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 C2017G01201 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: KVD Australia Pty Ltd ABN 37 604 634 157 and the persons named in the attached Schedule 1 (the applicants)

 

SINCE

 

A.  Each of the applicants has applied for approval under section 13 of the Financial Sector (Shareholdings) Act 1998 (the Act), to hold a stake of 100% in:

 

a.  Hallmark Life Insurance Company Ltd ABN 64 0752 799 08 (HLIC) and Hallmark General Insurance Company Ltd ABN 82 008 477 647 (HGIC), each an authorised insurance company under the Act (the insurers); and

b.  each company which is a 100% subsidiary of the applicant at the time HGIC ceases to be a 100% subsidiary of HLIC;

 

B.  The applicants listed in Schedule 2 have an approval dated 2 November 2015 under subsection 14(1) of the Act to hold a 100% stake in the insurers (the existing approval) but, to take proper account of the proposed restructure of the applicants’ ownership interests in the insurers, have requested that the existing approval be revoked from the time any new approval is granted;

 

C.  I am satisfied it is in the national interest to:

 

a.  approve each applicant holding a 100% stake in each company that is a 100% subsidiary of the applicant (including each of the insurers); and

 

b.  revoke the existing approval held by the persons in Schedule 2 to hold a 100% stake in the insurers from the time any new approval is granted to the applicants to hold a 100% stake in the insurers,

 

I, Adrian Rees, a delegate of the Treasurer, under:

 

(a)  subsection 14(1) of the Act, APPROVE each applicant holding a 100% stake in:

 

a.  each of HLIC and HGIC; and

 

 

 

 

b.  each holding company of the insurers that will be a 100% subsidiary of the applicant at the time HGIC ceases to be a 100% subsidiary of HLIC; and

 

(b)  subsection 16(1) of the Act IMPOSE the conditions in Schedule 3 to which the approval is subject; and

 

(c)  subsection 18(3) of the Act, REVOKE the instrument made on 2 November 2015 granting, among other things, the persons in Schedule 2 approval to hold a 100% stake in the insurers.

 

 

This instrument comes into force from the date it is signed.

 

Dated: 7 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. Sensitive: Legal

 

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 KVD Australia Pty Ltd ABN 37 604 634 157, who have applied for approval to hold a 100% stake in the insurers

 

1. Deutsche Bank Aktiengesellschaft ABN 13 064 165 162

2. Vatpo Investments Pte. Ltd. (Singapore)

3. KKR Clarendon Holdings L.P. (Delaware, USA)

4. KVD Singapore Pte. Ltd. (Singapore)

5. KVD Australia Holdco Pty Ltd ABN 83 604 747 391

6. KVD Australia Pty Ltd ABN 37 604 634 157

7. Latitude Financial Services Australia Holdings Pty. Ltd. ABN 46 603 161 100

8. Latitude Personal Finance Pty Ltd ABN 54 008 443 810

 

Note 1: Each company numbered 5. to 9. In Schedule 1 above is 1) a holding company of the insurers, 2) a 100% subsidiary of KVD Singapore Pte. Ltd. (Singapore), 3) a holding company of the companies, if any, listed below it in Schedule 1 and 4) a financial sector company

 

Note 2: KVD Australia Pty Ltd ABN 37 604 634 157 is a holding company of 1) the insurers; and 2) the financial sector companies numbered 7. to 9 in Schedule 1 above; and 3) a 100% subsidiary of KVD Singapore Pte. Ltd. (Singapore) and each of the financial sector companies numbered 4. to 6.in Schedule 1 above

 

Note 3: The place of incorporation of each of the foreign companies in Schedules 1 and 2 appears in the brackets after the name of the company

 

SCHEDULE 2 – persons, in addition to KVD Australia Pty Ltd ABN 37 604 634 157, who have an approval dated 2 November 2015 to hold a 100% stake in the insurers

 

1. Deutsche Bank Aktiengesellschaft ABN 13 064 165 162

2. Vatpo Investments Pte. Ltd. (Singapore)

3. KKR Clarendon Holdings L.P. (Delaware, USA)

4. KKR Asia II Fund Investments Pte. Ltd. (Singapore)

5. KKR Asia ESC Pte. Ltd. (Singapore)

6. KKR Asia II SBS Pte. Ltd. (Singapore)

7. KVD Singapore Pte. Ltd. (Singapore)

8. KVD Australia Holdco Pty Ltd ABN 83 604 747 391

9. GE Capital Finance Australia Holdings Pty Ltd ABN 46 603 161 100

10. GE Personal Finance Pty Ltd ABN 54 008 443 810

11. Hallmark Life Insurance Company Ltd. ABN 87 008 446 884 (in respect of Hallmark
      General Insurance Company Ltd. ABN 82 008 477 647 only)

 

SCHEDULE 3

 

The conditions to which the approval is subject are:

 

(1)  The direct control interest held by Deutsche Bank Aktiengesellschaft ABN 13 064 165 162 in KVD Singapore Pte. Ltd. (Singapore) must at all times remain below 50%;

 

(2)  The direct control interest held by Vatpo Investments Pte. Ltd. (Singapore) in KVD Singapore Pte. Ltd. (Singapore) must at all times remain below 50%; and

 

(3)  The direct control interest held by KKR Clarendon Holdings L.P. (Delaware, USA) in KVD Singapore Pte. Ltd. (Singapore) must at all times remain below 50%.

 

direct control interest has the meaning given in clause 11 of Schedule 1 to the Act

Overview

The Financial Sector (Shareholdings) Act 1998 was enacted to address the potential risks that can arise from excessive concentration of ownership in the financial sector. This legislation was introduced by the Parliament of Australia and aims to maintain the stability and soundness of the financial system by regulating shareholdings in financial sector companies. The Act provides a framework for the Treasurer to approve or disapprove significant shareholdings in financial institutions, ensuring that such holdings do not pose systemic risks. This specific instrument concerns the approval of KVD Australia Pty Ltd and several other entities to hold a 100% stake in Hallmark Life Insurance Company Ltd and Hallmark General Insurance Company Ltd, while revoking previous approvals to manage the evolving ownership structure effectively. The policy objective is to safeguard the national financial system from undue influence or control by ensuring that shareholdings are subject to stringent oversight and conditions.

Scope and Application

The Financial Sector (Shareholdings) Act 1998 applies to entities seeking to hold a significant stake in financial sector companies, specifically targeting those that own more than 15% of these companies. This Act operates at the national level, impacting entities across Australia and ensuring that shareholdings in financial sector companies are scrutinised to protect the national financial system. The Act applies to a range of entities, including Australian and foreign companies, and individuals who seek to acquire or hold a stake in financial sector companies. The approval process under this Act is pivotal for entities like KVD Australia Pty Ltd and others named in the Schedules, who have applied for, or already hold, significant stakes in authorised insurance companies such as Hallmark Life Insurance Company Ltd and Hallmark General Insurance Company Ltd. The Act allows for the revocation of existing approvals and the granting of new ones, subject to conditions that ensure the national interest is safeguarded. Notably, the Act extends its reach through subordinate instruments, allowing the Treasurer to impose, vary, or revoke conditions on approvals, thereby providing flexibility in managing shareholdings in financial sector companies.

Key Provisions

The main operative sections of this legislation are subsections 14(1), 16(1), and 18(3) of the Financial Sector (Shareholdings) Act 1998. Under subsection 14(1), the approval is granted to the applicants to hold a 100% stake in each of the insurers and each company that will be a 100% subsidiary of the applicant at the time HGIC ceases to be a 100% subsidiary of HLIC. Under subsection 16(1), the conditions in Schedule 3 are imposed on the approval. Finally, under subsection 18(3), the existing approval held by the persons in Schedule 2 is revoked from the time any new approval is granted to the applicants. The obligations and requirements imposed by this legislation include maintaining the direct control interests of certain entities below 50%. Specifically, Deutsche Bank Aktiengesellschaft, Vatpo Investments Pte. Ltd., and KKR Clarendon Holdings L.P. must each hold a direct control interest below 50% in KVD Singapore Pte. Ltd. Additionally, the applicants must comply with any other conditions specified in Schedule 3. Breach of the conditions or any other conduct in contravention of the approval may lead to significant consequences. Under section 11 of the Act, an unacceptable shareholding situation may result in an offence, which is an indictable offence. The maximum penalty for an individual is 400 penalty units, while for a body corporate, the penalty is up to 2,000 penalty units. Furthermore, under section 32(3) of the Act, the Federal Court may grant an injunction to restrain any conduct in contravention of a condition to which an approval under section 14 is subject. This may include requiring the person to take specific actions if deemed desirable by the court.

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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.