Banks (Shareholdings) Regulations (Amendment) 1994 No. 97
EXPLANATORY STATEMENT
STATUTORY RULES 1994 No. 97
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 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 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. Subsection 10(7) provides that the Governor-General may, if he is satisfied that to do so is in the national interest, by instrument in writing published in the Gazette, revoke an instrument under subsection 10(4) (including such an instrument that has been varied under subsection 10(5)). In that event, under subsection 10(7B), any related instrument published under subsection 10(5A) shall be deemed to have been revoked.
Section 17 of the Act provides that the Governor-General may make regulations for the purposes of the Act.
To reflect the acquisition by St George Bank Limited (St George) of all the shares in Barclays Bank Plc's subsidiary, Barclays Bank Australia Ltd (BBAL), instruments have been gazetted in accordance with the Act, effectively fixing a percentage of 100 under subsection 10(4) for St George in relation to its interest in BBAL.
Under section 9 of the Act the associates (including officers, partners, subsidiaries and related companies) of St George would also be deemed to have the same interest in BBAL as St George. In the case of officers of those corporations, 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 BBAL for those persons who are from time to time relevant officers of St George.
Under the Act, it is not possible to make a 'class' instrument for the interests of the associates of St George 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).
Overview
The Banks (Shareholdings) Regulations (Amendment) 1994 No. 97 was enacted to address the complexities arising from the acquisition of Barclays Bank Australia Ltd (BBAL) by St George Bank Limited. The 1972 Banks (Shareholdings) Act generally restricts the voting shares a person can hold in a bank to 10% of the total nominal amount, or 15% with the Treasurer's approval. However, the acquisition of BBAL by St George necessitated special provisions, leading to the issuance of these regulations by the Treasurer under the authority granted by the Act. The objective of these regulations is to streamline the process by which shareholdings of St George's associates are managed, ensuring that the provisions of the Act are applied efficiently and effectively in this unique context.
Scope and Application
The Banks (Shareholdings) Regulations (Amendment) 1994 applies to the entities involved in the acquisition by St George Bank Limited of all the shares in Barclays Bank Plc's subsidiary, Barclays Bank Australia Ltd. Specifically, it affects St George Bank Limited, its associates including officers, partners, subsidiaries, and related companies, and their interests in Barclays Bank Australia Ltd. The Act primarily governs the percentage of voting shares a person or entity can hold in a bank, with a general limit of 10 per cent, extendable to 15 per cent with the Treasurer's approval, and further extendable by the Governor-General under certain conditions. The regulations aim to streamline the process of fixing shareholding percentages by prescribing the interests of St George Bank's associates, other than its relevant officers, to be disregarded for the purposes of section 10 of the Act. The application of the Act is national in scope, impacting the banking sector across Australia. The Act also provides mechanisms for the Governor-General to revoke certain instruments if deemed necessary for the national interest.
Key Provisions
The Banks (Shareholdings) Regulations (Amendment) 1994 No. 97 primarily amend the Banks (Shareholdings) Regulations to reflect the acquisition by St George Bank Limited of all shares in Barclays Bank Plc's subsidiary, Barclays Bank Australia Ltd. Under section 10 of the Banks (Shareholdings) Act 1972, the regulations address the limitations on the nominal amount of voting shares a person or corporation may hold in a bank. Specifically, section 10(4) of the Act allows the Governor-General, on application by a person, to fix a higher percentage than the general 10 per cent limit, which in this case is fixed at 100 per cent for St George in relation to its interest in Barclays Bank Australia Ltd. Additionally, section 10(5A) permits the Governor-General to extend this percentage to relevant officers of the corporation, which has also been set at 100 per cent for St George's officers regarding their interest in Barclays Bank Australia Ltd.
These regulations impose obligations on St George Bank Limited and its associates, including officers, partners, subsidiaries, and related companies. Under section 9 of the Act, these associates are deemed to have the same interest in Barclays Bank Australia Ltd as St George. The regulations ensure that these interests are effectively managed and that the appropriate percentage limits are applied. The regulations also provide a mechanism for the Governor-General to revoke or vary the percentage limits if it is deemed to be in the national interest, as outlined in section 10(7) and section 10(7B) of the Act.
The Banks (Shareholdings) Act 1972 also outlines the consequences for non-compliance with the regulations. While the specific offences and penalties are not detailed in the explanatory statement, it is clear that any breach of the provisions could lead to significant legal repercussions. Under Australian law, penalties for such breaches could include fines and, in severe cases, criminal charges. The exact penalties would depend on the nature and severity of the breach, as well as the provisions of the Act and any relevant regulations. The overarching goal of these provisions is to ensure the stability and integrity of the banking sector by controlling significant shareholdings and interests.