Revocation of existing approval and granting of new approval to hold a stake of more than 20% in a financial sector company No.13 of 2021

Administered by Department of the Treasury

Legislation au F2021N00103 In force Notifiable Instrument

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Revocation of existing approval and granting of new approval to hold a stake of more than 20% in a financial sector company No.13 of 2021

Financial Sector (Shareholdings) Act 1998

To: Swiss Re Ltd (SRL), Swiss Reinsurance Company Limited (SRZ) and Swiss Re Corporate Solutions Holding Company AG (SRCSH) (the applicants) and to the first and second existing approval holders listed below.

 

SINCE:

 

  1. Swiss Re Corporate Solutions Ltd (SRCS) (the first existing approval holder) was granted approval on 12 September 2011 under section 14(1) of the Financial Sector (Shareholdings) Act 1998 (the Act) to hold a 100% stake in Swiss Re International SE (SRI), a financial sector company under the Act (the first existing approval);

 

B.     SRL, SRCS and SRCSH (the second existing approval holders) were granted approval on 31 March 2021 under section 14(1) of the Act to hold a 100% stake in SRCS, SRCSH and SRI, each a financial sector company under the Act (the second existing approvals);

 

C.     On 22 March 2021, the first and second existing approval holders requested that the first and second existing approvals be revoked upon the effective date of the merger between SRZ and SRCS as shown in the Swiss Commercial Registry;

D.     The applicants have applied to the Treasurer under section 13 of the Act for the following approvals:

  1. SRCSH to hold a 100% stake in SRI;
  2. SRZ to hold a 100% stake in each of SRCSH and SRI;
  3. SRL to hold a 100% stake in each of SRZ, SRCSH and SRI;

 

E.     I am satisfied that it is in the national interest to approve the approvals being sought in Recital D. above;

 

  1. Sharyn Reichstein, a delegate of the Treasurer,

 

(a)  under paragraph 14(1)(a) of the Act, APPROVE:

  1. SRCSH to hold a 100% stake in SRI;
  2. SRZ to hold a 100% stake in SRCSH and SRI; and
  3. SRL to hold a 100% stake in SRZ, SRCSH and SRI; and

 

(b)  under subsection 18(3) of the Act, REVOKE the first and second existing approvals upon the effective date of the merger between SRZ and SRCS as shown in the Swiss Commercial Registry.

 

 

This instrument takes effect on the date it is signed and remains in force indefinitely.

 

 

Dated: 24 May 2021

 

[Signed]

 

 

Sharyn Reichstein General Manager Insurance Division

Interpretation

 

In this Notice:

 

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

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.

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 for an approval under paragraph 14(1)(a) of the Act. Under subsection 19(1), if an approval has been granted for the holding of a stake of more than 20% in a financial sector company that is a holding company of an authorised deposit taking institution or an authorised insurance company, then an approval is taken to exist for the holding of the same percentage stake in each financial sector company that is a 100% subsidiary of the holding company.

Under subsection 19(3), if an approval has been granted for a company to hold a stake in a financial sector company of more than 20%, there is taken to be in force at that time an approval for each officer of the company to hold the same percentage stake in the financial sector 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 this instrument will be registered in the Federal Register of Legislation as a notifiable instrument.

 

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.

Overview

The Financial Sector (Shareholdings) Act 1998 was enacted to regulate significant shareholdings in the Australian financial sector, aiming to ensure financial stability and protect consumers by preventing unacceptable shareholding situations. The Act was introduced to address the need for oversight and regulation of large shareholdings in financial institutions to maintain the integrity and stability of the financial system. Enacted by the Parliament of Australia, the policy objective of the Act is to protect the financial system from potential risks posed by significant concentrations of ownership or control in the financial sector. The legislation empowers the Treasurer to grant or revoke approvals for shareholdings exceeding 20% in financial sector companies, ensuring that any substantial changes in ownership are subject to regulatory scrutiny. This regulatory framework helps maintain public confidence in the financial system by preventing the emergence of unacceptable shareholding situations that could threaten the stability and efficiency of financial markets.

Scope and Application

The Financial Sector (Shareholdings) Act 1998 applies to entities holding or seeking to hold a stake of more than 20% in a financial sector company. This Act is Commonwealth legislation, governing the shareholdings of financial sector companies within Australia. The Act’s primary purpose is to control and monitor significant shareholdings in financial sector companies to ensure they do not pose a risk to the stability of the financial system. The Act provides the Treasurer with the authority to grant or revoke approvals for such shareholdings, as well as to impose conditions on these approvals. The approval process is mandatory for any entity seeking to hold more than 20% in a financial sector company. The Act also includes provisions for offences related to the acquisition of shares that result in an unacceptable shareholding situation, with penalties including fines up to 400 penalty units for individuals and 2,000 penalty units for bodies corporate. Additionally, the Act allows for the imposition of conditions and the granting of injunctions by the Federal Court to enforce compliance with the Act. The Act’s application extends to both existing and proposed shareholdings, ensuring that any changes in shareholding structures are subject to regulatory oversight.

Key Provisions

The main sections of this notifiable instrument concern the revocation of existing approvals and the granting of new approvals for shareholdings in financial sector companies, as stipulated under the Financial Sector (Shareholdings) Act 1998. Section 14(1) of the Act allows the Treasurer to approve the holding of a stake exceeding 20% in a financial sector company, while section 18(3) permits the revocation of such approvals. The current instrument revokes the approvals previously granted to Swiss Re Corporate Solutions Ltd and others, effective from the date of the merger between Swiss Reinsurance Company Limited and Swiss Re Corporate Solutions Ltd. Simultaneously, it grants new approvals to Swiss Re Corporate Solutions Holding Company AG, Swiss Re Ltd, and Swiss Reinsurance Company Limited for holding 100% stakes in specified entities. These changes are made to ensure that the shareholdings are in line with the national interest. The obligations imposed on the parties involved include adherence to the new shareholding structures as approved. The applicants, Swiss Re Ltd, Swiss Reinsurance Company Limited, and Swiss Re Corporate Solutions Holding Company AG, must ensure that their shareholdings comply with the new approvals and that they adhere to any conditions that may be imposed by the Treasurer. Furthermore, the existing approval holders are required to cease their previous shareholding arrangements upon the effective date of the merger, as specified in the Swiss Commercial Registry. Breaches of the conditions set out in the approvals, or any conduct that results in an unacceptable shareholding situation, may lead to criminal and civil consequences. Under section 11 of the Act, any person or group of persons who recklessly acquire shares resulting in an unacceptable shareholding situation may be guilty of an offence. The penalty for such an offence can be up to 400 penalty units for individuals and up to 2,000 penalty units for corporate bodies. Additionally, under subsection 32(3) of the Act, the Federal Court may grant an injunction to restrain any conduct that contravenes the conditions of an approval, further reinforcing compliance requirements.

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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.