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Approval to hold a stake of more than 20% in a financial sector company No. 5 of 2021

Approval to hold a stake of more than 20% in a financial sector company No. 5 of 2021

Administered by Department of the Treasury

Legislation au F2021N00061 In force Notifiable Instrument

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Financial Sector (Shareholdings) Act 1998

To: Swiss Re Ltd (SRL), Swiss Re Corporate Solutions Ltd (SRCS) and Swiss Re Corporate Solutions Holding Company AG (SRCSH) (the applicants)

SINCE:

A. The applicants have applied to the Treasurer under section 13 of the Financial Sector (Shareholdings) Act 1998 (the Act) for the following approvals:

SRCSH to hold 100% stake in Swiss Re International SE (SRI);
SRCS to hold a 100% stake in SRCSH and SRI; and
SRL to hold a 100% stake in SRCS, SRCSH and SRI;

B. The approval is required as SRCSH will become a holding company of SRI, a financial sector company under the Act;

C. I am satisfied that it is in the national interest to approve the approvals being sought in Recital A. above;

I, Sharyn Reichstein, a delegate of the Treasurer, APPROVE:

SRCSH to hold 100% stake in SRI;
SRCS to hold a 100% stake in SRCSH and SRI; and
SRL to hold a 100% stake in SRCS, SRCSH and SRI.

This instrument takes effect on the date it is signed and remains in force indefinitely.

[Signed]

Dated: 30th March 2021

Sharyn Reichstein

General Manager

Insurance Division

Interpretation

In this Notice:

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

APRA means the Australian Prudential Regulation Authority

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 for an approval under paragraph 14(1)(a) of the Act. Under subsection 19(1), if an approval has been granted for the holding of a stake of more than 20% in a financial sector company that is a holding company of an authorised deposit taking institution or an authorised insurance company, then an approval is taken to exist for the holding of the same percentage stake in each financial sector company that is a 100% subsidiary of the holding company. Under subsection 19(3), if an approval has been granted for a company to hold a stake in a financial sector company of more than 20%, there is taken to be in force at that time an approval for each officer of the company to hold the same percentage stake in the financial sector 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 this instrument will be registered in the Federal Register of Legislation as a notifiable instrument.

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.

Overview

The Financial Sector (Shareholdings) Act 1998 was enacted to regulate and monitor significant shareholdings in financial sector companies, aiming to protect the stability and integrity of the Australian financial system. This legislation was introduced to address the potential risks that large shareholdings in financial institutions might pose to the national economy and the financial sector. The Act empowers the Treasurer to grant or deny approvals for significant shareholdings and to impose conditions on such approvals. Enacted by the Commonwealth Parliament, the policy objective of the Act is to prevent unacceptable shareholding situations that could undermine the financial system’s stability and public confidence. The Act ensures that significant shareholdings are subject to scrutiny, thereby safeguarding the financial sector from undue influence or control that might threaten its stability or integrity.

Scope and Application

The Financial Sector (Shareholdings) Act 1998 applies to entities seeking to hold a stake exceeding 20% in a financial sector company, which is defined in section 3 of the Act. The legislation covers both domestic and international entities, given the approval sought by Swiss Re Ltd, Swiss Re Corporate Solutions Ltd, and Swiss Re Corporate Solutions Holding Company AG pertains to their ownership structures. The Act’s jurisdiction is Commonwealth-wide, and it extends to any entities or persons intending to acquire shares in an Australian financial sector company. The Act provides for exclusions and exemptions under specific conditions, such as those outlined in section 19, which provides for flow-on approvals. Furthermore, the Act allows the Treasurer to impose, vary, or revoke conditions on approvals under sections 16 and 17, and to revoke approvals under section 18, thereby extending or restricting the application of the Act through subordinate instruments.

Key Provisions

This notifiable instrument grants approval for Swiss Re Ltd (SRL), Swiss Re Corporate Solutions Ltd (SRCS), and Swiss Re Corporate Solutions Holding Company AG (SRCSH) to hold significant stakes in financial sector companies, as outlined in section 13 of the Financial Sector (Shareholdings) Act 1998 (the Act). Specifically, the approval allows SRCSH to hold a 100% stake in Swiss Re International SE (SRI), SRCS to hold a 100% stake in SRCSH and SRI, and SRL to hold a 100% stake in SRCS, SRCSH, and SRI. The approval is necessary because SRCSH will become a holding company of SRI, a financial sector company under the Act. The approval is granted as it is deemed to be in the national interest, in accordance with the criteria set out in the Act. The Act imposes several obligations on the parties involved. Firstly, the applicants must ensure that the approved shareholding structures are maintained. The Treasurer, as the approving authority, has the power to impose additional conditions or vary existing ones under section 16(2) of the Act. This can be done on the Treasurer's own initiative or upon application by the applicant. Additionally, the applicants must notify the Treasurer if they wish to vary the percentage of their stake, as per section 17(1) of the Act. The Treasurer also retains the authority to unilaterally vary the approved percentage under section 17(6) if deemed necessary for national interest. Furthermore, the Act allows the Treasurer to revoke an approval if specific conditions are met, as outlined in section 18(1). Failure to comply with the terms of the approval or engaging in conduct that contravenes any imposed conditions can lead to serious consequences. Under section 11 of the Act, any person or group of persons who recklessly acquires shares in a financial sector company and thereby creates or exacerbates an unacceptable shareholding situation commits an offence. The penalty for such an offence can be up to 400 penalty units for an individual, or 2,000 penalty units for a body corporate, as stated in subsection 4B(3) of the Crimes Act 1914. Additionally, under section 32(3) of the Act, the Federal Court can grant an injunction to restrain any person from engaging in conduct that breaches the conditions of the approval. These provisions underscore the importance of adhering to the terms of the approval to avoid legal repercussions.

Area of Law: Financial Regulation
Instrument: Notifiable instrument
Concepts: Definitions & Interpretation; Offence Provisions; Enforcement Powers
Catchwords: unacceptable shareholding situation; penalty units; injunction

Interactions

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.

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