Banks (Shareholdings) Regulations (Amendment) 1992 No. 359
EXPLANATORY STATEMENT
STATUTORY RULES 1992 No. 359
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), including associates (defined in section 9), 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 in the bank. Subsection 10(4) empowers the Governor-General to make an Instrument to fix a percentage of greater than 15 per cent for a person, if he is satisfied that to do so is in the national interest. Subsection 10(5) empowers the Governor-General to vary previous Instruments, and subsection 10(7) allows the Governor-General to revoke previous Instruments made under this section, if he is satisfied that it is in the national interest to do so.
Section 17 of the Act provides that the Governor-General may make Regulations for the purposes of the Act.
Section 8 defines what may be included as an interest in shares for the purposes of the Act. Paragraph 8(9)(d) provides that there shall be disregarded a prescribed interest of such person, or of persons included in such class of persons as is prescribed. The Banks (Shareholdings) Regulations (the Principal Regulations) currently prescribe certain persons and interests in relation to shares in certain banks.
The proposed amendment to the Principal Regulations arose out of the change in name and ownership of the Chase Manhattan Bank Australia Limited (formerly known as Chase AMP Bank Limited) (the bank).
In December 1991 the AMP Society sold most of its 50 per cent share in the bank to its joint venture partner Chase Manhattan Holdings (Australia) Limited (Chase). An Instrument pursuant to subsection 10(7) has been made removing the present approvals granted to AMP and Chase to hold 50 per cent and 100 per cent of the shares in the bank respectively.
A further Instrument has been made which fixes a percentage of 100 per cent under subsection 10(4) and 10(5A) of the Act for Chase and certain associated corporations in relation to their interests in the bank.
Due to this ownership change it was necessary to amend the Schedule to the Principal Regulations to remove any reference to AMP as a disregarded interest. Therefore, it was proposed to amend the Schedule to the Principal Regulations by omitting the previous reference to the Chase AMP Bank Limited, and replacing it with a new item which reflected the bank's new name and new owners.
The effect of the proposed Regulations will be to disregard for the purposes of the Act, the shareholding interests which persons have in the bank arising from associate relationships with Chase and the other corporations listed in the Schedule.
Overview
The Banks (Shareholdings) Regulations (Amendment) 1992 No. 359, issued by the authority of the Treasurer, amends the Banks (Shareholdings) Regulations 1972 under the Banks (Shareholdings) Act 1972. This amendment was introduced to address the changes in ownership and the new name of Chase Manhattan Bank Australia Limited, formerly known as Chase AMP Bank Limited. The policy objective of the Act is to regulate the shareholding interests in banks to maintain financial stability and protect the national interest by limiting the concentration of voting shares within any individual or associated entities. The Act generally restricts the nominal amount of voting shares that a person or corporation may hold to 10 per cent, or up to 15 per cent with the Treasurer's approval. These Regulations specifically adjust the list of disregarded interests to reflect the new ownership structure of the bank, thereby ensuring compliance with the Act's provisions.
Scope and Application
The Banks (Shareholdings) Regulations (Amendment) 1992 No. 359 applies to any person, including corporations, who holds an interest in the voting shares of a bank within Australia. The Act primarily governs the maximum shareholding limits for individuals and corporations to ensure the stability and integrity of the banking sector. The geographic reach of the Act is nationwide, applying across all states and territories in Australia. The Act sets a limit of 10 per cent on the nominal amount of voting shares that a person can hold in a bank, with an option for the Treasurer to approve an increase to 15 per cent. Additionally, the Governor-General has the authority to set a higher percentage under specific national interest considerations. The Regulations are designed to cater to changes in bank ownership and control, particularly in response to mergers or acquisitions that alter the existing shareholder structure. The amendment to the Principal Regulations necessitated by the change in name and ownership of Chase Manhattan Bank Australia Limited ensures that the regulations remain relevant and accurate, reflecting the new corporate landscape. The Regulations also provide for certain exclusions and disregards of prescribed interests to align with the evolving business environment.
Key Provisions
The Banks (Shareholdings) Regulations (Amendment) 1992 No. 359 primarily seeks to update the regulatory framework concerning shareholdings in banks, following a change in ownership and name of the Chase Manhattan Bank Australia Limited. Section 10 of the Banks (Shareholdings) Act 1972 outlines the general limitations on the percentage of voting shares a person or corporation, including associates, can hold in a bank, which is typically capped at 10 per cent, or 15 per cent with the Treasurer's approval. The amendment to the Principal Regulations, under section 17, aims to reflect the new ownership structure of the bank by updating the Schedule to disregard certain shareholding interests as prescribed in section 8.
Under the Act, the obligations on parties or entities involve adhering to the shareholding limits as prescribed. The Governor-General can make instruments to set or alter these limits if deemed necessary for the national interest. The regulations specify who may hold shares in a bank and under what circumstances certain interests are disregarded. The amendment responds to the AMP Society's sale of its share in the bank to Chase Manhattan Holdings (Australia) Limited, necessitating a revision of the regulations to accurately reflect the new ownership and to ensure compliance with the Act's provisions.
The Banks (Shareholdings) Act 1972 imposes penalties and consequences for breaches of its provisions. While the specific penalties are not detailed in the explanatory statement, it is understood that non-compliance with the Act's requirements could result in legal action. The regulations empower the Governor-General to revoke or vary instruments if it is in the national interest, which can have significant implications for entities involved. The amendment aims to ensure that the regulatory framework remains effective and aligned with the current ownership structure of the bank, thereby maintaining the integrity and stability of the banking sector.