Revocation of existing approval and granting of new approval to hold a stake in a financial sector company of more than 15%

Administered by Department of the Treasury

Legislation au C2017G00567 In force Gazette

Legislation content

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: The persons named in Schedule 1 (the EGL approval holders) and Schedule 2 (the holding companies)

 

 

SINCE

 

  1. Each holding company has applied for approval under section 13 of the Financial Sector (Shareholdings) Act 1998 (the Act), to hold a stake of 100% in Gordian RunOff Limited ABN 11 052 179 647 (the insurer) and each 100% subsidiary of that holding company that is itself a holding company of the insurer;

 

B.     Each EGL approval holder having an approval under subsection 14(1) of the Act to hold a 100% stake in the insurer (the 20 February 2008 approval) has requested that approval be revoked from the time, if any, the approvals requested in Recital A. are granted; and

 

C.     I am satisfied it is in the national interest to grant each holding company the approvals requested in Recital A  

 

 

I, Stuart Bingham, a delegate of the Treasurer, under:

 

(a)   subsection 14(1) of the Act, APPROVE each holding company holding a 100% stake in the insurer and each 100% subsidiary of that holding company that is itself a holding company of the insurer; and

 

(b)   subsection 18(3) of the Act, REVOKE the 20 February 2008 approval.

 

 

 

This instrument comes into force on 30 June 2017 and remains in force indefinitely. 

Dated: 19 May 2017

 

 

[Signed]

 

Stuart Bingham

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 in 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.

 

 

 

 

 

 

SCHEDULE 1 - the EGL approval holders

 

Enstar Group Limited (Bermuda)

Enstar Australia Holdings Pty Limited ACN 128 812 546

Mr Dominic Silvester

 

 

SCHEDULE 2 - the holding companies

 

 Enstar Group Limited (Bermuda)

Kenmare Holdings Ltd. (Bermuda)

Enstar Asia Holdings Limited (UK)

Enstar Asia Pacific Pty Ltd ABN 18 009 129 793

Enstar Australia Holdings Pty Limited ACN 128 812 546 and

AG Australia Holdings Limited ACN 054 573 401  

 

Overview

The Financial Sector (Shareholdings) Act 1998 was enacted to address the problem of unacceptable shareholding situations within the financial sector, particularly concerning the control of financial sector companies. This legislation was introduced by the Australian Parliament to ensure that foreign shareholdings in the financial sector do not exceed certain thresholds without the Treasurer's approval. The policy objective of the Act is to maintain the stability and integrity of the Australian financial system by preventing undue foreign influence over financial sector companies. Under this Act, the Treasurer has the authority to approve or disapprove shareholdings exceeding 15% in financial sector companies, and to impose conditions on such shareholdings if deemed necessary in the national interest. This particular instrument, issued under the authority of the Act, grants new approvals to specified holding companies to maintain a 100% stake in Gordian RunOff Limited and its subsidiaries, while revoking existing approvals that conflict with these new arrangements. The instrument is intended to remain in force indefinitely, reflecting a permanent adjustment to the approved shareholding structure within the financial sector.

Scope and Application

The Financial Sector (Shareholdings) Act 1998 applies to specified entities that hold significant stakes in financial sector companies, ensuring that shareholdings do not lead to unacceptable situations that could threaten financial stability. This Act primarily governs the approval process for entities and individuals holding more than 15% of shares in financial sector companies, including authorised deposit-taking institutions and authorised insurance companies. The geographic reach of the Act is national, extending across all states and territories of Australia. The Act's application is comprehensive, covering a range of entities such as holding companies, financial sector companies, and their subsidiaries, ensuring that all significant shareholdings are subject to scrutiny and approval by the Treasurer. The Act also provides for the revocation and variation of existing approvals, as well as the imposition of conditions on these approvals, thereby allowing for flexible and responsive regulatory measures. Notably, the Act allows for the Treasurer to revoke approvals and impose conditions to safeguard the national interest, with provisions for both the imposition of new conditions and the revocation of existing ones. This flexibility ensures that the regulatory framework can adapt to changing circumstances and maintain the stability of the financial sector.

Key Provisions

The main sections of the Financial Sector (Shareholdings) Act 1998 (the Act) relevant to this legislation involve approvals for holding a stake in a financial sector company of more than 15% (sections 13, 14, 17, and 18). Section 13 of the Act provides the mechanism for holding companies to apply for approval to hold a stake in a financial sector company. Section 14 allows the Treasurer to grant or vary these approvals. Section 17 enables the alteration of the percentage specified in an approval, while Section 18 details the circumstances under which the Treasurer can revoke an approval. The approval process is initiated by holding companies applying for approval to hold a 100% stake in Gordian RunOff Limited and its subsidiaries, which are also holding companies of the insurer (section 13). Additionally, existing approvals (subsection 14(1)) for a 100% stake in the insurer, dated 20 February 2008, are to be revoked upon the grant of the new approvals (subsection 18(3)). Under this legislation, holding companies and EGL approval holders must comply with the new approvals granted under section 14(1) of the Act. They are required to hold a 100% stake in Gordian RunOff Limited and each 100% subsidiary of that holding company that is itself a holding company of the insurer. Furthermore, any EGL approval holders with a 20 February 2008 approval must cease holding a 100% stake in the insurer upon the grant of the new approvals (subsection 18(3)). The Treasurer, in granting these approvals, must notify the applicants and the financial sector company concerned, and publish the notice in the Gazette (section 14). The Act imposes various obligations and potential consequences for breaches. Firstly, section 11 of the Act criminalises the acquisition of shares that results in an unacceptable shareholding situation if the person was reckless as to whether the acquisition would have that result. A maximum penalty of 400 penalty units applies for an individual, and 2,000 penalty units for a body corporate (subsection 4B(3) of the Crimes Act 1914). Under section 32(3) of the Act, the Federal Court can grant an injunction to restrain any conduct that contravenes the conditions of an approval. Furthermore, section 19 of the Act provides for flow-on approvals, meaning if an approval is granted for a holding company, it extends to 100% subsidiaries of that holding company.

Legal classification tags

Area of Law
Financial Regulation
Instrument
Statutory Instrument
Concepts
Definitions & Interpretation
Offence Provisions
Regulatory Standards

Interactions

Authorises

All Versions

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.