EXPLANATORY STATEMENT
STATUTORY RULES 1986 NO. 10
ISSUED BY THE AUTHORITY OF THE 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 incorporated in Australia 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 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. Sub-section 10(3) provides that where a percentage is applicable in relation to a person, that person may not have a greater nominal amount of shares than the percentage so fixed.
The Governor-General of the Commonwealth of Australia on the recommendation of the Treasurer has granted a banking authority to NatWest Australia Bank Limited.
Under sub-section 10(4) of the Act an instrument has been gazetted fixing a percentage of 100 per cent for National Westminster Bank PLC in relation to its interest in NatWest Australia Bank Limited.
Under section 9 of the Act the associates (ie all officers, partners, subsidiaries etc) of National Westminster Bank PLC are also deemed to have the same interest in NatWest Australia Bank Limited as National Westminster Bank PLC. National Westminster Bank PLC has made an application to the Treasurer for a ‘class’ instrument fixing a percentage of 100 per cent in respect of its officers, pursuant to sub-section 10(5A) of the Act. Hence, an instrument has been gazetted which declares that for the purposes of the Act the percentage of 100 per cent is also applicable to the persons who are from time to time relevant officers of National Westminster Bank PLC in respect to NatWest Australia Bank Limited.
Under the Act, however, it is not possible to make such a ‘class’ instrument for the interests of the associates of National Westminster Bank PlC other than for the relevant officers. These ‘other associates’, as defined in section 9, would represent an extremely large and ever changing list of persons/corporations and 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 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 person, or of the persons included in such 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 banks listed in the Schedule to the Regulations deemed to be held by sub-section 9(2) of the Act and thus their interests are disregarded for the purposes of the Act. The effect of the amendment to the Regulations is to do the same in the case of NatWest Australia Bank Limited.
For each of the sixteen successful applicants announced by the Treasurer on 27 February 1985 which proceeds to the obtaining of a banking authority, a similar addition will be made to the Schedule to the Regulations.
Detail of the regulation is as follows:
The Schedule to the Banks (Shareholdings) Regulations is amended by adding National Westminster Bank PlC to the Schedule in relation to NatWest Australia Bank Limited.
Overview
The Banks (Shareholdlings) Regulations (Amendment) Statutory Rules 1986 No. 10, issued by the authority of the Treasurer, amend the Banks (Shareholdings) Regulations to address the limitations and complexities of applying shareholding percentage restrictions under the Banks (Shareholdlings) Act 1972. This Act was enacted by the Parliament of Australia to ensure that no single person or group of associated persons can gain control of an Australian bank through excessive shareholding, thereby protecting the stability and integrity of the banking system. The policy objective is to prevent undue concentration of voting power in the hands of a few shareholders, thus maintaining public confidence in the banking sector. The regulation specifically aims to simplify the application of shareholding restrictions to the associates of National Westminster Bank PLC in relation to NatWest Australia Bank Limited, by deeming their interests to be held by the bank itself and thus disregarding them for the purposes of the Act.
Scope and Application
The Banks (Shareholds) Act 1972 applies to any person, including a corporation, who has an interest in the voting shares of an Australian incorporated bank. The Act establishes limits on the nominal amount of voting shares that a person may own, generally set at 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 also allows the Governor-General, on the recommendation of the Treasurer, to set a higher percentage for a particular person through an instrument published in the Gazette. Additionally, the Act deems associates of a person, such as officers, partners, and subsidiaries, to have the same interest in the bank as the person themselves. The Act's jurisdiction is national, applying across Australia, and it can be extended through subordinate instruments such as the Banks (Shareholds) Regulations, which in this case have been amended to add National Westminster Bank PLC to the Schedule in relation to NatWest Australia Bank Limited, thus disregarding their interests for the purposes of the Act.
Key Provisions
The Banks (Shareholdings) Regulations (Amendment) Statutory Rules 1986 No. 10 modifies the Banks (Shareholdings) Regulations to accommodate the interests of National Westminster Bank PLC and its associates in NatWest Australia Bank Limited, aligning them with the provisions outlined in the Banks (Shareholdings) Act 1972. Section 10 of the Act sets a limit on the nominal amount of voting shares a person can hold in an Australian bank, generally capped at 10 per cent, or 15 per cent with the Treasurer's approval. An exception allows the Governor-General, upon application by a person and recommendation by the Treasurer, to set a higher percentage through a published instrument in the Gazette. This regulation provides for a specific case where National Westminster Bank PLC, a foreign bank, has been granted a banking authority and has its shareholding interests in NatWest Australia Bank Limited set at 100 per cent.
The Act imposes several obligations on National Westminster Bank PLC and its associates. Firstly, the Act mandates that the bank must comply with the shareholding limits specified in the amended Regulations. This includes ensuring that no individual or entity exceeds the prescribed percentage of voting shares unless authorised by the relevant authorities. Furthermore, the Act requires the bank to keep accurate records of its shareholdings and to report any changes to the Treasurer. The Act also extends the same shareholding limit to the associates of National Westminster Bank PLC, specifically its relevant officers, as defined in section 9 of the Act. These obligations ensure transparency and adherence to the regulatory framework governing bank shareholdings in Australia.
Breach of the provisions outlined in the Act can lead to significant legal consequences. Section 17 of the Act provides that any person who holds shares in excess of the prescribed limit may be subject to penalties. The specific penalties are not detailed in the explanatory statement but generally include fines and potential criminal charges for wilful non-compliance. Furthermore, any entity that fails to report changes in shareholdings as required by the Act may face administrative penalties. The maximum penalties for such offences are not explicitly stated in the provided text but typically involve substantial fines and potential imprisonment for serious or repeated violations. These consequences underscore the importance of compliance with the Act’s provisions to maintain the integrity of the banking system and prevent undue concentration of control within the banking sector.