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 C2019G00041 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 Existing Approval Holders), the persons named in Schedule 2 (the Applicants), The Reef Foundation (Guernsey) ATF the Concrete Trust (Guernsey) (CT) and Reef Holdings 2 Limited (Guernsey) (RHL2)

 

SINCE

 

  1. On 25 March 2015, the Existing Approval Holders were granted approval under subsection 14(1) of the Financial Sector (Shareholdings) Act 1998 (the Act) to hold a 100% stake in Auto & General Insurance Company Limited ABN 42 111 586 353 (AGIC), a financial sector company under the Act (the Existing Approval);

 

B.       On 29 November 2018, the Existing Approval Holders requested that the Existing Approval be revoked;

 

C.       On 29 November 2018, the Applicants applied to the Treasurer under section 13 of the Act to hold a 100% stake in AGIC;

 

D.       On 29 November 2018, BHL Holdings Limited (Guernsey) (BHL), CT, Jacamar Overseas Limited (Guernsey) (Jacamar) and RHL2 applied to the Treasurer under section 13 of the Act to hold a 100% stake in AGIC until the completion date of the Restructure; and

 

E.        I am satisfied it is in the national interest for the Applicants, BHL, CT, Jacamar and RHL2 to hold a 100% stake in AGIC,

 

I, Louis Serret, a delegate of the Treasurer:

 

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

 

(b)     under subsection 14(1) of the Act, APPROVE:

 

(i)       the Applicants to hold a 100% stake in AGIC indefinitely; and

 

(ii)     BHL, CT, Jacamar and RHL2 to hold a 100% stake in AGIC until the completion date of the Restructure.

 

This instrument commences on the date it is signed.

 

 

Dated 8 January 2019

 

[Signed]

 

……………………………

Louis Serret

General Manager

Specialised Institutions Division

 

 

Interpretation

 

In this Notice:

 

100% subsidiary has the meaning given in section 3 of the Act.

financial sector company has the meaning given in section 3 of the Act.

Restructure means the restructure of the ownership group of AGIC as detailed in the application made by the Applicants dated 29 November 2018.

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) of the Act may be exercised on the Treasurer’s own initiative or on 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 subsection 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 Existing Approval Holders

 

BHL Holdings Limited (Guernsey)

Jacamar Overseas Limited (Guernsey)

Klinkert Investments Pty Ltd ACN 086 314 285

Ram Kangatharan

 

 

Schedule 2 – the Applicants

 

The Reef Foundation (Guernsey) ATF the Copper Trust (Guernsey)

The Reef Foundation (Guernsey) ATF the Glass Trust (Guernsey)

The Reef Foundation (Guernsey) ATF the Oak Trust (Guernsey)

Copper Holdings Limited (Guernsey)

Glass Holdings Limited (Guernsey)

Oak Tree Holdings Limited (Guernsey)

Reef Holdings Limited (Guernsey)

Theseus (Monaco) SARL (Monaco) ATF the Family ’tHooft Trust (Guernsey)

Klinkert Investments Pty Ltd ACN 086 314 285 ATF the Klinkert Investment Trust

Klinkert Capital Pty Ltd ACN 629 479 170 ATF the Klinkert Capital Trust B

Klinkert Capital Pty Ltd ACN 629 479 170 ATF the Klinkert Capital Trust C

Klinkert Capital Pty Ltd ACN 629 479 170 ATF the Klinkert Capital Trust L

SK BHL Limited (Guernsey)

SF Capital Limited (Guernsey)

BHL Minorities Limited (Guernsey)

Stephen Klinkert

Ram Kangatharan

 

Overview

The Financial Sector (Shareholdings) Act 1998, enacted by the Parliament of Australia, was introduced to address the need for regulation and oversight of significant shareholdings in financial sector companies to ensure financial stability and protect the interests of consumers and the broader economy. The Act aims to prevent unacceptable shareholding situations where the concentration of ownership could lead to risks for the financial sector. The Act provides the Treasurer with the authority to approve or impose conditions on shareholdings in financial sector companies, as well as to revoke such approvals if necessary. This legislative instrument, which revokes existing approval and grants new approval for shareholdings in a financial sector company, demonstrates the application of the Act's provisions in response to specific applications and circumstances, thereby facilitating the national interest in maintaining a stable and secure financial sector.

Scope and Application

The Financial Sector (Shareholdings) Act 1998 applies to entities and individuals seeking to acquire or hold significant stakes in financial sector companies, which are defined under the Act. The Act specifically governs the approval process for holdings of more than 15% in such companies and sets out the conditions and circumstances under which these approvals can be granted, modified, or revoked. The Act is applicable across the Commonwealth of Australia and is enforced by the Treasurer, who has the authority to impose conditions on existing approvals, approve new applications for shareholdings, or revoke existing approvals if deemed necessary in the national interest. The Act provides for both the revocation of existing shareholding approvals and the granting of new approvals, as demonstrated by the revocation of the existing approval held by the persons named in Schedule 1 and the granting of new approvals to the entities named in Schedule 2. The application of the Act is further extended through subordinate instruments, which allow for the imposition of conditions on approvals, variations in the percentage of shares held, and the revocation of approvals under specific circumstances. The Act also outlines criminal penalties for the reckless acquisition of shares that result in unacceptable shareholding situations.

Key Provisions

The key provisions of the instrument, as per the Financial Sector (Shareholdings) Act 1998 (the Act), involve the revocation of an existing approval and the granting of a new approval for certain parties to hold a stake in a financial sector company. Specifically, the instrument revokes the existing approval granted to the Existing Approval Holders to hold a 100% stake in Auto & General Insurance Company Limited (AGIC) and grants new approvals to the Applicants, BHL Holdings Limited (Guernsey), the Concrete Trust (Guernsey), Jacamar Overseas Limited (Guernsey), and Reef Holdings 2 Limited (Guernsey) to hold a 100% stake in AGIC, with certain conditions for some of these parties (subsections 14(1) and 18(3)). The new approvals are granted indefinitely for the Applicants and until the completion of a specified restructure for the other entities. The Act imposes several obligations and requirements on the parties to whom it applies. Firstly, it mandates that any person or group of persons holding an approval under section 14 of the Act must comply with any conditions that the Treasurer may impose, either on the Treasurer's own initiative or in response to an application by the approval holder (subsection 16(2)). Secondly, the Act allows the Treasurer to vary the percentage of shares that an approval holder is permitted to hold, either at the approval holder's request or on the Treasurer's own initiative, if it is in the national interest to do so (subsection 17(1) and subsection 17(6)). Additionally, the Act requires the Treasurer to notify the approval holder and the relevant financial sector company of any revocation or variation of an approval and to publish a notice of the approval in the Gazette (subsection 14 and section 16(4)). The Act also establishes potential consequences for breaches. Specifically, it criminalises the acquisition of shares that results in an unacceptable shareholding situation in relation to a financial sector company if the acquirer was reckless as to whether the acquisition would have that result (section 11). A maximum penalty of 400 penalty units applies for an individual, or 2,000 penalty units for a body corporate. This offence is classified as an indictable offence under the Act. Furthermore, under subsection 32(3) of the Act, the Federal Court may grant an injunction to restrain a person from engaging in conduct that contravenes a condition to which an approval under section 14 is subject, and may require the person to take certain actions if it deems it desirable to do so.

Legal classification tags

Area of Law
Financial Regulation
Instrument
Statutory Instrument
Concepts
Definitions & Interpretation
Reporting & Disclosure Obligations
Licensing & Registration
Offence Provisions
Catchwords
unacceptable shareholding situation

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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.