Banks (Shareholdings) Regulations (Amendment)

Overview

The Banks (Shareholdings) Regulations (Amendment) 1991 No. 292 was enacted to address a specific problem identified under the Banks (Shareholdings) Act 1972, which limits the nominal amount of voting shares a person or corporation may hold in a bank. The primary issue was the impracticality of creating individual instruments for each associate of Australia and New Zealand Funds Pty Ltd and Australia and New Zealand Banking Group Limited, given the large and fluctuating number of such associates. The objective of these amendments is to streamline the regulatory process by disregarding certain interests in Town and Country Bank Ltd for the purposes of the Act, thus making it more efficient to manage shareholding limits within the banking sector. The amendments were issued under the authority of the Treasurer and align with the regulatory powers granted under section 17 of the Act.

Scope and Application

The Banks (Shareholdings) Regulations (Amendment) 1991 No. 292, issued under the authority of the Treasurer, pertains to the Banks (Shareholdings) Act 1972. This legislation applies to any person or corporation that holds voting shares in a bank, including relevant officers of such entities. The geographic reach of the Act is national, as it applies to banks within Australia. The Act imposes a limit on the nominal amount of voting shares that a person or corporation may hold in a bank, generally capped at 10 per cent, or up to 15 per cent with the approval of the Treasurer. However, through an Instrument published in the Gazette, the Governor-General can fix a higher percentage for specific persons or corporations. The proposed amendments to the Regulations extend this framework by prescribing interests in Town and Country Bank Ltd arising from associate relationships with Australia and New Zealand Funds Pty Ltd and Australia and New Zealand Banking Group Limited, effectively disregarding these interests for the purposes of the Act. This approach is taken to avoid the need for individual Instruments for every person within the meaning of section 9 of the Act, given the large and changing group of associates involved.

Key Provisions

The primary sections of the Banks (Shareholdings) Regulations (Amendment) 1991 No. 292, address the percentage limitations on shareholdings in banks, as well as the application process for obtaining higher shareholding percentages. Specifically, Section 10 of the Banks (Shareholdings) Act 1972 stipulates that generally, a person, including a corporation, may not hold more than 10% of the total nominal amount of a bank's voting shares, or 15% with the Treasurer's approval. However, the Governor-General has the authority to fix a higher percentage for a person by an instrument published in the Gazette (Section 10(4)). Moreover, the Governor-General can declare that a percentage fixed for a corporation applies to its relevant officers, as stipulated in Section 10(5A). Finally, the Governor-General can make regulations for the purposes of the Act as provided under Section 17. In relation to obligations, the Act imposes several requirements on the parties it governs. Firstly, any person or corporation seeking to hold more than the statutory limit of 10% of a bank's voting shares must apply to the Treasurer for approval (Section 10). If the Governor-General approves the application, an instrument will be published in the Gazette fixing the higher percentage (Section 10(4)). Secondly, the Act also requires that the associates of a corporation, including all officers, partners, subsidiaries, and related companies, be deemed to have the same interest in the bank as the corporation (Section 9). Furthermore, if a corporation applies for a higher shareholding percentage, the Governor-General can fix a percentage for the corporation's relevant officers (Section 10(5A)). The Banks (Shareholdings) Regulations (Amendment) 1991 No. 292 also outline the potential consequences for breaches of the Act. Firstly, any person or corporation that exceeds the shareholding limit without approval from the Treasurer may face civil or criminal penalties, depending on the severity of the breach. Under the Act, any person or corporation found guilty of exceeding the shareholding limit may be subject to a penalty of up to $50,000 per day for each day the offence continues (Section 18). Additionally, any officer or employee of a corporation who is found to have exceeded the shareholding limit may also be subject to penalties under the Act. In the case of a corporation, the maximum penalty is $500,000 for each day the offence continues (Section 18). These penalties are intended to deter individuals and corporations from exceeding the shareholding limit without approval from the Treasurer.