Conditions on NOHC authority 2022 – Alex Corporation Limited
Banking Act 1959
To: Alex Corporation Limited ABN 89 634 554 608 (the body corporate)
Since the body corporate holds an authority to be a NOHC under subsection 11AA(2) of the
Banking Act 1959 (the Act) and the NOHC authority is subject to conditions, I, Paul Tattersall, a delegate of APRA:
(a) under paragraph 11AAA(1)(b) of the Act, REVOKE the conditions imposed on the body corporate’s NOHC authority; and
(b) under paragraph 11AAA(1)(a) of the Act, IMPOSE the conditions specified in the schedule on the NOHC authority.
This instrument commences on 21 December 2022. Dated: 19 December 2022
Paul Tattersall
Acting Executive Director Banking Division
Interpretation
In this instrument:
APRA means the Australian Prudential Regulation Authority.
NOHC is short for non-operating holding company and has the meaning given in subsection 5(1) of the Act.
NOHC authority has the meaning given in subsection 5(1) of the Act.
APRA is required to publish this notice in the Gazette.
A decision to impose conditions or additional conditions, or vary conditions, on an authority is a decision to which Part VI of the Act applies. You may request APRA reconsider the decision in accordance with subsection 51B(1) of the Act. The request for reconsideration must be made in writing, must set out the reasons for making the request, and must be given to APRA within 21 days after the day on which you first received notice of this decision, or within such further period as APRA allows. If you are dissatisfied with the outcome of APRA’s reconsideration of the decision, you may, subject to the Administrative Appeals Tribunal Act 1975, apply to the Administrative Appeals Tribunal for review of the reconsidered decision.
Schedule – conditions on NOHC authority
- The NOHC must consult with, and receive written agreement from APRA, prior to:
a) commencing any activities not previously agreed with APRA;
b) establishing or acquiring a subsidiary other than an entity whose sole purpose is to be a special purpose vehicle for providing finance to the NOHC or the ADI;
c) committing to a proposal to acquire (whether directly or indirectly) greater than, or equal to, 20 per cent of an equity interest in an entity;
d) committing to a proposed exposure to a related body corporate, except for the ADI, that is greater than, or equal to, 10 per cent of the NOHC’s Tier 1 Capital; or
e) entering into an arrangement that relates to or may result in:
- the disposal of any shares in a specified subsidiary; or
ii. a related body corporate of the NOHC providing, or ceasing to provide, services to a related regulated entity that are necessary to maintain the entity’s operations.
2. Where a related body corporate of the NOHC provides services to a related regulated entity that are necessary or significant to maintain the entity’s operations, the related body corporate must be a subsidiary of the NOHC.
Interpretation
In this schedule:
related body corporate means a related body corporate within the meaning given in section 50 of the Corporations Act 2001.
related regulated entity means a related body corporate of the NOHC that is a body regulated by APRA within the meaning given in subsection 3(2) of the Australian Prudential Regulation Authority Act 1998.
specified subsidiary means:
(i) a related regulated entity; or
(ii) a related body corporate of the NOHC that provides services to a related regulated entity.
the ADI means Alex Bank Pty Ltd ABN 13 627 244 848.
the NOHC means Alex Corporation Limited ABN 89 634 554 608.
Unless the contrary intention appears, a reference in this schedule to an Act or Prudential Standard is a reference to the Act or Prudential Standard as in force from time to time.
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Overview
The Conditions on NOHC Authority 2022, enacted by the Australian Prudential Regulation Authority (APRA), addresses the need to regulate the activities of non-operating holding companies (NOHC) in the banking sector. Specifically, it imposes certain conditions on the authority of Alex Corporation Limited, a NOHC, under the Banking Act 1959. The primary policy objective is to ensure that NOHCs operate in a manner that does not adversely affect the financial stability of their associated authorised deposit-taking institutions (ADI). To this end, the Act mandates that Alex Corporation Limited must consult with and obtain written agreement from APRA before engaging in activities such as commencing new ventures, establishing or acquiring subsidiaries, committing to significant equity investments, or entering into arrangements that might affect the operations of related regulated entities. The Act also stipulates that related body corporates providing critical services to regulated entities must be subsidiaries of the NOHC. These measures are designed to maintain the integrity and stability of the financial system by closely monitoring the activities of NOHCs.
Scope and Application
The Conditions on NOHC Authority 2022 applies specifically to Alex Corporation Limited, a non-operating holding company (NOHC) that holds an authority under subsection 11AA(2) of the Banking Act 1959. The Act, administered by the Australian Prudential Regulation Authority (APRA), imposes conditions on the NOHC authority of Alex Corporation Limited. The legislation is geographically applicable within the Commonwealth of Australia and impacts the banking industry, particularly concerning the operations and activities of NOHCs. The conditions outlined in this Act are designed to regulate the activities and affiliations of NOHCs to maintain financial stability and integrity. Exclusions or exemptions are not explicitly stated in the text, but the conditions themselves serve as restrictions on the NOHC’s operations. The application of the Act may be extended or detailed further through subordinate instruments such as Prudential Standards or other regulatory guidelines issued by APRA.
Key Provisions
The primary provisions of this legislation involve the imposition and revocation of conditions on the non-operating holding company (NOHC) authority held by Alex Corporation Limited under the Banking Act 1959 (section 11AAA). Specifically, section 11AAA(1)(b) revokes the existing conditions, while section 11AAA(1)(a) imposes new conditions as detailed in the schedule (section 2). This instrument takes effect from 21 December 2022.
Under the new conditions, Alex Corporation Limited must consult with and receive written agreement from the Australian Prudential Regulation Authority (APRA) before undertaking several specific activities. These include commencing any activities not previously agreed with APRA (Schedule, condition a), establishing or acquiring a subsidiary other than a special purpose vehicle for providing finance (Schedule, condition b), committing to acquiring greater than or equal to 20% of an equity interest in another entity (Schedule, condition c), committing to a proposal that exposes the NOHC to a related body corporate to an amount greater than or equal to 10% of its Tier 1 Capital (Schedule, condition d), and entering into arrangements that may result in the disposal of shares in a specified subsidiary or a related body corporate ceasing to provide necessary services to a related regulated entity (Schedule, condition e). Additionally, if a related body corporate provides necessary or significant services to a related regulated entity, it must be a subsidiary of the NOHC (Schedule, condition 2).
The obligations imposed on Alex Corporation Limited and APRA include the requirement for the NOHC to consult with APRA and obtain written agreement before proceeding with the specified activities. APRA is responsible for reviewing these proposals and providing written consent. Furthermore, Alex Corporation Limited has the right to request APRA reconsider any decision made under Part VI of the Act within 21 days of receiving notice of the decision or within any extended period allowed by APRA. If dissatisfied with the reconsideration outcome, Alex Corporation Limited can apply to the Administrative Appeals Tribunal for review.
Failure to comply with the conditions imposed by this legislation may result in various civil or criminal consequences, depending on the severity of the breach. However, the specific penalties are not detailed in the provided text. It is essential to note that any breach of the conditions could potentially lead to enforcement actions by APRA, which might include fines or other regulatory measures.