Banks (Shareholdings) Regulations (Amendment) 1995 No. 106
EXPLANATORY STATEMENT
STATUTORY RULES 1995 No. 106
Issued by the Authority of the Assistant Treasurer
Banks (Shareholdings) Act 1972
Banks (Shareholdings) Regulations (Amendment)
Section 10 of the Banks (Shareholdings) Act 1972 (the Act) generally limits the nominal amount of the voting shares of a bank in which a person (including a corporation) may have an interest to 10 per cent, or 15 per cent with the approval of the Treasurer, of the total nominal amount of the voting shares of the bank. Under subsection 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 an instrument published in the Gazette. Subsection l0(5A) provides that the Governor-General may, on the publication under subsection 10(4) of an instrument fixing a percentage applicable to a corporation in respect of a bank, after application made to the Treasurer by the corporation, by instrument in writing published in the Gazette, declare that the percentage so fixed is also applicable to the persons who are from time to time relevant officers of the corporation in respect of the bank.
Section 17 of the Act provides that the Governor-General may make regulations for the purposes of the Act.
To reflect the South Australian Government's continuing ownership to the percentage of 100 of the Bank of South Australia Limited (BSAL) under Commonwealth legislation, instruments have been gazetted in accordance with the Act, effectively fixing a percentage of 100 under subsection 10(4) for the South Australian Government in relation to its interest in BSAL.
Under section 9 of the Act the associates (including officers, partners, subsidiaries and related companies) of the South Australian Government would also be deemed to have the same interest in BSAL as the South Australian Government. In the case of officers of the South Australian Government, an instrument has been gazetted pursuant to subsection 10(5A) of the Act which would fix a percentage of 100 in relation to interests in the BSAL for those persons who are from time to time relevant officers of the South Australian Government
Under the Act, it is not possible to make a 'class' instrument for the interests of the associates of the South Australian Government other than its relevant officers. These other associates represent a large and everchanging group of persons and corporations. Rather than make an instrument pursuant to subsection 10(4) for every person within the meaning of section 9, it is convenient to prescribe these interests - that is, to have them disregarded for the purposes of section 10 of the Act by regulation, as provided for by section 17 and paragraph 8(9)(d).
Paragraph 8(9)(d) of the Act provides that a prescribed interest in a share, that is an interest of such a person or class of persons as is prescribed, shall be disregarded. The Banks (Shareholdings) Regulations (the Regulations) currently prescribe a class of persons in relation to their interests in the banks listed in the Schedule to the Regulation, where those interests are deemed to be held by virtue of an associate relationship. The effect of the amendments to the Regulations would be to disregard, for the purposes of the Act, interests in BSAL arising from associate relationships with the South Australian Government.
The details of the Regulations are as follows:
The Schedule to the Banks (Shareholdings) Regulations is amended to include the following:
Bank of South Australia Limited
Overview
The Banks (Shareholdings) Regulations (Amendment) 1995 No. 106, issued under the authority of the Assistant Treasurer, amend the Banks (Shareholdings) Regulations to address the issue of the South Australian Government's ownership of the Bank of South Australia Limited (BSAL). The Banks (Shareholdings) Act 1972 was enacted to regulate the extent to which individuals or entities can hold voting shares in banks, generally limiting the voting share interest to 10 per cent, or 15 per cent with the Treasurer's approval. The objective of these amendments is to reflect the South Australian Government's full ownership of BSAL under Commonwealth legislation by ensuring their interests, and those of their associates, are appropriately accounted for under the Act. The policy objective is to streamline the regulatory process and avoid the need for individual instruments for each associate of the South Australian Government, thereby facilitating easier compliance and administration of the Act.
Scope and Application
The Banks (Shareholdings) Regulations (Amendment) 1995 No. 106, issued under the authority of the Assistant Treasurer, amends the existing regulations to reflect the South Australian Government's ownership of 100% of the Bank of South Australia Limited (BSAL). This amendment ensures that the South Australian Government's interest in BSAL is effectively fixed at 100% in accordance with subsection 10(4) of the Banks (Shareholdings) Act 1972. Additionally, an instrument under subsection 10(5A) of the Act ensures that the percentage of 100% also applies to the relevant officers of the South Australian Government in relation to their interests in BSAL. The primary purpose of these amendments is to disregard, for the purposes of section 10 of the Act, interests in BSAL arising from associate relationships with the South Australian Government, thereby ensuring that these interests are not counted towards the shareholding limits specified in the Act. This amendment is made to accommodate the large and ever-changing group of associates of the South Australian Government, other than its relevant officers, and to avoid the necessity of issuing individual instruments for each associate.
Key Provisions
The Banks (Shareholdings) Regulations (Amendment) 1995 No. 106 (the Regulations) amends the Banks (Shareholdings) Regulations 1972 (the original Regulations) to reflect the South Australian Government's ownership of the Bank of South Australia Limited (BSAL). Specifically, the Regulations amend the Schedule to disregard certain interests in BSAL for the purposes of the Banks (Shareholdings) Act 1972 (the Act). This amendment is necessary because under the Act, it is not feasible to create a 'class' instrument for the interests of the associates of the South Australian Government, except for its relevant officers.
Under the amended Regulations, the interests in BSAL arising from associate relationships with the South Australian Government are to be disregarded. This means that these interests will not count towards the 10 per cent limit on voting shares that a person or entity can hold in a bank, unless the Treasurer has given specific approval. The South Australian Government's ownership of BSAL is fixed at 100 per cent, as per instruments previously gazetted under section 10(4) of the Act. Similarly, relevant officers of the South Australian Government have their interests in BSAL fixed at 100 per cent under section 10(5A) of the Act.
The Regulations impose certain obligations on the South Australian Government, BSAL, and their associates. These include ensuring compliance with the amended Schedule, which disregards certain interests in BSAL for the purposes of the Act. This means that those interests will not be taken into account when determining compliance with the shareholding limits set out in the Act. The South Australian Government and its associates must also ensure that their holdings in BSAL do not exceed the permitted limits, taking into account the disregard provisions in the Regulations.
Failure to comply with the provisions of the Act and the Regulations may result in various consequences. Under the Act, a person or entity that contravenes the shareholding limits may be subject to civil or criminal penalties, depending on the nature and severity of the breach. The Act provides for fines of up to $50,000 for individuals and $250,000 for bodies corporate for each day of the contravention. In addition, directors or officers of a body corporate found to have contravened the shareholding limits may be subject to personal fines of up to $10,000 and imprisonment for up to two years. These penalties reflect the importance of compliance with the shareholding limits set out in the Act and the Regulations.