Banks (Shareholdings) Regulations (Amendment) 1996 No. 146
EXPLANATORY STATEMENT
STATUTORY RULES 1996 No. 146
Issued by the Authority of the Assistant Treasurer
Banks (Shareholdings) Act 1972
Banks (Shareholdings) Regulations (Amendment)
Section 10 of the Banks (Shareholdings) Act 1972 (the Act) limits the amount of the voting shares of a bank 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 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, if the Governor-General is satisfied that to do so is in the national interest, fix a higher percentage for that person by instrument published in the Gazette. Subsection 10(5A) provides that the Governor-General may, on the publication under subsection 10(4) of an instrument fixing a percentage applicable to a corporation in respect of a bank, declare by instrument in writing published in the Gazette that the percentage so fixed is also applicable to the persons who are from time to time relevant officers of the corporation in respect of the bank.
Section 17 of the Act provides that the Governor-General may make regulations for the purposes of the Act.
ANZ Grindlays Bank plc (Grindlays) expects to move its place of incorporation from the United Kingdom to Australia (where the company will be incorporated under the Corporations Law as ANZ Grindlays Bank Limited) in July 1996. For the purposes of the move, Grindlays has applied for an authority to carry on banking business under the Banking Act 1959. This will require a separate determination by the GovernorGeneral (papers prepared separately). On its relocation to Australia, all of Grindlays share capital will be held by ANZ Holdings (UK) plc (75 per cent) and Australia and New Zealand Banking Group Limited (ANZ - 25 per cent) respectively. It is then planned to transfer all of Grindlays shares to ANZ in the month or so following its relocation to Australia. These shareholdings are in excess of the 10 per cent ownership limit set down in section 10 of the Act.
Two instruments under subsection 10(4) of the Act have been prepared, fixing a percentage of 100 for ANZ and 75 per cent for ANZ Holdings (UK) plc, in relation to their respective interests in Grindlays.
Under section 9 of the Act the associates (including officers, partners, subsidiaries and related companies) of ANZ and ANZ Holdings (UK) plc would also be deemed to have the same interest in Grindlays as these corporations. In the case of officers of ANZ and ANZ Holdings (UK) plc, two instruments pursuant to subsection 10(5A) of the Act are proposed which would fix a percentage of 100 and 75 in relation to interests in Grindlays for those persons who are from time to time relevant officers of ANZ and ANZ Holdings (UK) plc respectively.
Under the Act, it is not possible to make a 'class' instrument for the interests of the associates of ANZ and ANZ Holdings (UK) plc, other than its relevant officers. These other associates represent a large and everchanging group of persons and corporations.
Rather than make an instrument pursuant to subsection 10(4) for every person within the meaning of section 9, it is convenient to prescribe these interests - that is, to have them disregarded for the purposes of section 10 of the Act - by regulation, as provided for by section 17 and paragraph 8(9)(d) of the Act.
Paragraph 8(9)(d) of the Act provides that a prescribed interest in a share, that is an interest of such a person or 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 to be held by virtue of an associate relationship. The effect of the proposed amendments to the Regulations would be to disregard, for the purposes of the Act, interests in Grindlays arising froth associate relationships with ANZ and ANZ Holdings (UK) plc.
The details of the proposed Regulations are as follows:
The Schedule to the Banks (Shareholdings) Regulations is amended by adding the following corporation to column 2:
ANZ Grindlays Bank Limited
and by adding the following corporations to column 3:
Australia and New Zealand Banking Group Limited; and
ANZ Holdings (UK) plc
Overview
The Banks (Shareholdings) Regulations (Amendment) 1996 No. 146, issued under the authority of the Assistant Treasurer, amends the Banks (Shareholdings) Regulations to address the impending relocation of ANZ Grindlays Bank plc to Australia. This change is significant as it involves altering the bank's place of incorporation and results in substantial shareholdings by ANZ Holdings (UK) plc and Australia and New Zealand Banking Group Limited that exceed the 10 per cent voting share limit set by section 10 of the Banks (Shareholdings) Act 1972. The policy objective of the Act is to maintain financial stability and protect the interests of depositors by limiting concentrated shareholdings in banks. The proposed amendments seek to disregard certain interests in ANZ Grindlays Bank Limited for the purposes of the Act, ensuring compliance with the legislative framework as the bank transitions to Australian jurisdiction.
Scope and Application
The Banks (Shareholdings) Regulations (Amendment) 1996 No. 146 applies to the regulation of shareholdings in Australian banks, specifically addressing the interests of ANZ Grindlays Bank Limited, Australia and New Zealand Banking Group Limited, and ANZ Holdings (UK) plc. This amendment arises from the relocation of ANZ Grindlays Bank plc's incorporation from the United Kingdom to Australia, resulting in a need to adjust the regulatory framework to accommodate the new shareholding structure. The Act applies to persons and corporations involved in the shareholding arrangements of the banks, including relevant officers, associates, and subsidiaries. Geographically, the Act operates under Commonwealth jurisdiction, ensuring that the regulations comply with national legislative standards. The proposed amendments to the Regulations aim to disregard certain interests in ANZ Grindlays Bank Limited that stem from associate relationships with ANZ and ANZ Holdings (UK) plc, thereby accommodating the unique circumstances of the bank's relocation and shareholding structure. The Regulations also provide for the possibility of higher shareholding percentages to be fixed by the Governor-General if deemed necessary in the national interest.
Key Provisions
The Banks (Shareholdings) Regulations (Amendment) 1996 No. 146 addresses specific provisions under the Banks (Shareholdings) Act 1972, particularly relating to the shareholding limits of voting shares in Australian banks. Section 10 of the Act sets a limit of 10% on the voting shares of a bank that an individual or corporation can own, with a potential increase to 15% if approved by the Treasurer. If the Governor-General deems it in the national interest, they can fix a higher percentage through an instrument published in the Gazette, as outlined in subsection 10(4). This mechanism also allows the Governor-General to extend these limits to relevant officers of the corporation through an instrument under subsection 10(5A).
These regulations impose clear limits and oversight on the ownership of voting shares in Australian banks to ensure no single entity or group can exert undue influence over the banking sector. The primary obligation under these provisions is for corporations and individuals to remain within the specified shareholding limits unless they have received explicit approval from the Treasurer or the Governor-General. The amendments proposed in the Banks (Shareholdings) Regulations (Amendment) 1996 No. 146 are designed to manage the transition of ANZ Grindlays Bank plc's incorporation to Australia while adhering to the regulatory framework. The amendment ensures that the interests of ANZ Holdings (UK) plc and Australia and New Zealand Banking Group Limited in Grindlays are correctly managed under the Act, by prescribing these interests to be disregarded for the purposes of section 10.
Failure to comply with the provisions of the Banks (Shareholdings) Act 1972 and the accompanying regulations can lead to significant legal consequences. Specifically, if an entity exceeds the permitted shareholding limits without the required approvals, they may face civil or criminal penalties. While the Act does not explicitly detail the penalties for non-compliance, it is understood that breaches could result in fines or other legal actions. The severity of the penalties can depend on the nature and extent of the breach, and the courts have the discretion to impose appropriate sanctions. Furthermore, ongoing non-compliance could lead to further regulatory actions, including potential revocation of banking licenses.