Approval to hold the transferring business of a financial sector company
Financial Sector (Shareholdings) Act 1998
TO: Community First Credit Union Limited ABN 80 087 649 938 (the applicant) SINCE
- the applicant and Cape Credit Union Limited ABN 78 087 649 929 (the Company) are financial sector companies within the meaning of the Financial Sector (Shareholdings) Act 1998 (the Act); and
- 100% of the gross assets and liabilities of the Company (the transferring business) are to be transferred to the applicant as a voluntary transfer of business under the Financial Sector (Business Transfer and Group Restructure) Act 1999 (the Business Transfer Act); and
C. the applicant has applied to the Treasurer under section 13A of the Act, to hold the transferring business; and
D. I am satisfied that it is in the national interest to approve the applicant holding the transferring business,
I, Louis Serret, a delegate of the Treasurer, under subsection 14(1) of the Act, APPROVE the applicant holding the transferring business.
This Approval commences on the date it is signed and remains in force indefinitely. Dated: 7 May 2018
[Signed]
Louis Serret General Manager
Specialised Institutions Division
Interpretation Document ID: 229996
In this Notice
financial sector company has the meaning given in section 3 of the Act.
Note 1 Regulation 6 of the Financial Sector (Transfers of Business) Regulations 1999 provides that, for
subsection 43(4) of the Business Transfer Act, the provisions of the Act apply in relation to a transfer of business as if section 13A were inserted after section 13 of the Act. Section 13A provides that a financial sector company to which more than 15% of the gross assets and liabilities of another financial sector company (the transferring business) is to be transferred under the Act, must apply to the Treasurer for approval to hold the transferring business and that Division 3 of Part 2 of the Act applies to the application as if the transferring business were a separate financial sector company.
Note 2 Under section 14 of the Act, the Treasurer must give written notice of the approval to the applicant
and arrange for a copy of the notice to be published in the Gazette and given to the Company.
Overview
The Financial Sector (Shareholdings) Act 1998 was enacted to address the need for regulatory oversight in the financial sector, particularly concerning shareholdings in financial sector companies. This Act provides the framework for the Treasurer to approve the acquisition of significant shareholdings in financial institutions to ensure that such acquisitions do not pose undue risk to the stability of the financial system. Enacted by the Australian Parliament, the Act aims to maintain the integrity and stability of the financial sector by ensuring that any significant transfer of business or assets within financial institutions is done under strict regulatory scrutiny. This ensures that the national interest is protected against potential systemic risks that could arise from such transfers. The approval process under this Act allows the Treasurer to evaluate whether the transfer of business, such as the one from Cape Credit Union Limited to Community First Credit Union Limited, aligns with the broader objectives of financial stability and consumer protection.
Scope and Application
The Financial Sector (Shareholdings) Act 1998 applies to financial sector companies as defined by the Act. In this instance, the approval granted under section 13A of the Act pertains specifically to Community First Credit Union Limited, an authorised deposit-taking institution, and Cape Credit Union Limited, which are both categorised as financial sector companies. The approval allows Community First Credit Union Limited to hold the transferring business of Cape Credit Union Limited, a transaction which involves the transfer of 100% of the gross assets and liabilities of the latter to the former. The Act's jurisdiction extends to the Commonwealth level, with the Treasurer, or a delegate, being responsible for approving such transactions in the national interest. The approval process also includes publication of the decision in the Gazette and notification to the relevant parties. Notably, the Act's application is facilitated by Regulation 6 of the Financial Sector (Transfers of Business) Regulations 1999, which modifies the Financial Sector (Business Transfer and Group Restructure) Act 1999 to incorporate provisions from the Financial Sector (Shareholdings) Act 1998, ensuring that the transfer is treated with the same regulatory scrutiny as if it were a separate financial sector company.
Key Provisions
The Financial Sector (Shareholdings) Act 1998 governs the approval process for financial sector companies to hold the transferring business of another such company. Under this Act, Community First Credit Union Limited (the applicant) has applied to the Treasurer for approval to hold the transferring business of Cape Credit Union Limited, which is a voluntary transfer of business under the Financial Sector (Business Transfer and Group Restructure) Act 1999 (section 13A). The approval is based on the satisfaction that it is in the national interest (section 14(1)).
The obligations imposed by the Act on the applicant include the necessity to apply for approval from the Treasurer before holding the transferring business if more than 15% of the gross assets and liabilities are to be transferred (section 13A). Additionally, the Act mandates that the applicant must ensure the transfer complies with all relevant legislative requirements, including those under the Financial Sector (Business Transfer and Group Restructure) Act 1999 (Regulation 6 of the Financial Sector (Transfers of Business) Regulations 1999).
Should there be a breach of the Act's provisions, consequences may include civil or criminal penalties. Although the specific penalties are not outlined in the approval notice, the Act generally allows for substantial fines and potential imprisonment for serious violations. For example, under section 13 of the Act, penalties may be imposed for non-compliance with the approval requirements or for misleading or deceptive conduct. The severity of these penalties can vary based on the nature and extent of the breach, but they serve to ensure adherence to the legislative framework governing financial sector companies.