Banks (Shareholdings) Regulations

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EXPLANATORY STATEMENT

STATUTORY RULES 1985 NO. 67

ISSUED BY THE AUTHORITY OF THE TREASURER

BANKS (SHAREHOLDINGS) ACT 1972

BANKS (SHAREHOLDINGS) REGULATIONS

Section 10 of the Banks (Shareholdings) Act 1972 (the Act) 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 less than 10 per cent 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.

Section 17 of the Act provides that the Governor-General may make regulations not inconsistent with the Act, prescribing all matters that by the Act are required or permitted to be prescribed or are necessary or convenient to be prescribed for carrying out or giving effect to the Act.


The Mutual Life and Citizens’ Assurance Company Ltd (MLC) and Paribas Group Australia Pty Limited (PGA) have applied in writing to the Treasurer to acquire up to 15 per cent of the voting shares of Australian Bank Limited (ABL). Both MLC and PGA are considered to be capable of providing the ongoing support of ABL commensurate with their having a 15 per cent interest in the bank.

Paragraph 8(4)(c) of the Act states ‘Where a body corporate has an interest in a share and a person is, the associates of a person are, or a person and his associates are, entitled to exercise or control the exercise of not less than three-twentieths of the votes attached to the voting shares in the body corporate, that person shall be deemed to have an interest in that share’. Each corporation with a deemed interest in more than 10 per cent of the voting shares of a bank is required to have a higher percentage than 10 per cent fixed under sub-section 10(4).

By virtue of paragraph 8(4)(c) the following corporations would be deemed to have the same interest in the bank as MLC and PGA:

(a) The MLC Limited which holds all the issued shares capital of The Mutual Life & Citizens’ Assurance Company Limited;


(b) Lend Lease Corporation Limited which holds 49.47 per cent of the shares in The MLC Limited;

(c) Industrial Equity Limited which holds 19.9 per cent of the shares in The MLC Limited;

(d) The Citizens & Graziers’ Life Assurance Company Limited which holds 53.6 per cent of the share in Industrial Equity Limited;

(e) Brierley Investments Limited which holds 96.3 per cent of the shares in the Citizens & Graziers’ Life Assurance Company Limited;

(f) Paribas International which holds 66.7 per cent of the shares in Paribas Group Australia Pty Ltd;

(g) Paribas North America Inc which holds 33.3 per cent of the shares in Paribas Group Australia Pty Ltd;

(h) Paribas International which owns 99.7 per cent of issued common stock of Paribas North America Inc representing 88 per cent of the voting rights;

(i) Compagnie Financiere de Paribas which holds all the shares in Paribas International.


Having regard to the fact that these interests will be held indirectly through MLC and PGA there is no objection to their having 15 per cent interest in ABL. Therefore, the proposed instrument, which will be gazetted after it is made, fixes a percentage of 15 per cent for the following corporations in relation to their interest in ABL under sub-section 10(4):

• The Mutual Life & Citizens’ Assurance Company Limited;

• Paribas Group Australia Pty. Limited;

• The M.L.C. Limited;

• Lend Lease Corporation Limited;

• Industrial Equity Limited;

• The Citizens & Graziers’ Life Assurance Company Limited;

• Brierley Investments Limited;

• Paribas International;


• Paribas North America, Inc; and

• Compagnie Financiere de Paribas.

Under section 9 of the Act all officers, partners, subsidiaries etc of the above corporations would be deemed to have the same interest in ABL as the above mentioned companies and would therefore require instruments fixing a percentage of 15 per cent pursuant to sub-section 10(4). The ‘associates’ of the above corporations as deemed under section 9 would represent an extremely large and ever changing list of persons.

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 sub-section 8(9)(d).

Sub-section 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 effect of the proposed Banks (Shareholdings) Regulations will be to declare that the class of persons within the meaning of section 9, that have an interest solely because of their association with the


above companies which are to be included in the instrument, are ‘prescribed persons’ and that their interests are ‘prescribed interests’. Therefore, their interests in ABL shall be disregarded for the purposes of the Act.

Details of the proposed regulations are as follows:

• Regulation one provides the citation;

• Regulation two provides the interpretation;

• Regulation three prescribes the interest in a share for the purposes of paragraph 8(9)(d); and

• Regulation four prescribes the class of persons in relation to an interest in a share of ABL who are deemed to be associates of any of the following corporations

• The Mutual Life & Citizens’ Assurance Company Limited;

• Paribas Group Australia Pty. Limited;


• The M.L.C. Limited;

• Lend Lease Corporation Limited;

• Industrial Equity Limited;

• The Citizens & Graziers’ Life Assurance Company Limited;

• Brierley Investments Limited;

• Paribas International;

• Paribas North America, Inc; and

• Compagnie Financiere de Paribas.

and have an interest in ABL solely because of their association with the above companies.

Overview

The Banks (Shareholdings) Regulations 1985 were introduced by the Parliament of Australia to address the need for regulation of shareholdings in Australian banks, as stipulated under the Banks (Shareholdings) Act 1972. The primary objective of this legislation was to limit the percentage of voting shares that an individual or corporation can hold in an Australian bank to less than 10 per cent of the total nominal amount of voting shares. The regulations were enacted to provide the flexibility for the Governor-General, on application by a person and approval from the Treasurer, to set a higher shareholding limit under specific circumstances, ensuring that banks maintain a stable and controlled ownership structure. The regulations were intended to streamline the process of granting exceptions to the general rule by prescribing the necessary matters for carrying out or giving effect to the Act.

Scope and Application

The Banks (Shareholdings) Regulations 1985, issued under the authority of the Treasurer, provide detailed guidelines for the application of the Banks (Shareholdlings) Act 1972. The Act restricts the percentage of voting shares in an Australian bank that a person or corporation may hold, typically to less than 10 per cent. However, the Governor-General, on application by a person, may set a higher percentage through an instrument published in the Gazette. The Regulations extend the scope of the Act by making specific provisions for related entities, including subsidiaries, officers, partners, and other associates, ensuring a comprehensive oversight of shareholdings to maintain financial stability and integrity within the banking sector. The Regulations also establish exemptions for certain prescribed interests, reducing administrative burdens while maintaining the Act’s overarching objectives.

Key Provisions

The Banks (Shareholdings) Act 1972, as supplemented by the explanatory statement for Statutory Rules 1985 No. 67, imposes significant restrictions on the ownership of voting shares in Australian banks. Section 10 of the Act restricts individuals and corporations to owning less than 10% of the total voting shares of any Australian bank, although this limit can be raised by the Governor-General through a published instrument in the Gazette upon application (subsection 10(4)). Section 17 allows the Governor-General to make regulations necessary for the Act’s implementation, including prescribing matters required or permitted by the Act. Entities such as the Mutual Life and Citizens' Assurance Company Ltd (MLC) and Paribas Group Australia Pty Limited (PGA) have applied to the Treasurer for permission to own up to 15% of the voting shares in Australian Bank Limited (ABL). Given their capacity to provide ongoing support, this application has been accepted. However, the Act's definition of "interest" in a share under subsection 8(4)(c) means that if an entity controls at least three-twentieths of the voting rights, it is considered to have a significant interest in the bank. This necessitates the Governor-General to fix a higher percentage for these entities. The proposed regulations, set to be gazetted, will address the complex web of corporate ownership by deeming certain interests in ABL as "prescribed interests" that will be disregarded under subsection 8(9)(d). Specifically, Regulation three will prescribe these interests, while Regulation four will detail the class of persons associated with the specified corporations and their prescribed interests. This includes entities such as MLC Limited, Lend Lease Corporation Limited, Industrial Equity Limited, and others, which will be deemed to have an interest in ABL solely due to their association with the primary corporations. In terms of compliance, these regulations will exempt numerous associated entities from the 10% shareholding limit, ensuring that their interests in ABL are disregarded for the purposes of the Act. This legal framework is designed to streamline the regulatory process, avoiding the need for individual instruments for each associated entity. By doing so, it ensures that the Act's objectives are met efficiently, while also maintaining the integrity of bank ownership regulations. Non-compliance with the provisions of the Banks (Shareholdings) Act 1972 could result in severe penalties. While the specific penalties are not detailed in the explanatory statement, breaches of the Act typically involve both civil and criminal consequences. Civil penalties may include fines, while criminal penalties could involve imprisonment. The exact penalties would depend on the nature and severity of the breach, as well as any relevant case law. The intent of these provisions is to enforce the legislative intent to maintain stability and control within the Australian banking sector by regulating shareholding interests.

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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.