Overview

The Financial Sector (Shareholdings) Act 1998 was enacted by the Australian Parliament to address concerns about the concentration of ownership and control in the financial sector, ensuring that the sector remains stable and resilient. The Act was introduced to provide a regulatory framework that allows the Treasurer to approve or refuse significant shareholdings in financial institutions, thereby protecting the interests of consumers and the broader economy. In this context, Bernadette Donovan, as a delegate of the Treasurer, has granted approval to Kristo Käärmann and Kotilda OÜ to hold substantial stakes in Wise Group plc and Wise plc, considering it to be in the national interest. This approval is subject to specific conditions outlined in the schedule, which restrict the applicants' control interests to ensure that the financial sector companies remain compliant with regulatory requirements. The approval remains in force until the later of the specified conditions being met or 31 December 2036.

Scope and Application

The Financial Sector (Shareholdings) approval to hold a stake No. 8 of 2026 applies to Kristo Käärmann and Kotilda OÜ, granting them approval to hold significant stakes in Wise Group plc and Wise plc, which are financial sector companies under the Financial Sector (Shareholdings) Act 1998. This legislation is part of the Commonwealth's regulatory framework designed to monitor and control significant holdings in entities that provide financial services in Australia. The approval is limited to stakes exceeding 20% and is subject to specific conditions that restrict the extent of direct control these applicants can exercise over the companies. This approval is applicable nationally, aligning with the overarching objectives of the Act to protect the financial system's stability and integrity. The Act does not explicitly state any exclusions or exemptions, though it mandates that any further applications for stake approvals must be made before 31 December 2036. The instrument's conditions are detailed in the accompanying schedule, which outlines the limits on the direct control interests of the applicants. Additionally, the Act provides for flow-on approvals to subsidiaries and officers of the companies if the holding company is a 100% subsidiary or if the approval is held by a company. This instrument, as a notifiable instrument, will be registered on the Federal Register of Legislation and requires the Treasurer or a delegate to notify the relevant financial sector companies.

Key Provisions

The key provisions of the notifiable instrument (F2026N00227) pertain to the approval of significant shareholdings in financial sector companies. Under subsection 13(1) of the Financial Sector (Shareholdings) Act 1998, Kristo Käärmann and Kotilda OÜ have applied for approval to hold more than 20% of shares in Wise Group plc and Wise plc. This approval is granted by Bernadette Donovan, a delegate of the Treasurer, under paragraph 14(1)(a) of the Act, on the condition that it is deemed to be in the national interest. Specifically, Kristo Käärmann is approved to hold a 50% stake in Wise Group plc, and Kotilda OÜ is approved to hold a 50% stake in Wise Group plc and a 100% stake in Wise plc. This approval is subject to certain conditions outlined in the schedule of the instrument. The obligations imposed by the Act on the applicants include maintaining compliance with the specified shareholding limits. According to the schedule, the applicants must not hold a combined direct control interest in Wise Group plc exceeding 50% without prior approval from the Treasurer or a delegate. Furthermore, individual applicants must not hold a direct control interest in Wise Group plc exceeding certain percentages: 50% for Kristo Käärmann and 20% for Kotilda OÜ. These conditions are designed to ensure that the applicants do not gain undue influence over the financial sector companies in question. Failure to comply with the provisions and conditions of the notifiable instrument may result in legal consequences. While specific offences and penalties are not detailed in the instrument, the Act provides a framework for enforcement. Under the general provisions of the Financial Sector (Shareholdings) Act 1998, breaches of the Act or its conditions could lead to civil or criminal penalties. The exact penalties would depend on the nature and severity of the breach, but they could include fines, corrective actions, or even criminal charges in severe cases. The instrument remains in force until the later of the date of a further application for approval, the date of refusal or withdrawal of such an application, or 31 December 2036, providing a clear timeframe for compliance and oversight.