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

Overview

The Financial Sector (Shareholdings) Act 1998 was enacted to regulate significant shareholdings in financial sector companies in Australia, addressing the potential risks that such shareholdings might pose to the stability and integrity of the financial system. The Act empowers the Treasurer, through delegation, to approve or disapprove applications for holdings exceeding 20% in financial sector companies, ensuring that such significant interests align with the national interest. This legislative framework was introduced by the Parliament of Australia with the policy objective of maintaining and enhancing the safety and soundness of the financial sector, thereby protecting consumers and promoting confidence in the financial system. This notifiable instrument, numbered F2022N00001, grants approval to Crédit Agricole S.A. and Delfinances to hold a stake of more than 20% in Crédit Agricole Corporate and Investment Bank. Therese McCarthy Hockey, as a delegate of the Treasurer, has determined that this approval is in the national interest and has thus authorised the shareholdings. The instrument, which commences on 4 January 2022, is intended to remain in force indefinitely, subject to the conditions and provisions set out in the Financial Sector (Shareholdings) Act 1998.

Scope and Application

The Financial Sector (Shareholdings) Act 1998 applies to any entity, including individuals and corporate bodies, seeking to hold a stake of more than 20% in an Australian financial sector company. This Act pertains to the Commonwealth of Australia, covering all its states and territories. It does not specify exclusions or exemptions within the text of the notifiable instrument, but the Act itself may contain provisions that exclude certain entities or transactions from its purview. The scope of the Act can be extended or restricted through subordinate instruments, such as regulations or guidelines issued by the Australian Prudential Regulation Authority (APRA) or the Treasurer. The notifiable instrument in question specifically approves Crédit Agricole S.A. and Delfinances to hold a 97.77% stake in Crédit Agricole Corporate and Investment Bank, effective from 4 January 2022, and this approval remains in force indefinitely. This approval process also provides for flow-on approvals under certain conditions, such as when the approved entity is a holding company of an authorised deposit-taking institution or an authorised insurance company, or when it involves officers of the company.

Key Provisions

The key operative sections of this legislation pertain to the approval of Crédit Agricole S.A. and Delfinances holding a stake of more than 20% in Crédit Agricole Corporate and Investment Bank ARBN 654 071 075, a financial sector company, as defined under section 3 of the Financial Sector (Shareholdings) Act 1998 (the Act). Under subsection 13(1), the applicants must apply to the Treasurer for approval, which can be granted if it is determined to be in the national interest, as outlined in paragraph 14(1)(a) of the Act. Once approved, the applicants can hold a stake of 97.77% in the financial sector company, as specified in the instrument. The Act imposes several obligations and requirements on the parties it governs. The applicants must apply for approval to hold a stake exceeding 20% in a financial sector company, and this approval is contingent upon it being deemed to be in the national interest. Additionally, the Treasurer or their delegate must provide a copy of this instrument to the relevant financial sector company and publish it in the Gazette. The Act also includes provisions for flow-on approvals under section 19, which means that if an approval is granted for a holding company to hold a stake of more than 20% in a financial sector company, it is automatically granted for the same percentage stake in each 100% subsidiary of the holding company. In terms of offences, penalties, or civil/criminal consequences for breach, the Financial Sector (Shareholdings) Act 1998 does not explicitly mention any specific penalties within the text of this notifiable instrument. However, breaches of the Act or its provisions may lead to enforcement actions, fines, or other legal consequences as determined by the relevant authorities. The maximum penalties for breaches of the Act may vary depending on the specific provision being breached and the nature of the offence. It is essential for the parties involved to adhere to the requirements and obligations set out in the Act to avoid any potential legal repercussions.