Banks (Shareholdings) Regulations (Amendment)

Overview

The Banks (Shareholdlings) Regulations (Amendment) Statutory Rules 1985 No. 44, issued by the authority of the Treasurer, addresses a specific issue concerning the Banks (Shareholdlings) Act 1972. The Act originally placed restrictions on the amount of voting shares an individual or corporation could hold in an Australian bank, with a general limit of 10 per cent, or 15 per cent with Treasurer approval. The Regulations were introduced to amend the existing framework by updating the list of corporations whose interests in Standard Chartered Bank Australia Limited would be disregarded under the Act. This was done to provide clarity and ensure consistency in the application of the Act's shareholding limits across different banking entities. The policy objective of these amendments, as enacted by the Governor-General on the recommendation of the Treasurer, is to facilitate the orderly management of shareholdings in Australian banks by ensuring that the interests of certain corporations and their associates in Standard Chartered Bank Australia Limited are appropriately accounted for under the Act. By updating the Schedule to the Banks (Shareholdlings) Regulations, the amendments aim to streamline the regulatory process and avoid the need for numerous individual instruments for each associate of the listed corporations.

Scope and Application

The Banks (Shareholdlings) Regulations (Amendment) Statutory Rules 1985 No. 44 pertains to the Banks (Shareholdlings) Act 1972, governing the limits on voting shares in Australian banks held by individuals and entities. This legislation applies to persons and corporations, including those incorporated in Australia and their associates, with an interest in the voting shares of a bank. The Act stipulates a limit of 10 per cent of the total nominal amount of a bank's voting shares, extendable to 15 per cent with the Treasurer's approval. The Governor-General may set a higher percentage for specific applicants, as demonstrated by the recent amendment that sets a 75 per cent limit for Standard Chartered Bank, Standard Chartered Investments Pty. Limited, and Standard Chartered PLC in relation to their interests in Standard Chartered Bank Australia Limited. This amendment also extends to the relevant officers of these corporations. The Regulations further clarify that the interests of associates of these corporations, other than the relevant officers, are disregarded under the Act, thereby streamlining compliance and administration. These Regulations are applicable nationally, encompassing all Australian banks and relevant entities within the Commonwealth's jurisdiction.

Key Provisions

The Banks (Shareholdings) Regulations (Amendment) Statutory Rules 1985 No 44 amend the Banks (Shareholdings) Regulations to address the shareholding interests in Standard Chartered Bank Australia Limited (paragraph 1). Under section 10(4) of the Banks (Shareholdings) Act 1972, the Governor-General has the authority to fix a higher percentage of voting shares for a person interested in a bank, provided an application is made to the Treasurer. In this case, the Governor-General has fixed a percentage of 75 for each of the three specified corporations: Standard Chartered Bank, Standard Chartered Investments Pty. Limited, and Standard Chartered PLC, in relation to their interests in Standard Chartered Bank Australia Limited (paragraphs 2-4). The Regulations also deem the associates of these corporations, as defined in section 9 of the Act, to have the same interest in Standard Chartered Bank Australia Limited as the corporations themselves. This means that the 75 per cent shareholding limit applies to the associates as well. Additionally, the Regulations declare that the 75 per cent limit is also applicable to the relevant officers of each of these corporations, as per sub-section 10(5A) of the Act (paragraphs 5-6). To accommodate the large and ever-changing list of associates, other than the relevant officers, the Regulations use paragraph 8(9)(d) to disregard these interests for the purposes of the Act. This amendment to the Regulations ensures that the interests of these associates are disregarded, in line with the existing provisions for other banks listed in the Schedule to the Regulations (paragraphs 7-8). Under the amended Regulations, Standard Chartered Bank, Standard Chartered Investments Pty. Limited, and Standard Chartered PLC are added to the Schedule in relation to Standard Chartered Bank Australia Limited. This addition ensures consistency with the treatment of the sixteen other successful applicants who have been granted banking authorities and have their interests listed in the Schedule to the Regulations (paragraph 9). The Banks (Shareholdings) Regulations (Amendment) Statutory Rules 1985 No 44 impose certain obligations on the parties involved. Standard Chartered Bank, Standard Chartered Investments Pty. Limited, and Standard Chartered PLC must ensure that their shareholdings in Standard Chartered Bank Australia Limited do not exceed the prescribed limit of 75 per cent. They are also required to notify the Treasurer of any changes in their shareholdings or the identity of their relevant officers (section 10). The Regulations deem the associates of these corporations to have the same interest, meaning they too must comply with the shareholding limits (section 9). The Regulations also provide for the disregard of interests under paragraph 8(9)(d) for the associates of the corporations, other than the relevant officers. This means that while these associates are not subject to the 75 per cent limit, they must still comply with any other applicable provisions of the Act and Regulations. The inclusion of these corporations in the Schedule to the Regulations ensures consistency with the treatment of other banks listed in the Schedule (paragraphs 7-9). The Banks (Shareholdings) Act 1972 and the amended Regulations establish various offences and penalties for breaches. A person who contravenes the provisions of the Act or the Regulations may be subject to criminal or civil penalties. Under the Act, a person who acquires or holds shares in a bank in excess of the prescribed limit, or who fails to comply with the notification requirements, may be guilty of an offence (section 11). The maximum penalty for an individual is a fine of up to 50 penalty units ($5,500 as of 2023), while the maximum penalty for a corporation is a fine of up to 250 penalty units ($27,500 as of 2023). Additionally, a person who is found to have contravened the Act or the Regulations may also be subject to other civil or criminal consequences, such as disqualification from holding a banking authority or other financial penalties (sections 12-13).