EXPLANATORY STATEMENT
STATUTORY RULES 1985 NO. 67
ISSUED BY THE AUTHORITY OF THE TREASURER
BANKS (SHAREHOLDINGS) ACT 1972
BANKS (SHAREHOLDINGS) REGULATIONS
Section 10 of the Banks (Shareholdings) Act 1972 (the Act) limits the nominal amount of the voting shares of a bank incorporated in Australia in which a person (including a corporation) may have an interest to less than 10 per cent of the total nominal amount of the voting shares of the bank. Under sub-section 10(4) of the Act the Governor-General may, after application made to the Treasurer by a person, fix a higher percentage for that person by instrument published in the Gazette.
Section 17 of the Act provides that the Governor-General may make regulations not inconsistent with the Act, prescribing all matters that by the Act are required or permitted to be prescribed or are necessary or convenient to be prescribed for carrying out or giving effect to the Act.
The Mutual Life and Citizens’ Assurance Company Ltd (MLC) and Paribas Group Australia Pty Limited (PGA) have applied in writing to the Treasurer to acquire up to 15 per cent of the voting shares of Australian Bank Limited (ABL). Both MLC and PGA are considered to be capable of providing the ongoing support of ABL commensurate with their having a 15 per cent interest in the bank.
Paragraph 8(4)(c) of the Act states ‘Where a body corporate has an interest in a share and a person is, the associates of a person are, or a person and his associates are, entitled to exercise or control the exercise of not less than three-twentieths of the votes attached to the voting shares in the body corporate, that person shall be deemed to have an interest in that share’. Each corporation with a deemed interest in more than 10 per cent of the voting shares of a bank is required to have a higher percentage than 10 per cent fixed under sub-section 10(4).
By virtue of paragraph 8(4)(c) the following corporations would be deemed to have the same interest in the bank as MLC and PGA:
(a) The MLC Limited which holds all the issued shares capital of The Mutual Life & Citizens’ Assurance Company Limited;
(b) Lend Lease Corporation Limited which holds 49.47 per cent of the shares in The MLC Limited;
(c) Industrial Equity Limited which holds 19.9 per cent of the shares in The MLC Limited;
(d) The Citizens & Graziers’ Life Assurance Company Limited which holds 53.6 per cent of the share in Industrial Equity Limited;
(e) Brierley Investments Limited which holds 96.3 per cent of the shares in the Citizens & Graziers’ Life Assurance Company Limited;
(f) Paribas International which holds 66.7 per cent of the shares in Paribas Group Australia Pty Ltd;
(g) Paribas North America Inc which holds 33.3 per cent of the shares in Paribas Group Australia Pty Ltd;
(h) Paribas International which owns 99.7 per cent of issued common stock of Paribas North America Inc representing 88 per cent of the voting rights;
(i) Compagnie Financiere de Paribas which holds all the shares in Paribas International.
Having regard to the fact that these interests will be held indirectly through MLC and PGA there is no objection to their having 15 per cent interest in ABL. Therefore, the proposed instrument, which will be gazetted after it is made, fixes a percentage of 15 per cent for the following corporations in relation to their interest in ABL under sub-section 10(4):
• The Mutual Life & Citizens’ Assurance Company Limited;
• Paribas Group Australia Pty. Limited;
• The M.L.C. Limited;
• Lend Lease Corporation Limited;
• Industrial Equity Limited;
• The Citizens & Graziers’ Life Assurance Company Limited;
• Brierley Investments Limited;
• Paribas International;
• Paribas North America, Inc; and
• Compagnie Financiere de Paribas.
Under section 9 of the Act all officers, partners, subsidiaries etc of the above corporations would be deemed to have the same interest in ABL as the above mentioned companies and would therefore require instruments fixing a percentage of 15 per cent pursuant to sub-section 10(4). The ‘associates’ of the above corporations as deemed under section 9 would represent an extremely large and ever changing list of persons.
Rather than make an instrument, pursuant to sub-section 10(4), for every person within the meaning of section 9 it is convenient to prescribe these interests as provided for by section 17 and sub-section 8(9)(d).
Sub-section 8(9)(d) of the Act provides that a prescribed interest in a share that is an interest of such person, or of the persons included in such class of persons, as is prescribed shall be disregarded. The effect of the proposed Banks (Shareholdings) Regulations will be to declare that the class of persons within the meaning of section 9, that have an interest solely because of their association with the
above companies which are to be included in the instrument, are ‘prescribed persons’ and that their interests are ‘prescribed interests’. Therefore, their interests in ABL shall be disregarded for the purposes of the Act.
Details of the proposed regulations are as follows:
• Regulation one provides the citation;
• Regulation two provides the interpretation;
• Regulation three prescribes the interest in a share for the purposes of paragraph 8(9)(d); and
• Regulation four prescribes the class of persons in relation to an interest in a share of ABL who are deemed to be associates of any of the following corporations
• The Mutual Life & Citizens’ Assurance Company Limited;
• Paribas Group Australia Pty. Limited;
• The M.L.C. Limited;
• Lend Lease Corporation Limited;
• Industrial Equity Limited;
• The Citizens & Graziers’ Life Assurance Company Limited;
• Brierley Investments Limited;
• Paribas International;
• Paribas North America, Inc; and
• Compagnie Financiere de Paribas.
and have an interest in ABL solely because of their association with the above companies.