation.

Scope and Application

The Financial Sector (Shareholdings) Act 1998 applies to entities or individuals seeking to hold a significant stake in a financial sector company, which is defined in section 3 of the Act. In this specific case, the legislation is applied to Liberty Financial Group Limited and its associated entities and individuals listed in the schedule, granting them approval to hold a stake of 100% in Avenue Bank Limited, a financial sector company. The Act operates on a Commonwealth level, thus having a national jurisdictional reach. The approval is subject to certain conditions, such as restrictions on carrying on lending businesses, providing information to the Australian Prudential Regulation Authority, and limitations on funding and share subscription agreements. Furthermore, individual shareholding limits are imposed on certain entities and individuals, ranging from 20% to 55%, contingent upon obtaining prior approval from the Treasurer or their delegate. The Act's application may be extended or restricted through subordinate instruments, such as the Financial Sector (Shareholdings) Rules 2019, which outline the prescribed matters to be considered during the approval process.

Key Provisions

The key operative sections of this legislation pertain to the approval of Liberty Financial Group Limited and associated entities to hold a 100% stake in Avenue Bank Limited, a financial sector company. This approval is granted under subsection 13(1) of the Financial Sector (Shareholdings) Act 1998, following consideration of the relevant criteria and conditions specified in the Financial Sector (Shareholdings) Rules 2019. The approval is subject to the conditions outlined in the schedule attached to this instrument (subsection 16(1) of the Act). These conditions include restrictions on the lending business activities of Liberty Financial Group Limited and its subsidiaries, obligations to provide information to the Australian Prudential Regulation Authority (APRA), limitations on funding sources, and restrictions on varying share subscription agreements and sharing management strategies or business services with other entities (subsections 16A and 19A of the Act). The legislation imposes several obligations on the parties involved. Liberty Financial Group Limited and its subsidiaries are required to refrain from conducting a lending business after a specified period if certain conditions are met, including exceeding a particular asset threshold and applying for and receiving approval for a stake in another financial sector company (conditions 1 and 2 of the schedule). Additionally, Liberty Financial Group Limited must furnish APRA with relevant information upon request within a stipulated timeframe (condition 2 of the schedule). The legislation also mandates that Liberty Financial Group Limited must operate independently of Avenue Hold Limited and its subsidiaries, and must not share services, staff, or management strategies without obtaining prior written approval from APRA (conditions 3, 4, and 5 of the schedule). Furthermore, there are limits on the individual shareholdings of specific entities and individuals, which cannot exceed certain percentages of direct control interest in the financial sector company without prior approval from the Treasurer or a delegate (conditions 6-9 of the schedule). The Act also outlines potential offences, penalties, or consequences for breaches of its provisions. While specific penalties are not detailed in the provided text, breaches of the conditions attached to the approval could result in civil or criminal penalties under the Financial Sector (Shareholdings) Act 1998 and related regulations. Non-compliance with the obligations to provide information to APRA or to adhere to the specified conditions may lead to enforcement actions by the relevant authorities, including potential fines, revocation of approval, or other regulatory measures. The severity of the penalties would depend on the nature and extent of the breach, as well as any relevant provisions within the Act and associated rules.

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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.