Revocation of existing approval and granting of new approval to hold a stake in a financial sector company of more than 15%
Financial Sector (Shareholdings) Act 1998
To: RGA Americas Reinsurance Company Ltd (Bermuda) (RGA Americas) and the person(s) named in the attached Schedule 1 (the applicants)
SINCE
- Under a restructure of the Australasian operations of the RGA group, it is proposed that Reinsurance Group of America, Incorporated (RGA Inc) transfer its interests in RGA Australian Holdings Pty Limited ABN 20 071 125 507 (RGA Australian Holdings) to its 100% subsidiary RGA Americas (the Restructure);
B. Should the Restructure proceed, each of RGA Inc and RGA Americas will hold a 100% stake in RGA Australian Holdings and its 100% subsidiary, RGA Reinsurance Company of Australia Pty Limited ABN 14 072 292 712, an authorised insurance company under the Financial Sector (Shareholdings) Act 1998 (the Act) (the insurer);
C. Each of the applicants have applied for approval under section 13 of the Act, to hold a stake of 100% in the insurer and each holding company of the insurer, if any, which is or will become a 100% subsidiary of the applicant from the date the Restructure is carried out; and
D. RGA Inc is taken to have an approval dated 1 July 1998, by virtue of the operation of subsection 47(1) of the Act, to hold a 100% stake in the insurer (the existing approval) but, to take proper account of the group Restructure, has requested that the existing approval be revoked from the time, if any, an approval is granted to the applicants in respect of the proposed Restructure of the RGA group’s ownership interests in the insurer;
E. I am satisfied it is in the national interest to:
- approve each applicant holding a 100% stake in the insurer and each company that is or will become a 100% subsidiary of the applicant as a result of the carrying out of the Restructure; and
b. revoke the existing approval held by RGA Inc to hold a 100% stake in the insurer from the time any new approval is granted to the applicants to hold a 100% stake in the insurer,
I, Adrian Rees, a delegate of the Treasurer, under:
(a) subsection 14(1) of the Act, APPROVE each applicant holding a 100% stake in the insurer and a 100% stake in each company that will be a holding company of the insurer and a 100% subsidiary of the applicant from the date the Restructure is carried out; and
(b) subsection 18(3) of the Act, REVOKE from the date the Restructure is carried out the approval deemed to have been granted on 1 July 1998 to RGA Inc and certain of its associates under section 47 of the Act to hold a 100% stake in the insurer.
This instrument comes into force on the date it is signed.
Dated: 1 November 2017
[Signed]
Adrian Rees
General Manager
Diversified Institutions Division
Interpretation
In this Notice:
100% subsidiary has the meaning given in section 3 of the Act
authorised insurance company has the meaning given in section 3 of the Act
financial sector company has the meaning given in section 3 of the Act
holding company has the meaning given by section 4 of the Act
stake in relation to a company, has the meaning given in clause 10 of Schedule 1 to the Act.
unacceptable shareholding situation has the meaning given in section 10 of the Act
Note 1 Under paragraph 16(2)(a) of the Act, the Treasurer may, by written notice given to a person who holds an Approval under section 14, impose one or more conditions or further conditions to which the Approval is subject. Under paragraph 16(2)(b) of the Act, the Treasurer may revoke or vary any conditions imposed under paragraph 16(2)(a) of the Act or specified in the Notice of Approval. The Treasurer’s powers under subsection 16(2) may be exercised on the Treasurer’s own initiative or an application made to the Treasurer in accordance with the requirements of subsection 16(4) of the Act, by the person who holds the Approval (see subsection 16(3) of the Act).
Note 2 A person who holds an Approval under section 14 of the Act may apply to the Treasurer under subsection 17(1) of the Act, to vary the percentage specified in the Approval.
Note 3 Under subsection 17(6) of the Act, the Treasurer may, on the Treasurer’s own initiative, by written notice given to a person who holds an Approval under section 14, vary the percentage specified in the Approval if the Treasurer is satisfied it is in the national interest to do so.
Note 4 The circumstances in which the Treasurer may revoke a person’s Approval under section 14 are set out in subsection 18(1) of the Act.
Note 5 Section 19 of the Act provides for flow-on approvals. If an Approval has been granted for the holding of a stake in a financial sector company and the financial sector company is a holding company for an authorised deposit-taking institution or an authorised insurance company, then an approval is taken to exist for the holding of a stake of equal value in each financial sector company that is a 100% subsidiary of the holding company.
Note 6 Under section 14 of the Act, the Treasurer must give written notice of this Approval to the applicants and financial sector company concerned and must publish a copy of this notice in the Gazette.
Note 7 Under section 11 of the Act, a person or 2 or more persons under an arrangement are guilty of an offence if the person(s) acquires shares in a company and the acquisition has the result, in relation to a financial sector company, that:
(i) an unacceptable shareholding situation comes into existence; or
(ii) if an unacceptable shareholding situation already exists in relation to the company and in relation to a person – there is an increase in the stake held by the person in the company;
and the person(s) was reckless as to whether the acquisition would have that result. A maximum penalty of 400 penalty units applies or by virtue of subsection 4B(3) of the Crimes Act 1914, in the case of a body corporate, a penalty not exceeding 2,000 penalty units. By virtue of section 39 of the Act, an offence against section 11 is an indictable offence.
Note 8 Under section 32(3) of the Act, if a person has engaged in or is proposing to engage in any conduct in contravention of a condition to which an approval under section 14 is subject, the Federal Court may, on the application of the Treasurer, grant an injunction:
(i) restraining the person engaging in the conduct; and
(ii) if in the court’s opinion, it is desirable to do so, requiring the person to do something.
Note 9 Under section 47(1) of the Act, if a person held a stake in a financial sector company in excess of 15% immediately before the commencement of section 47 of the Act (1 July 1998), and holding that stake was not in contravention of a provision of the Banks (Shareholdings) Act 1972 or the Insurance Acquisitions and Takeovers Act 1991, the person is taken to have an approval to hold that stake from the commencement of section 47 of the Act (1 July 1998).
SCHEDULE 1 - the persons, in addition to RGA Americas, who applied for approval to hold a 100% stake in the insurer
1) RGA Inc
2) RGA Australian Holdings
Note 1: Each of RGA Americas and RGA Australian Holdings is a holding company of the insurer and a 100% subsidiary of RGA Inc
Note 2: RGA Australian Holdings is a holding company of the insurer and will become a 100% subsidiary of RGA Americas from the time, if any, RGA Americas acquires a 100% direct control interest in RGA Australian Holdings