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 C2018G00725 In force Gazette

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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: XL Group Ltd (Bermuda) and the persons listed in Schedule 1 (the applicants).

 

SINCE

 

  1. XL Group Plc, and its then associates, were granted an approval dated 28 June 2010 (the Existing Approval) under subsection 14(1) of the Financial Sector (Shareholdings) Act 1998 (the Act) to hold a 100% stake in EXEL Holdings Limited (Cayman), XL Capital Ltd (Cayman), XL Company Switzerland GmbH (Switzerland), XL Gracechurch Limited (United Kingdom), XL Group Plc (Ireland), XL Insurance Company Limited (United Kingdom), XL Insurance (Bermuda) Ltd (Bermuda), and XL Insurance (UK) Holdings Limited ARBN 083 570 441;

 

B.            XL Group Plc and its then associates have requested that the Existing Approval be revoked;

 

C.            On 24 August 2018, XL Group Ltd (Bermuda) and the applicants applied for approval under section 13 of the Act to hold a 100% stake in the companies listed in Schedule 2 (the companies), which are financial sector companies under the Act; and

 

D.           I am satisfied it is in the national interest to approve XL Group Ltd (Bermuda) and the applicants holdings a stake in each of the companies of more than 15%,

I, Louis Serret, a delegate of the Treasurer:

 

(a)          under subsection 18(3) of the Act, REVOKE the Existing Approval;

 

(b)  under subsection 14(1) of the Act, APPROVE XL Group Ltd (Bermuda) and the applicants holding a stake in each of the companies of 100%.

 

This instrument comes into force on the date it is signed.  The Approval under this instrument remains in force indefinitely.

 

Dated 10 September 2018

 

 

[Signed]

……………………………

Louis Serret

General Manager

Specialised Institutions Division

 

Interpretation

 

In this Notice:

 

direct control interest has the meaning set out in clause 11 of Schedule 1 to the Act.

financial sector company has the meaning given in section 3 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 applicant 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 persons, in addition to XL Group Ltd (Bermuda) who applied for approval

 

  1. XLIT Ltd. (Cayman)
  2. EXEL Holdings Limited (Cayman)
  3. XL Bermuda Ltd (Bermuda)
  4. XL Gracechurch Limited (UK)
  5. XL Insurance (UK) Holdings Limited (UK)
  6. XL London Market Group (United Kingdom)
  7. XL London Market Ltd (United Kingdom)
  8. XL London Market Services Ltd (United Kingdom)
  9. XL Re (Europe) Ltd (Ireland)
  10. XL Re Ltd (Bermuda)
  11. XL Re Latin America Limited (Switzerland)
  12. XL Services UK Limited (United Kingdom)

 

 

SCHEDULE 2 – the financial sector companies

 

  1. XLIT Ltd. (Cayman)
  2. EXEL Holdings Limited (Cayman)
  3. XL Bermuda Ltd. (Bermuda)
  4. XL Gracechurch Limited (UK)
  5. XL Insurance (UK) Holdings Limited (UK)
  6. XL Insurance Company SE ABN 36 083 570 441

 

Overview

The Financial Sector (Shareholdings) Act 1998 was enacted to address the need for regulation and oversight of significant shareholdings in financial sector companies. This Act was introduced by the Australian Parliament to ensure that the financial sector remains stable and resilient, thereby safeguarding the national economy. The Act aims to prevent unacceptable shareholding situations that could pose systemic risks to the financial sector. The Act empowers the Treasurer to approve, revoke, or vary shareholding approvals and to impose conditions on such approvals to protect the national interest. In this context, the revoking of the existing approval held by XL Group Plc and its associates, and the granting of a new approval to XL Group Ltd (Bermuda) and the associated entities to hold a 100% stake in specified financial sector companies, reflects the Act's objective of maintaining control over significant financial holdings to prevent any undue influence or risk to the financial system.

Scope and Application

The Financial Sector (Shareholdings) Act 1998 applies to entities, including XL Group Ltd (Bermuda) and the listed applicants, that seek to hold a significant stake in financial sector companies. The Act imposes specific conditions on the approval process for such shareholdings, particularly where the stake exceeds 15% in a financial sector company. This legislation operates at the Commonwealth level, thereby establishing a national standard for the regulation of shareholdings in the financial sector. The Act includes provisions for revoking existing approvals and imposing conditions on new approvals, thereby providing flexibility in the regulatory framework. Notably, the Act excludes certain entities and circumstances as per its defined terms and conditions, and it can be further regulated through subordinate instruments, allowing for adjustments and clarifications to its application. The scope of the Act extends to the revocation of the existing approval held by XL Group Plc and its associates for a 100% stake in various specified companies and the granting of a new approval for XL Group Ltd (Bermuda) and the applicants to hold a 100% stake in the companies listed in Schedule 2. These companies are identified as financial sector entities under the Act. The application of the Act is comprehensive, covering both the revocation of previous approvals and the granting of new ones, ensuring that the regulatory oversight remains consistent and aligned with national interests. The Act's provisions allow the Treasurer to impose conditions, vary percentages, and revoke approvals, subject to specific criteria outlined in the legislation.

Key Provisions

The key provisions of this instrument revolve around the revocation of an existing approval and the granting of a new approval for XL Group Ltd (Bermuda) and certain associated entities to hold a stake in specified financial sector companies. Under section 18(3) of the Financial Sector (Shareholdings) Act 1998, the existing approval granted to XL Group Plc and its associates is revoked, while under section 14(1), XL Group Ltd (Bermuda) and the listed applicants are approved to hold a 100% stake in the companies detailed in Schedule 2. This approval is effective indefinitely from the date of signing, which is 10 September 2018. Entities subject to this legislation, specifically XL Group Ltd (Bermuda) and the applicants, must comply with the conditions set out in the approval. The Treasurer retains the authority to impose, vary, or revoke conditions under section 16(2) of the Act, either at their own initiative or in response to an application. Additionally, section 17(1) allows applicants to request variations to the percentage specified in their approval, while the Treasurer may also vary the percentage under section 17(6) if deemed in the national interest. The Treasurer is mandated to notify the applicants and the relevant financial sector companies of this approval and to publish the notice in the Gazette, as required by section 14. Breaches of this legislation can result in significant penalties and legal consequences. Under section 11, a person or group may commit an offence if their acquisition of shares in a company leads to an unacceptable shareholding situation, defined in section 10 of the Act, and they were reckless about this outcome. The penalty for such an offence is up to 400 penalty units for individuals and up to 2,000 penalty units for bodies corporate, with the offence being indictable under section 39. Furthermore, section 32(3) empowers the Federal Court to grant injunctions to prevent or require specific conduct in contravention of approval conditions, upon application by the Treasurer.

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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.