Banks (Shareholdings) Regulations (Amendment)

Overview

The Banks (Shareholdlings) Regulations (Amendment) 2004 were enacted to address the issue of share ownership and control within Australian banks, particularly in the context of Civic Advance Bank Limited. This statutory rule, issued under the authority of the Treasurer, amends the existing Banks (Shareholdings) Regulations 1972 to facilitate the ownership of Civic Advance Bank Limited by Advance Bank Australia Limited, Permanent Trustee Company Limited, and Permanent Trustee Nominees (Canberra) Limited. The policy objective of this amendment is to provide clarity and legal certainty regarding the share ownership structure of Civic Advance Bank Limited, ensuring that the interests of these corporations and their associates are appropriately managed and regulated within the parameters set by the Banks (Shareholdlings) Act 1972. The regulations aim to streamline the application process for share ownership percentages by prescribing specific interests, thereby reducing the complexity and administrative burden associated with individual applications for each associate.

Scope and Application

The Banks (Shareholdnings) Act 1972 governs the shareholding limits for Australian banks, applying to individuals, corporations, and other entities that have an interest in the voting shares of a bank incorporated in Australia. It sets a general limit of 10 per cent, or up to 15 per cent with the Treasurer's approval, of the total nominal amount of the voting shares that a person may hold in a bank. The Act applies to all banks within Australia and its territories, encompassing Commonwealth, state, and territory banks. The Act's reach is national, ensuring consistent application across the country. However, the Act allows for certain exclusions and exemptions, particularly through subordinate instruments, where the Governor-General may fix a higher percentage for a person upon application by that person, as published in the Gazette. The Banks (Shareholdings) Regulations further clarify and extend the application of the Act, as evidenced by the recent amendments to disregard prescribed interests in Civic Advance Bank Limited by certain corporations and their associates, facilitating compliance and ensuring the Act's provisions are effectively managed.

Key Provisions

The Banks (Shareholdings) Act 1972, as amended by the Banks (Shareholdings) Regulations (Amendment) Statutory Rules 198 No 116, generally restricts the percentage of voting shares in Australian banks that a person, including a corporation, can hold to 10% of the total voting shares, or 15% with the approval of the Treasurer (section 10(1)). However, section 10(4) allows the Governor-General to set a higher percentage for a specific person upon application by that person and approval from the Treasurer, with the decision published in the Gazette. The Act further clarifies that once a percentage is fixed for a person, they cannot exceed that percentage in their shareholding (section 10(3)). These regulations apply to Advance Bank Australia Limited, Permanent Trustee Company Limited, and Permanent Trustee Nominees (Canberra) Limited in relation to their interests in Civic Advance Bank Limited. Each of these corporations has been granted a 100% shareholding interest, as specified in the Gazette under section 10(4) of the Act. This allowance extends to the associates of these corporations, including their officers, who are deemed to have the same interest as the corporations themselves (section 9). The Regulations also cover officers of these corporations, as per section 10(5A), ensuring they are not subject to the 10% limit. However, it is impractical to individually list all associates, leading to the use of section 17 and paragraph 8(9)(d) to prescribe and disregard these interests under the Act. The amendments to the Banks (Shareholdings) Regulations further clarify that the interests of Advance Bank Australia Limited, Permanent Trustee Company Limited, and Permanent Trustee Nominees (Canberra) Limited, as well as their associates, in Civic Advance Bank Limited are to be disregarded for the purposes of the Act. This is achieved by adding these corporations to the Schedule of the Regulations. The effect of these amendments ensures that the interests of these entities in Civic Advance Bank Limited are not counted towards the shareholding limits set by the Act. Under the Banks (Shareholdings) Act 1972, any person or corporation exceeding the permitted shareholding limits without the required approval or a higher percentage fixed by the Governor-General could face penalties. The Act does not explicitly detail these penalties but implies that exceeding the limits could lead to legal consequences. The Regulations, in turn, provide clarity on the application of these limits to specific entities and their associates, ensuring compliance with the Act's provisions. Failure to adhere to these regulations could result in civil or criminal penalties, though the specific penalties are not outlined in the provided text.