Banks (Shareholdings) Regulations (Amendment) 1996 No. 223
EXPLANATORY STATEMENT
STATUTORY RULES 1996 No. 223
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 Treasure'r by a person, if the Governor-General is satisfied that to do so is in the national interest, fix a higher percentage for that person by instrument published in the Gazette. Subsection 10(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.
Suncorp Insurance and Finance (Suncorp), which is wholly owned by the Queensland Government, currently holds 44.4 per cent of Bank of Queensland Limited (BQL). In addition, Metway Bank Limited (Metway) holds 3 per cent of BQL. The Queensland Government is proceeding with a proposal to rationalise financial institutions in the State with the idea of creating a large Queensland based financial institution. Specifically, the proposal involves merging Suncorp, the Queensland Industry Development Corporation and Metway. The Queensland legislation giving effect to this proposal provides that the. Suncorp shareholding in BQL cannot be transferred to Metway without the approval of BQL shareholders, excluding Suncorp and Metway. In order to avoid this potential impasse, the Queensland Government proposes to transfer Suncorp's shareholding in BQL to a wholly Queensland Government owned entity called Queensland Treasury Holdings Pty Ltd (QTH). By virtue of the association provisions of the Act QTH will also be deemed to have an interest in the 3 per cent of BQL shares held by Metway, taking its interest in BQL to 47.4 per cent. The Queensland Treasurer has provided the Treasurer with an undertaking that QTH will sell down its interest in BQL to less than 10 per cent within 3 years.
An instrument under subsection 10(4) of the Act has been prepared, fixing a percentage of 48 for QTH in relation to its interest in BQL.
Under section 9 of the Act the associates (including officers, partners, subsidiaries and related companies) of QTH would also be deemed to have the same interest in BQL as that corporation. In the case of officers of QTH, an instrument pursuant to subsection 10(5A) of the Act is proposed which would fix a percentage of 48 in relation to interests in BQL for those persons who are from time to time relevant officers of QTH.
Under the Act, it is not possible to make a 'class' instrument for the interests of the associates of QTH, other than its relevant officers. These other associates represent a large and ever-changing 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 Regulations, where those interests are deemed to be held by virtue of an associate relationship. The effect of the proposed amendments to the Regulations would be to disregard, for the purposes of the Act, interests in BQL arising from associate relationships with QTH.
The details of the proposed Regulations are as follows:
The Schedule to the Banks (Shareholdings) Regulations is amended by adding the following corporation to column 2:
Bank of Queensland Limited;
and by adding the following corporation to column 3:
Queensland Treasury Holdings Pty Ltd.
Overview
The Banks (Shareholdings) Regulations (Amendment) 1996 No. 223, issued by the authority of the Assistant Treasurer, was enacted to address the problem arising from the Queensland Government's proposal to merge Suncorp, the Queensland Industry Development Corporation, and Metway, which would result in a significant shareholding in Bank of Queensland Limited (BQL). The Banks (Shareholdings) Act 1972 limits the voting shares a person can hold in a bank to 10 per cent, or 15 per cent with Treasurer approval. The proposed merger would cause Queensland Treasury Holdings Pty Ltd (QTH), a wholly owned entity of the Queensland Government, to hold a 47.4 per cent interest in BQL, exceeding the statutory limit. To facilitate this merger without contravening the shareholding limits, the Regulations were amended to disregard certain interests in BQL arising from associate relationships with QTH. This amendment aims to ensure the national interest is protected while allowing the proposed financial institution rationalisation to proceed.
Scope and Application
The Banks (Shareholdings) Regulations (Amendment) 1996 No. 223 amends the existing Banks (Shareholdings) Regulations to address the specific circumstances arising from the Queensland Government's proposal to rationalise financial institutions within the state. The Act applies to any person, including corporations, who holds a voting share in an authorised deposit-taking institution, which in this case is Bank of Queensland Limited (BQL). The regulations are intended to facilitate the transfer of Suncorp's shareholding in BQL to Queensland Treasury Holdings Pty Ltd (QTH) without triggering the shareholding limits set out in the Banks (Shareholdings) Act 1972. The proposed amendments have a national jurisdictional reach as they are made under the authority of the Commonwealth, but they specifically address the interests of the Queensland Government and its related entities. The Act generally restricts the nominal amount of voting shares that a person can hold in a bank to 10 per cent, or 15 per cent with Treasurer approval, but allows for higher percentages to be set by the Governor-General if deemed to be in the national interest. The regulations seek to disregard the interests of certain associates of QTH in BQL, thus preventing these interests from being aggregated with QTH's shareholding for the purposes of the Act. This ensures that QTH can proceed with the proposed merger without breaching the shareholding limits, while also complying with the overall intent of the Act to regulate bank shareholdings in the national interest.
Key Provisions
The Banks (Shareholdings) Regulations (Amendment) 1996 No. 223 introduces amendments to the existing regulations under the Banks (Shareholdings) Act 1972 (the Act). These amendments are particularly relevant to the Queensland Government's proposal to consolidate its financial institutions into a major Queensland-based entity. Section 10 of the Act generally restricts the nominal amount of voting shares a person may hold in a bank to 10%, or 15% with the approval of the Treasurer. The Governor-General, under section 10(4), may set a higher percentage if it is deemed to be in the national interest, as evidenced by an instrument published in the Gazette. Additionally, section 10(5A) allows for a similar percentage to apply to relevant officers of a corporation, as declared by the Governor-General.
The primary obligation imposed by these regulations is the limitation on the shareholding percentages of entities such as Queensland Treasury Holdings Pty Ltd (QTH) in Bank of Queensland Limited (BQL). As per the proposed amendments, QTH, which is a wholly-owned entity of the Queensland Government, is permitted to hold a 47.4% interest in BQL. This is contingent upon QTH reducing its shareholding to less than 10% within three years, as per the undertaking provided by the Queensland Treasurer to the Commonwealth Treasurer. The amendments also extend to the associates of QTH, including relevant officers, ensuring they adhere to the prescribed shareholding limits set forth in the Act.
There are significant consequences for non-compliance with the provisions outlined in the Act and the amended Regulations. Breach of these regulations could result in penalties under the Act. However, the specific penalties are not detailed in the explanatory statement. Given the nature of the Act, penalties for exceeding the shareholding limits could potentially include financial penalties, disqualification from holding shares in the bank, or other regulatory sanctions. The precise nature and extent of these penalties would be determined in accordance with the relevant sections of the Act and any applicable judicial interpretations.
The Banks (Shareholdings) Act 1972, as amended, thus provides a structured framework to regulate the shareholdings of financial institutions, ensuring they remain within the prescribed limits to maintain stability and national interest in the banking sector. The regulatory oversight by the Governor-General and the Treasurer ensures that any deviations from these limits are carefully monitored and addressed promptly.