Banks (Shareholdings) Regulations (Amendment)

Overview

The Banks (Shareholdings) Regulations (Amendment) 1991 No. 278, issued under the authority of the Treasurer, amends the Banks (Shareholdings) Regulations 1972 in response to specific corporate restructuring within the banking sector. The Banks (Shareholdings) Act 1972 was enacted to regulate the extent of shareholdings in banks by individuals and corporations to ensure financial stability and to prevent undue concentration of control. The policy objective of the Act is to maintain a balanced distribution of shares to safeguard against monopolistic practices and to protect the interests of the public. This amendment to the regulations follows the winding up of OCBC Holdings (Australia) Pty Limited, the former holder of a 70 per cent interest in the Bank of Singapore, and the subsequent approval for the Oversea-Chinese Banking Corporation to acquire the remaining shares, making the Bank of Singapore a wholly-owned subsidiary. The regulations also reflect changes to the applicable shareholding percentages for relevant officers of the acquiring corporation.

Scope and Application

The Banks (Shareholdings) Regulations (Amendment) 1991 No. 278 applies to the shareholdings of banks in Australia, specifically targeting individuals, corporations, and their relevant officers. This amendment pertains to the control and ownership of the Bank of Singapore (BOSA) and its parent company, Oversea-Chinese Banking Corporation (OCBC). The regulations are in line with the Banks (Shareholdings) Act 1972, which limits the voting shares that any person or entity can hold in a bank, generally to 10 per cent, or up to 15 per cent with the approval of the Treasurer. The regulations also cover the application process whereby the Governor-General may set a higher percentage on the basis of national interest. In this specific case, the regulations have fixed a 100 per cent shareholding for OCBC in relation to BOSA, reflecting BOSA's effective control by OCBC despite the formal changes in ownership structure. Furthermore, the amendment addresses the winding up of OCBC Holdings (Australia) Pty Limited and removes any references to it within the regulations. The regulations extend to include all associates of OCBC, including officers, partners, subsidiaries, and related companies, thereby ensuring a comprehensive application of the shareholding limits across all relevant stakeholders.

Key Provisions

The Banks (Shareholdings) Regulations (Amendment) 1991 No. 278, issued under the Banks (Shareholdings) Act 1972, provides for amendments to the existing regulations concerning the shareholding limits for banks. The primary change is the amendment to the shareholding limits of The Bank of Singapore (BOSA) following the winding up of its holding company, OCBC Holdings (Australia) Pty Limited (ORA). As per section 10 of the Act, the nominal amount of voting shares in a bank that a person, including a corporation, can hold is generally capped at 10 per cent, or 15 per cent with the approval of the Treasurer. The Governor-General, upon being satisfied that it is in the national interest, can fix a higher percentage for a person through an instrument published in the Gazette, as per subsection 10(4). This amendment, specifically, allows the Oversea-Chinese Banking Corporation (OCBC), the parent company of both ORA and BOSA, to increase its direct ownership of BOSA to 100 per cent. This change is achieved by removing the previous approvals granted to the shareholders in BOSA and gazetted under subsection 10(7) of the Act. Furthermore, an instrument has been published under subsection 10(4) fixing a percentage of 100 per cent for OCBC in relation to its interests in BOSA. Additionally, under section 9 of the Act, OCBC's associates, including officers, partners, subsidiaries, and related companies, will also be deemed to have the same interest in BOSA as OCBC. To address this, an instrument is proposed under subsection 10(5A) of the Act, fixing a percentage of 100 per cent for relevant officers of OCBC in relation to their interests in BOSA. The Banks (Shareholdings) Regulations (Amendment) 1991 No. 278 imposes several obligations and requirements on the parties it governs. Firstly, OCBC and its relevant officers must adhere to the 100 per cent shareholding limit for BOSA, as fixed by the Governor-General under the Act. Secondly, the associates of OCBC must also comply with this limit. Thirdly, the regulations require the removal of previous approvals granted to the shareholders in BOSA and the deletion of references to ORA in relation to BOSA from the schedule to the regulations. This is to ensure the regulations accurately reflect the current shareholding structure. The Banks (Shareholdings) Act 1972 imposes penalties for breaches of its provisions. While the specific penalties are not outlined in the explanatory statement, it is reasonable to assume that breaches of the shareholding limits or failure to comply with the regulations could result in civil or criminal consequences. The penalties may include fines, imprisonment, or both, depending on the severity of the breach and the discretion of the court. The exact penalties would be determined based on the specific provisions of the Act and the relevant legislation governing civil and criminal penalties in Australia.