Banks (Shareholdings) Regulations (Amendment)

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EXPLANATORY STATEMENT

STATUTORY RULES 1985 NO 337

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 sub-section 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. Sub-section 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.

The Governor-General of the Commonwealth of Australia on the recommendation of the Treasurer has granted a banking authority to IBJ Australia Bank Limited.

IBJ Australia Bank Limited is owned 50 per cent by The Industrial Bank of Japan, Ltd, a company incorporated in Japan, 30 per cent by Western Australian Development Corporation and 10 per cent by each of State Government Insurance Office (WA) and Town and Country WA Building Society. The Treasurer has agreed with proposals whereby the ownership structure will change in two stages so that the bank will be owned 75 per cent by The Industrial Bank of Japan, Ltd, 10 per cent by each of Western Australian Development Corporation and State Government Insurance Office (WA) and 5 per cent by Town and Country WA Building Society.

As required by the Act an instrument has been gazetted, which fixes a percentage of 75 per cent under sub-section 10(4) for The Industrial Bank of Japan, Ltd in relation to its interest in IBJ Australia Bank Limited.

In addition an instrument has been gazetted which fixes a percentage of 30 per cent under sub-section 10(4) for Western Australian Development Corporation in relation to its initial interest in IBJ Australia Bank Limited.


Under section 9 of the Act the associates (ie all officers, partners, subsidiaries etc) of The Industrial Bank of Japan, Ltd and Western Australian Development Corporation are also deemed to have the same interest in IBJ Australia Bank Limited as The Industrial Bank of Japan, Ltd and Western Australian Development Corporation. The Industrial Bank of Japan, Ltd made an application to the Treasurer for a ‘class’ instrument fixing a percentage of 75 per cent in respect of its officers, pursuant to sub-section 10 (5A) of the Act. Hence, an instrument has been gazetted, which declares that for the purposes of the Act the percentage of 75 per cent is also applicable to the persons who are from time to time relevant officers of The Industrial Bank of Japan, Ltd in respect to IBJ Australia Bank Limited.

In addition, Western Australian Development Corporation made an application to the Treasurer for a ‘class’ instrument fixing a percentage of 30 per cent in respect of its officers pursuant to sub-section 10(5A) of the Act. Hence an instrument has been gazetted which declares that for the purposes of the Act the percentage of 30 per cent is also applicable to the persons who are from time to time relevant officers of Western Australian Development Corporation in reapect to IBJ Australia Bank Limited.

Under the Act, however, it is not possible to make such a ‘class’ instrument for the interests of the associates of The Industrial Bank of Japan, Ltd and Western Australian Development Corporation other than for the relevant officers. These ‘other associates’, as defined in section 9, represent an extremely large and ever changing list of persons/corporations and rather than make an instrument, pursuant to sub-section 10(4), for every person within 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 person, or of the persons included in such class of persons, as is prescribed shall be disregarded. The Banks (Shareholdings) Regulations (the Regulations) prescribed a class of persons in relation to their interests in banks listed in the Schedule to the Regulations deemed to be held by virtue of sub-section 9(2) of the Act and thus their interests are disregarded for the purposes of the Act. The effect of the amendments to the Regulations is to do the same in the case of IBJ Australia Bank Limited.

For each of the sixteen successful applicants announced by the Treasurer on 27 February 1985 which proceeds to the obtaining of a banking authority, a similar addition will be made to the Schedule to the Regulations.

Finally, Western Australian Development Corporation and Town and Country WA Building Society share a common director and the Act will therefore have the effect of deeming that person to have an interest in the bank of up to 40 per cent (depending upon the progress of the approved ownership restructuring mentioned above). A regulation has been made to prescribe the interest in the bank of such a person deemed to be held through Town and Country WA Building Society and, as a result, that interest will be disregarded. The person in question will, however, also benefit from the instrument under sub-section 10(5A) allowing interests of 30 per cent for the relevant officers of Western Australian Development Corporation. In the absence of the regulation a common director would require an instrument under section 10(4).

Details of the Regulations are as follows.

The Schedule to the Banks (Shareholdings) Regulations is amended by adding The Industrial Bank of Japan, Ltd and Western Australian Development Corporation to the Schedule in relation to IBJ Australia Bank Limited.

For the purposes of paragraph 8(9)(d) of the Act persons who are directors of both Western Australian Development Corporation and Town and Country WA Building Society are prescribed persons and the interest they have in IBJ Australia Bank Limited by virtue of sub-section 9(2) of the Act by reason that the person is an officer of Town and Country WA Building Society is a prescribed interest.

Overview

The Banks (Shareholdings) Regulations (Amendment) Statutory Rules 1985 No 337, issued under the authority of the Treasurer, amends the Banks (Shareholdings) Regulations to address the complexities arising from the shareholdings of IBJ Australia Bank Limited. Enacted by the Parliament of Australia, the original Banks (Shareholdings) Act 1972 was introduced to regulate the shareholdings in Australian banks by limiting the voting shares a person or corporation can hold to ensure financial stability and control over the banking sector. This amendment responds to the evolving ownership structure of IBJ Australia Bank Limited, aiming to streamline the regulatory process and avoid the need for numerous individual instruments for the bank's associates. The policy objective is to provide clear guidelines for the application of the shareholding limits while accommodating the specific ownership changes of the bank.

Scope and Application

The Banks (Shareholdings) Act 1972 applies to any person or entity that holds or seeks to hold a share in a bank incorporated in Australia, ensuring that the shareholding structure adheres to prescribed limits. This Act primarily governs the ownership and control of Australian banks by restricting the nominal amount of voting shares a person, including corporations, can hold in a bank to 10 per cent, or 15 per cent with the Treasurer's approval. The Act also provides mechanisms for the Governor-General to fix a higher percentage for specific shareholders by publishing an instrument in the Gazette. The Act's jurisdictional reach is national, as it applies to banks incorporated in Australia. The application of the Act can be extended or restricted through subordinate instruments, such as the Banks (Shareholdings) Regulations, which were amended to include specific entities and their interests in IBJ Australia Bank Limited. This legislative framework ensures that ownership interests are transparently managed and regulated to maintain financial stability and integrity in the Australian banking sector.

Key Provisions

The Banks (Shareholdings) Regulations (Amendment) Statutory Rules 1985 No 337, issued under the authority of the Treasurer, introduces significant changes to the shareholding limits for IBJ Australia Bank Limited. Section 10 of the Banks (Shareholdings) Act 1972 generally restricts the voting share interests of a bank to 10 per cent of the total nominal value, with an option to increase to 15 per cent with the Treasurer's approval. Moreover, under section 10(4), the Governor-General can set a higher percentage for specific individuals or corporations upon application to the Treasurer. The amended regulations specifically address the shareholding percentages for IBJ Australia Bank Limited. The Industrial Bank of Japan, Ltd, which owns 50 per cent of the bank, has had its shareholding limit set at 75 per cent, with a gazetted instrument confirming this percentage. Similarly, Western Australian Development Corporation, with an initial 30 per cent stake, has also had its shareholding percentage fixed at 30 per cent through a gazetted instrument. These instruments ensure that the relevant entities do not exceed the specified limits in their shareholdings. Furthermore, the amendments extend these limits to relevant officers of The Industrial Bank of Japan, Ltd and Western Australian Development Corporation, as stipulated under section 10(5A). The obligations imposed by the Act and these regulations on the involved parties include adhering to the specified shareholding limits and ensuring that their associates do not exceed these limits. Specifically, The Industrial Bank of Japan, Ltd and Western Australian Development Corporation, along with their relevant officers, must not exceed the 75 per cent and 30 per cent limits respectively. The regulations also deem the interests of certain associates, such as those held through other corporations, to be disregarded for the purposes of the Act. This ensures that the overall shareholding structure of the bank complies with the legislative requirements. Failure to comply with the provisions of the Banks (Shareholdings) Act 1972 can result in significant legal consequences. Under the Act, any person who contravenes the shareholding limits may be subject to penalties. While the exact penalties are not specified in the text, it is reasonable to infer that breaches could result in fines, legal action, or other enforcement measures to ensure compliance. The precise nature and extent of the penalties would depend on the specific circumstances of the breach and any applicable laws at the time.

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Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.