Approval to hold the transferring business of a financial sector company
Financial Sector (Shareholdings) Act 1998
TO: Teachers Mutual Bank Limited ABN 30 087 650 459 (the applicant) SINCE
- the applicant and The University Credit Society Limited ABN 90 087 651 901 (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, Nigel Phillip John Boik, 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: 12 June 2015
[Signed]
Nigel Phillip John Boik General Manager
Specialised Institutions Division Central Region
Interpretation Document ID: 218167
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 by the Parliament of Australia to ensure the stability and integrity of the financial sector by regulating the shareholdings and business transfers of financial sector companies. This legislation addresses the need to maintain public confidence in the financial system by preventing undue concentrations of financial power and ensuring that any significant business transfers are in the national interest. The Act was introduced to fill a gap in regulatory oversight regarding the ownership and transfer of business between financial sector entities. In this context, the Treasurer has the authority to approve or disapprove applications from financial sector companies seeking to hold the transferring business of another such company, as demonstrated in the approval granted to Teachers Mutual Bank Limited for the transfer of business from The University Credit Society Limited. This approval process is integral to ensuring that such transfers align with national financial stability objectives.
Scope and Application
The Financial Sector (Shareholdings) Act 1998 applies to financial sector companies, which are defined in section 3 of the Act, and governs the approval process for the transfer of business between these entities. Specifically, the Act mandates that a financial sector company must seek approval from the Treasurer if it intends to hold more than 15% of the gross assets and liabilities of another financial sector company. This approval process is critical when a voluntary transfer of business is proposed under the Financial Sector (Business Transfer and Group Restructure) Act 1999. The scope of the Act extends nationally, ensuring consistent regulation across Australia, although its application is governed by the specific criteria outlined within the Act and its subordinate instruments. The approval given under the Act to Teachers Mutual Bank Limited to hold the transferring business of The University Credit Society Limited is a clear example of the Act's jurisdictional reach and its role in overseeing significant transactions within the financial sector.
Key Provisions
The primary sections of the Financial Sector (Shareholdings) Act 1998 that apply to this approval notice are sections 13A and 14. Section 13A requires a financial sector company, like Teachers Mutual Bank Limited, to apply to the Treasurer for approval if it intends to hold more than 15% of the gross assets and liabilities of another financial sector company. Section 14 empowers the Treasurer to approve such an application if it is in the national interest to do so. The notice indicates that the applicant has applied for approval under section 13A, and the delegate of the Treasurer has approved the application under section 14.
This approval imposes obligations on both Teachers Mutual Bank Limited and The University Credit Society Limited. The applicant must ensure that all requirements of the Act and any related regulations are met before the transfer of the transferring business. This includes providing all necessary information to the Treasurer and ensuring that the transfer is conducted in accordance with the Financial Sector (Business Transfer and Group Restructure) Act 1999. The Company, on the other hand, must cooperate with the transfer process and comply with any conditions that the Treasurer may impose as part of the approval.
Failure to comply with the requirements of the Financial Sector (Shareholdings) Act 1998 and the Financial Sector (Business Transfer and Group Restructure) Act 1999 can result in various consequences. For instance, the Treasurer may revoke the approval if it is found that the conditions of the approval have not been met. Additionally, there may be civil or criminal penalties for non-compliance with other provisions of the Act. The specific penalties depend on the nature and severity of the breach but can include fines and, in some cases, imprisonment. For example, under section 17 of the Act, a person who contravenes certain provisions can be fined up to $1.2 million for a corporation or $240,000 for an individual. These penalties underscore the importance of adhering to the requirements set out in the Act and related regulations.