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

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: First American Financial Corporation (Delaware) (FAFC) and the person(s) named in the attached Schedule 1 (the applicants) 

SINCE

1. 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:

1. First American Title Insurance Company of Australia Pty Ltd ABN 64 075 279 908, an authorised insurance company under the Act (the insurer); and

b.      each company which is or will become a 100% subsidiary of the applicant in the course of FAFC carrying out a restructure of its operations (the FAFC group restructure) so as to make:

1. the insurer a 100% subsidiary of FAF International Holdings GmbH (Switzerland) (FAFIHG); and
2. FAFIHG a 100% subsidiary of FAFC;

B.     The applicants listed in Schedule 2 have an approval dated 21 January 2010 under subsection 14(1) of the Act to hold a 100% stake in the insurer (the existing approval) but, to take proper account of the FAFC group restructure, have requested that the existing approval be revoked from the time any new approval is granted in respect of the proposed restructure of the FAFC group’s ownership interests in the insurer;

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

1. 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 FAFC group restructure; and

b.      revoke the existing approval held by the persons in Schedule 2 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, Jennifer Balding, 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 as a result of the carrying out of the FAFC group restructure; and

(b)   subsection 18(3) of the Act, REVOKE the instrument made on 21 January 2010 granting, among other things, the persons in Schedule 2 approval to hold a 100% stake in the insurer.

This instrument comes into force from the date it is signed.  The approvals granted to First American Title Insurance Company and FAF International Holdings B.V. (Netherlands) will cease from the time each company ceases to be a holding company of the insurer.

Dated: 29 September 2017

[Signed]

………………………

Jennifer Balding

Acting General Manager

Specialised 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.

SCHEDULE 1 - the persons, in addition to FAFC, who applied for approval to hold a 100% stake in the insurer

1)      First American Title Insurance Company (Nebraska) (FATICO)

2)      FAF International Holdings B.V. (Netherlands) (FAFIHBV)

3)      FAF International Holdings GmbH (Switzerland) (FAFIHG)

Note 1: Each of FATICO and FAFIHBV is a holding company of the insurer and a 100% subsidiary of FAFC

Note 2:  FATICO will cease to be a holding company of the insurer from the time FAFC acquires its shares in FAFIHBV

Note 3:  FAFIHG will become a holding company of the insurer and a 100% subsidiary of FAFC from the time, if any, it acquires a 100% direct control interest in FAFIHBV

Note 4: After FAFIHG purchases the insurer from FAFIHBV, it intends winding up FAFIHBV

Note 5: The place of incorporation of each of the companies in Schedule 1 and Schedule 2 appears in the brackets after the name of the company 

SCHEDULE 2 – persons, in addition to FAFC, who have an approval dated 21 January 2010 to hold a 100% stake in the insurer

1)      First American Title Insurance Company (Nebraska) (FATICO)

2)      FAF International Holdings B.V. (Netherlands) (FAFIHBV)