Revocation of existing approval and granting of new approval to hold a stake in a financial sector company of more than 15% - Berkshire Hathaway Inc. (Delaware), National Indemnity Company (Nebraska) and Mr Warren Buffett

Administered by Department of the Treasury

Legislation au C2015G01082 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:  Berkshire Hathaway Inc. (Delaware) (the first applicant);

 

National Indemnity Company (Nebraska) (the second applicant); and

 

 Mr Warren Buffett (the third applicant),

 

(together, the applicants).

 

SINCE

 

  1. on 22 April 2015, the applicants were granted approval under subsection 14(1) of the Financial Sector (Shareholdings) Act 1998 (the Act) to hold a stake of 100% in each of the financial sector companies listed in the attached Schedule (the Companies);

 

B.     at the same time the third applicant who had applied for an approval under section 13 of the Act to hold a stake of 50% in the first applicant was granted, due to an administrative error, approval under subsection 14(1) of the Act to hold a 100% stake in the first applicant;

 

C.     the applicants have acknowledged the administrative error and have requested the approvals granted on 22 April 2015 (the existing Approvals) be revoked and new approvals be granted on the terms originally requested; and

 

D.    I am satisfied it is in the national interest to revoke the existing Approvals and to approve the first applicant to hold a stake of 100% in each of the Companies; to approve the second applicant to hold a stake of 100% in Berkshire Hathaway Specialty Insurance Company ABN 84 600 643 034; and to approve the third applicant to hold a stake of 50% in the first applicant and a stake of 100% in each of the Companies,

 

I, Brandon Kong Leong Khoo, a delegate of the Treasurer, under subsection 18(3) of the Act, REVOKE the existing Approvals and under subsection 14(1) of the Act, simultaneously APPROVE the first applicant holding a stake of 100% in each of the Companies, and APPROVE the second applicant holding a stake of 100% in Berkshire Hathaway Specialty Insurance Company ABN 84 600 643 034, and APPROVE the third applicant holding a stake of 50% in the first applicant and a stake of 100% in each of the Companies.

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

 

Dated

 

[Signed]

 

 

Brandon Kong Leong Khoo

Executive General Manager

Diversified Institutions Division

Interpretation

In this Notice:

 

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.

the existing Approvals refers to the approval dated 22 April 2015 under subsection 14(1) of the Act for Berkshire Hathaway Inc. (Delaware), National Indemnity Company (Nebraska) and Mr Warren Buffett to hold a 100% stake in Berkshire Hathaway Inc. (Delaware), National Indemnity Company (Nebraska) and Berkshire Hathaway Specialty Insurance Company ABN 84 600 643 034, and for Mr Warren Buffett to hold a 50% stake in Berkshire Hathaway Inc. (Delaware).

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 - the financial sector companies

 

  1. National Indemnity Company (Nebraska);
  2. Berkshire Hathaway Specialty Insurance Company ABN 84 600 643 034

 

 

 

 

 

Overview

The Financial Sector (Shareholdings) Act 1998 was enacted to address the problem of unacceptable shareholding situations in financial sector companies, ensuring that such shareholdings do not compromise the stability and integrity of the financial system. This Act was introduced by the Parliament of Australia to provide a regulatory framework governing the acquisition of shares in financial sector companies by non-resident entities and individuals. The policy objective of the Act is to maintain and enhance the stability and integrity of the Australian financial system by controlling significant shareholdings in financial sector companies. The Act empowers the Treasurer to grant or revoke approvals for shareholdings and to impose conditions on such approvals, ensuring that any shareholdings do not result in an unacceptable situation. In the context of the revocation of existing approvals and the granting of new approvals for Berkshire Hathaway Inc. (Delaware), National Indemnity Company (Nebraska), and Mr Warren Buffett, the legislative intent remains to ensure that the financial sector's stability is preserved by appropriately regulating significant shareholdings.

Scope and Application

The Financial Sector (Shareholdings) Act 1998 applies to entities and individuals seeking to acquire a stake in financial sector companies, with a particular focus on shareholdings exceeding 15%. The Act operates at the Commonwealth level and is designed to regulate the acquisition of stakes in financial sector companies to ensure they do not lead to unacceptable shareholding situations. These situations include instances where the acquisition of shares results in an individual or entity holding an excessive stake in a financial sector company, potentially impacting financial stability and regulatory oversight. The Act provides the Treasurer with the authority to grant, vary, impose conditions on, or revoke approvals for such shareholdings, ensuring that they align with the national interest. While the Act itself sets out the primary framework, subordinate instruments may further define and refine its application, including the imposition of conditions or the setting of specific thresholds for approval. Exclusions or exemptions from the Act's scope are not explicitly detailed in the provided text, but the Act's provisions are extensive enough to cover most, if not all, significant shareholding transactions in the financial sector.

Key Provisions

The key operative sections of the Financial Sector (Shareholdings) Act 1998 (the Act) are sections 14, 16, 17, 18, and 19, which respectively deal with the granting of approvals to hold stakes in financial sector companies, the imposition and variation of conditions on those approvals, and the revocation of such approvals. Section 11 pertains to the offence of acquiring shares in a financial sector company in a manner that results in an unacceptable shareholding situation. Section 32(3) allows the Federal Court to grant an injunction to restrain a person from engaging in conduct that contravenes a condition of an approval. The Act imposes obligations on applicants for shareholding approvals to ensure that any shareholdings do not result in an unacceptable shareholding situation. The Treasurer must give written notice of any approval to the applicant and the relevant financial sector company, and publish a copy of this notice in the Gazette (section 14). The Treasurer also has the power to impose, vary, or revoke conditions on these approvals (section 16), to vary the percentage specified in an approval (section 17), and to revoke an approval (section 18). Additionally, if an approval exists for a holding company, a flow-on approval exists for its 100% subsidiaries (section 19). Under the Act, a person or persons who acquire shares in a company and the acquisition results in an unacceptable shareholding situation, or an increase in the stake held by a person in a company when an unacceptable shareholding situation already exists, are guilty of an offence if they were reckless as to whether the acquisition would have that result (section 11). The maximum penalty for an individual is 400 penalty units, or 2,000 penalty units for a body corporate. An offence against section 11 is an indictable offence. Furthermore, if a person has engaged or proposes to engage in any conduct in contravention of a condition to which an approval is subject, the Federal Court may, on the application of the Treasurer, grant an injunction restraining the person from engaging in the conduct and, if desirable, requiring the person to do something (section 32(3)). This instrument revokes the existing approvals granted on 22 April 2015 and simultaneously grants new approvals to the applicants to hold specific stakes in the listed financial sector companies. The revocation and new approvals are made under subsection 18(3) and subsection 14(1) of the Act, respectively. The instrument comes into force on the date it is signed, and the new approvals remain in force indefinitely. The maximum penalties for breaches of the Act are 400 penalty units for an individual and 2,000 penalty units for a body corporate. Offences under the Act are indictable.

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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.