Revocation of existing approval and granting of new approval to hold a stake in a financial sector company of more than 20% No. 4 of 2022
Financial Sector (Shareholdings) Act 1998
To: The Existing Approval Holders named in Schedule 1 and the Applicants named in Schedule 2
SINCE:
- On 6 January 2021, the Existing Approval Holders were granted approval under subsection 14(1) of the Financial Sector (Shareholdings) Act 1998 (the Act) to hold a 30% stake in Integrity Group Holdings Limited ABN 33 159 865 666 (IGHL) and to hold a 100% stake in Integrity Life Australia Limited ABN 83 089 981 073 (ILAL), each a financial sector company under the Act (the Existing Approval);
B. On 7 December 2021 and 23 December 2021, the Applicants applied to the Treasurer under section 13 of the Act for approval to hold a 100% stake in each of IGHL and ILAL, each a financial sector company under the Act (the New Application);
C. On 27 January 2022, the Existing Approval Holders requested that, upon the New Application being approved, the Existing Approval be revoked;
D. I am satisfied it is in the national interest for the Applicants to hold a 100% stake in each of IGHL and ILAL,
I, Peter Kohlhagen, a delegate of the Treasurer:
- under subsection 18(3) of the Act, revoke the Existing Approval;
B. under subsection 14(1) of the Act, approve each Applicant to hold a 100% stake in each of IGHL and ILAL (the Approval); and
C. under subsection 16(1) of the Act, impose the condition on the Approval set out in Schedule 3.
This notice commences on the day it is made and remains in force indefinitely. Date: 10 February 2022
[Signed]
Peter Kohlhagen General Manager Insurance Division
Interpretation
In this notice:
Act means the Financial Sector (Shareholdings) Act 1998.
APRA means the Australian Prudential Regulation Authority.
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.
Notes
Note 1 Under section 14 of the Act, the Treasurer must give written notice of this Approval to the
applicant and financial sector company concerned and this instrument will be registered in the Federal Register of Legislation as a notifiable instrument.
Note 2 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.
Schedule 1 – the Existing Approval Holders:
- Schroder Investment Management (Switzerland) AG
2. Schroder Investment Management (Europe) S.A in its capacity as management company of Schroder Investment Fund – Life Insurance Linked I
3. Zurich Anlagestiftung Insurance Linked Strategies Life I
4. Amobrosia GP Limited in its capacity as general partner of Ambrosia LP
Schedule 2 – the Applicants:
- Schroder Investment Management (Switzerland) AG in its capacity as investment manager of Ambrosia, SIF I, SIF II, SIF III and Zurich (collectively called the ‘Schroder Funds’)
2. Schroder Investment Management Limited in its capacity as the delegated portfolio manager of the Schroder Funds
3. Schroder Investment Management (Europe) S.A in its capacity as management company of Schroder Investment Fund – Life Insurance Linked I (SIF I)
4. Schroder Investment Management (Europe) S.A in its capacity as management company of Schroder Investment Fund – Life Insurance Linked II (SIF II)
5. Schroder Investment Management (Europe) S.A in its capacity as management company of Schroder Investment Fund – Life Insurance Linked III (SIF III)
6. Zurich Anlagestiftung Insurance Linked Strategies Life I (Zurich)
7. Ambrosia GP Limited in its capacity as general partner of Ambrosia LP (Ambrosia)
Schedule 3 – condition imposed on the Approval:
Each individual Applicant set out in Schedule 2 must not hold greater than 40% of the shares on issue in IGHL at any given time. For the avoidance of doubt, each Applicant listed in Schedule 2 is treated as a separate Applicant for the purposes of this Schedule 3.
Overview
The Financial Sector (Shareholdings) Act 1998 was enacted to regulate and oversee shareholdings in financial sector companies, ensuring that such holdings do not pose undue risks to the stability and integrity of the financial system. The Act addresses the problem of potential undue concentration of ownership and control within the financial sector by imposing requirements on shareholders who wish to hold a significant stake in a financial sector company. This legislation was introduced by the Commonwealth Parliament to provide a framework for the Treasurer to approve or disapprove shareholdings in financial sector companies and to impose conditions on such approvals. The policy objective of the Act is to maintain and enhance the safety and soundness of the financial system by preventing concentrations of ownership and control that could compromise the resilience of financial sector companies.
The revocation of existing approval and granting of new approval to hold a stake in a financial sector company of more than 20% No. 4 of 2022 is a notifiable instrument issued under the Financial Sector (Shareholdings) Act 1998. This instrument revokes the existing approval held by certain entities to hold a 30% stake in Integrity Group Holdings Limited and a 100% stake in Integrity Life Australia Limited, and grants new approval to other entities to hold 100% stakes in the same companies, subject to specific conditions. The instrument was issued by Peter Kohlhagen, a delegate of the Treasurer, and it is in the national interest for the Applicants to hold the specified stakes in the financial sector companies, ensuring that the safety and soundness of the financial system is maintained.
Scope and Application
The Financial Sector (Shareholdings) Act 1998 applies to entities or persons who seek to hold a stake in a financial sector company exceeding a specified threshold, which is currently set at 20%. This Act governs the approval process for such shareholdings and ensures they align with national interests. The legislation applies to all financial sector companies defined under the Act, and its jurisdiction extends nationally across Australia. Certain exclusions or exemptions are outlined in the Act, which may include specific categories of financial sector companies or circumstances where the shareholding is below the threshold requiring approval. The Act's application may be further detailed or restricted through subordinate instruments, which provide additional regulations or guidelines. This particular notifiable instrument revokes existing approval held by certain entities for stakes in Integrity Group Holdings Limited and Integrity Life Australia Limited, and grants new approval to specified applicants, subject to conditions outlined in Schedule 3.
Key Provisions
The main operative sections of the legislation concern the revocation of existing approval and the granting of new approval for holding a stake in a financial sector company of more than 20% (subsection 18(3) and subsection 14(1)). The legislation revokes the existing approval held by Schroder Investment Management (Switzerland) AG, Schroder Investment Management (Europe) S.A, Zurich Anlagestiftung Insurance Linked Strategies Life I, and Ambrosia GP Limited, allowing them to hold a 30% stake in Integrity Group Holdings Limited and a 100% stake in Integrity Life Australia Limited (subsection 18(3)). It then grants new approval to Schroder Investment Management (Switzerland) AG, Schroder Investment Management Limited, Schroder Investment Management (Europe) S.A, Zurich Anlagestiftung Insurance Linked Strategies Life I, Ambrosia GP Limited to hold a 100% stake in both Integrity Group Holdings Limited and Integrity Life Australia Limited (subsection 14(1)).
The Act imposes several obligations and requirements on the parties governed by it. Firstly, it mandates that written notice of the approval be given to the applicant and the financial sector company concerned (subsection 14(1)). Secondly, it requires the instrument to be registered in the Federal Register of Legislation as a notifiable instrument (subsection 14(1)). Thirdly, it imposes a condition on the approval that each individual applicant must not hold more than 40% of the shares on issue in IGHL at any given time (subsection 16(1)). This condition is clearly set out in Schedule 3.
The legislation also provides for certain consequences for breaches of its provisions. However, the specific offences, penalties, or consequences are not detailed within the text provided. It is likely, though, that any breaches of the obligations and requirements set out in the Act would result in legal consequences, potentially including fines or imprisonment. The maximum penalties would depend on the specific nature and severity of the breach, as well as any relevant case law or statutory provisions.