Banks (Shareholdings) Regulations (Amendment)

Overview

The Banks (Shareholdlings) Regulations (Amendment) 1985 were enacted to amend the Banks (Shareholdings) Regulations 1972, which are subsidiary legislation to the Banks (Shareholdings) Act 1972. The Act was introduced to address the issue of excessive control over Australian banks by limiting the nominal amount of voting shares that a person or corporation can hold in a bank. The Banks (Shareholdlings) Regulations (Amendment) 1985 sought to update the existing regulations to include new entities that have been granted a banking authority. The Regulations were made by the Governor-General under the authority of the Treasurer, in accordance with section 17 of the Act. The policy objective of these amendments was to ensure that the Regulations remain current and effective in regulating shareholdings in Australian banks, while also providing flexibility for new entities to enter the market.

Scope and Application

The Banks (Shareholdings) Regulations (Amendment) Statutory Rules 1985 No. 311, issued under the authority of the Treasurer, amends the Banks (Shareholdings) Regulations to reflect changes in shareholdings in Barclays Bank Australia Limited. The Banks (Shareholdings) Act 1972 generally restricts the amount of voting shares that a person or entity can hold in an Australian incorporated bank to 10 per cent of the total nominal amount of the bank’s voting shares, or 15 per cent with the approval of the Treasurer. The Act applies to persons and entities, including corporations, and their interests in Australian banks. The regulations extend the application of the Act by specifying exclusions and thresholds through subordinate instruments, such as the amendments made in this statutory rule. These amendments allow Barclays PLC and Barclays Bank PLC to hold up to 100 per cent of the shares in Barclays Bank Australia Limited, as well as their respective officers, while other associates’ interests are disregarded under section 17 and paragraph 8(9)(d) of the Act. The changes are also reflected in the Schedule to the Banks (Shareholdings) Regulations, which lists the corporations and their interests in relation to Barclays Bank Australia Limited.

Key Provisions

The Banks (Shareholdings) Act 1972 (the Act) and its accompanying regulations govern the maximum percentage of voting shares that a person or corporation can hold in an Australian-incorporated bank, with a general limit of 10% unless otherwise approved by the Treasurer (s.10). The Act also allows for the Governor-General to set a higher percentage upon application from a person, which must be published in the Gazette (s.10(4)). In this instance, an instrument has been gazetted under s.10(4) which separately sets the percentage at 100% for Barclays PLC and Barclays Bank PLC in relation to their interests in Barclays Bank Australia Limited (s.10(5A)). This means these corporations are exempt from the general shareholding limit and can hold up to 100% of the voting shares in Barclays Bank Australia Limited. The Act imposes several obligations on the parties it governs. Firstly, corporations must adhere to the shareholding limits as prescribed by the Act and any subsequent instruments gazetted under s.10(4). For Barclays PLC and Barclays Bank PLC, this means they are allowed to hold up to 100% of the voting shares. Additionally, the associates of these corporations, which includes officers, partners, and subsidiaries, are also deemed to have the same interest under s.9 of the Act. The Act also requires any application for a higher shareholding percentage to be made to the Treasurer and any such percentage set must be published in the Gazette. This ensures transparency and allows for public scrutiny of significant shareholdings in Australian banks. Breach of the provisions set out in the Act and the accompanying regulations can lead to significant civil or criminal consequences. For instance, holding shares in excess of the permitted percentage without the required approval or publication in the Gazette could result in penalties under the Act. While the specific penalties are not detailed in the text provided, under Australian law, breaches of financial services legislation can result in substantial fines and, in some cases, imprisonment. The exact penalties would depend on the severity and intent of the breach, as well as any previous history of non-compliance. The amendments to the Banks (Shareholdings) Regulations further clarify the treatment of prescribed interests in relation to Barclays Bank Australia Limited. The Schedule to the Regulations has been updated to include Barclays PLC and Barclays Bank PLC, thereby prescribing their interests under s.17 and paragraph 8(9)(d) of the Act. This ensures that these corporations’ interests are disregarded for the purposes of the Act, allowing them to hold up to 100% of the voting shares without breaching the general limit. The inclusion of these corporations in the Schedule to the Regulations provides a clear and legally enforceable framework for their shareholding in Barclays Bank Australia Limited, ensuring compliance with the Act’s provisions.