EXPLANATORY STATEMENT
STATUTORY RULES 1989 NO. 4
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 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 instrument published in the Gazette if the Governor-General is satisfied that to do so is in the national interest. Subsection 10(3) provides that where 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 (a person may hold less than the percentage fixed).
In accordance with the Act an instrument has been gazetted which fixes a percentage of 100 under subsection 10(4) as the maximum interest that each of the following corporations may hold in relation to Australian Bank Limited.
• Lend Lease Corporation
• MLC Life Limited
• State Bank of Victoria
• The MLC Limited
The exemptions were made to allow two competing proposals by the State Bank of Victoria and MLC Life Limited to take-over and restructure Australian Bank Limited to be placed before the bank’s shareholders. A feature of both proposals is that the successful bidder will, in due course, reduce its shareholdings in Australian Bank to 10 per cent.
It is proposed that the instrument would then be revoked so that the normal limit of 10 per cent would apply to shareholdings in Australian Bank.
Under section 9 of the Act the associates (i.e. all officers, partners, subsidiaries) of the above corporations would also be deemed to have the same interest in Australian Bank Limited as those corporations. An instrument has been
gazetted which declares that for the purposes of the Act the percentage of 100 is also applicable to the persons who are from time to time relevant officers of the above corporations in respect of Australian Bank 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 a large and ever changing list of persons and corporations, and rather than make an instrument pursuant to subsection 10(4) for every person with 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 persons, 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 by virtue of subsection 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.
When MLC Life Limited, known at the time as The Mutual Life and Citizens’ Assurance Company Limited, received approval in May 1985 to acquire up to 15 per cent in Australian Bank, the interests of the associates MLC Life Limited, the MLC Limited and Lend Lease Corporation were prescribed by Regulation for the purposes of paragraph 8(9) so that they were disregarded.
The effect of the amendment to the Regulations is to do the same in the case of the interests of the associates of the State Bank of Victoria in Australian Bank Limited and to revise the Schedule to reflect The Mutual Life and Citizens’ Assurance Company Limited’s change of name to MLC Life Limited.