Banks (Shareholdings) Regulations (Amendment)

Legislation au C2004L00974 Regulations Not in force Legislative Instrument

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EXPLANATORY STATEMENT

STATUTORY RULES 1986 NO 92

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: that amount is limited 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 such 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 Bank of America Australia Limited.

As required by the Act an instrument has been gazetted which separately but not cumulatively fixes a percentage of 75 under sub-section 10(4) for BankAmerica Corporation and Bank of America National Trust and Savings Association in relation to their interests in Bank of America Australia Limited. In addition, an instrument has been gazetted which separately but not cumulatively fixes a percentage of 25 under sub-section 10(4) for Coles Myer Ltd., K mart Corporation and K mart Holdings Pty. Limited in relation to their interest in Bank of America Australia Limited.


Under section 9 of the Act the associates (ie all officers, partners, subsidiaries etc) of the above corporations are deemed to have the same interest in Bank of America Australia Limited as the corporations themselves. BankAmerica Corporation and Bank of America National Trust and Savings Association have made application to the Treasurer for a ‘class’ instrument fixing a percentage of 75 in respect of their 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 75 is also applicable to the persons who are from time to time relevant officers of BankAmerica Corporation and Bank of America National Trust and Savings Association in respect to Bank of America Australia Limited.

In addition, Coles Myer Ltd., K mart Corporation and K mart Holdings Pty. Limited have made application to the Treasurer for a ‘class’ instrument fixing a percentage a 25 in respect of their officers pursuant to sub-section 10(5A). Hence, an instrument has been gazetted which declares for the purposes of the Act that a percentage of 25 is applicable to persons who are from time to time relevant officers of Coles Myer Ltd., K mart Corporation and K mart Holdings Pty. Limited.

Under the Act, however, it is not possible to make such a ‘class’ instrument for the interests of the associates of those corporations other than the relevant officers. These other associates, as defined in section 9, would represent an extremely large and ever-changing list of persons and 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 the banks listed in the Schedule to the Regulations, where those interests are deemed to be held by virtue of sub-section 9(2) of the Act, that is by virtue of an associate relationship. The effect of the Regulations is that these interests are disregarded for the purposes of the Act. The effect of the amendments to the Regulations is to do the same in the case of Bank of America Australia Limited.

For each of the sixteen successful applicants announced by the Treasurer on 27 February 1985 which has been granted a banking authority, a similar addition has been 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 the following corporations to the Schedule in relation to Bank of America Australia Limited.

• BankAmerica Corporation

• Bank of America National Trust and Savings Association

• Coles Myer Ltd.

• K mart Corporation

• K mart Holdings Pty. Limited

Overview

The Banks (Shareholdings) Regulations (Amendment) 1986, issued under the authority of the Treasurer, amends the Banks (Shareholdings) Regulations 1972 to address a gap in the regulatory framework concerning the shareholding limits of certain corporations in Australian banks. Enacted by the Commonwealth Parliament, the primary objective of this amendment is to clarify and streamline the application of shareholding limits as outlined in the Banks (Shareholdings) Act 1972. The Act originally limited the nominal amount of voting shares a person could hold in an Australian bank to 10 per cent, or 15 per cent with the Treasurer's approval. The regulation seeks to ensure that specific interests of associated entities are appropriately considered and disregarded for the purposes of these shareholding limits, thereby maintaining regulatory coherence and fairness in the banking sector.

Scope and Application

The Banks (Shareholds) Act 1972 applies to individuals and corporations who hold voting shares in Australian banks, limiting the nominal amount of such shares to 10% of the total nominal amount of the bank's voting shares, or 15% with the approval of the Treasurer. The Act extends its reach to encompass not only the principal shareholders but also their associates, as defined by the Act, which includes officers, partners, and subsidiaries. The Governor-General, on the recommendation of the Treasurer, has the authority to fix a higher percentage for specific entities by publishing an instrument in the Gazette. This allows for exceptions to the general 10% limit, subject to the conditions specified in the Act. The Banks (Shareholds) Regulations (Amendment) further refine the application of the Act by prescribing certain interests that are to be disregarded under the Act, thus providing additional clarity and specificity in the regulatory framework. These amendments, in particular, ensure that the interests of associates of the specified entities are disregarded in the calculation of shareholding limits, thereby facilitating compliance and governance within the banking sector.

Key Provisions

The Banks (Shareholdings) Regulations (Amendment) (2004) introduces specific amendments to the existing regulations under the Banks (Shareholdings) Act 1972 (the Act). Section 10 of the Act (subsection 10(4)) provides the overarching framework that generally restricts the nominal amount of voting shares in an Australian bank that an individual or corporation can hold. Specifically, this limit is set at 10% of the total nominal value of the bank’s voting shares, or 15% with the Treasurer’s approval. The Governor-General, on the recommendation of the Treasurer, can fix a higher percentage for specific individuals or corporations through a gazetted instrument. In this case, the regulations specify that BankAmerica Corporation and Bank of America National Trust and Savings Association can collectively hold up to 75% of the voting shares, while Coles Myer Ltd., K mart Corporation, and K mart Holdings Pty. Limited can collectively hold up to 25%. These percentages are not cumulative and apply separately to each entity. The obligations under the Act and the amended regulations include ensuring that these entities and their associates comply with the specified shareholding limits. Associates, as defined in section 9 of the Act, are considered to have the same interest in the bank as the corporations themselves. For example, relevant officers of BankAmerica Corporation and Bank of America National Trust and Savings Association are also subject to the 75% shareholding limit, as are the officers of Coles Myer Ltd., K mart Corporation, and K mart Holdings Pty. Limited, who are subject to the 25% limit. These obligations extend to ensuring that any changes in shareholdings are reported and approved as required by the Act. Failure to comply with the provisions of the Act and the amended regulations can result in significant consequences. The Act does not explicitly outline specific offences or penalties, but breaches of the regulations can lead to civil or criminal consequences. The Treasurer has the authority to take action against entities that exceed the permitted shareholding limits, which could include revoking banking authorities or imposing fines. While the exact penalties are not specified in the provided text, the overarching intent is to enforce strict compliance to maintain the integrity of the banking system in Australia.

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Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.