Superannuation Industry (Supervision) Act exemption determination No. 1 of 2026
EXPLANATORY STATEMENT
Prepared by the Australian Prudential Regulation Authority (APRA)
Superannuation Industry (Supervision) Act 1993, section 328
Under subsection 328(1) of the Superannuation Industry (Supervision) Act 1993 (the SIS Act), APRA has the power to exempt, in writing, a particular person or a class of persons from compliance with any or all of the modifiable provisions of the SIS Act.
On 11 May 2026, APRA made Superannuation Industry (Supervision) Act exemption determination No 1 of 2026 which exempts, from its commencement, a specific class of persons, namely secretaries and management employees with a direct control interest in an RSE licensee of less than 2%, from the requirement to obtain approval from APRA to hold a controlling stake in an RSE licensee in certain circumstances.
The instrument commences on the day after it is registered on the Federal Register of Legislation.
- Background
Section 29JCB of the SIS Act makes it an offence, which attracts severe penalties, to hold a controlling stake in an RSE licensee that is a body corporate without APRA’s approval.
A person holds a ‘controlling stake’ in an RSE licensee that is a body corporate if the person holds a stake of more than 15% in the RSE licensee. The SIS Act defines ‘stake’ in an RSE licensee to have the same meaning as in the Financial Sector (Shareholdings) Act 1998 (FSS Act). Clause 10 of Schedule 1 of the FSS Act sets out that a person’s stake in a company is the aggregate of the person’s direct control interests and the direct control interests held by associates of the person. Clause 11 of Schedule 1 of the FSS Act sets out that a person holds a direct control interest in a company at a particular time equal to the percentage of the voting power in the company that the person is in a position to control at that time.
The change of ownership and control provisions in Division 8 of Part 2A of the SIS Act may affect certain officeholders, including a secretary or ‘management employee’ (within the meaning of Clause 2 of Schedule 1 of the FSS Act) of a company, who have relevant direct control interests. Some secretaries and management employees may hold a de minimis level of shares in the RSE licensee, or other company that holds a direct control interest in the RSE licensee. In instances where these officeholders are considered to be associates of a company that holds shares in the RSE licensee, each officeholder may be treated as having a controlling stake in the RSE licensee.
- Purpose and operation of the instrument
The purpose of the instrument is to exempt a certain class of persons, namely a ‘SM Officer’ as defined in paragraph 4 of the Schedule to the instrument, from compliance with sections 29HA and 29JCB of the SIS Act where certain criteria are met. Section 29HA and section 29JCB of the SIS Act respectively require a person to apply to APRA for approval to hold a controlling stake in an RSE licensee and set out that a person that holds a controlling stake in an RSE licensee without approval commits an offence for which strict liability applies.
The change of ownership and control provisions in Division 8 of Part 2A of the SIS Act support APRA’s supervision and enforcement powers when a change of ownership or control of an RSE licensee takes place. The provisions ensure that persons who seek to acquire a controlling stake in an RSE licensee are subject to an APRA approval process and address the risk of persons who may impact on the RSE licensee’s ability to comply with its obligations under the SIS Act, acquiring a controlling stake in the RSE licensee.
The instrument applies to a narrow class of persons:
- being persons that are an ‘SM Officer’ defined in paragraph 4 of the Schedule to the instrument as being a secretary, or management employee, of a company that has approval under section 29HD of the Act, or is deemed to have approval by virtue of item 14 of Schedule 4 of the Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No. 1) Act 2019, to hold a controlling stake in the RSE licensee (SM Officer); and
- where that SM Officer:
- acquires a controlling stake in an RSE licensee on or after the date of commencement of the instrument; and
- holds a direct control interest in the RSE licensee of less than 2%.
The instrument is intended to reduce regulatory burden by seeking to reduce controlling stake applications from SM Officers with de minimis level of shareholdings while ensuring that the intent of the change of ownership and control provisions in Division 8 of Part 2A of the SIS Act is maintained. The instrument is also intended to ensure that an approval process remains in place for SM Officers who do not meet the criteria contained in paragraph 5 of the Schedule to the instrument and for other persons who hold a controlling stake in an RSE licensee, including directors.
APRA’s view is that SM Officers generally have limited influence or control over RSE licensees, particularly where their shareholdings are minimal. Under the FSS Act, aggregation of these persons’ minimal shareholdings with those of their associates can effectively transform an immaterial stake into a controlling stake. Given this, APRA considers there to be limited prudential benefit in subjecting SM Officers, who meet the criteria contained in paragraph 5 of the Schedule to the instrument, to the controlling stake approval process.
If a person ceases to be in the class described in paragraph 5 of the Schedule to the instrument, including for example because the direct control interest exceeds the percentage amount prescribed, then the exemption would cease to apply, and the person would be subject to sections 29HA and 29JCB of the SIS Act.
Notwithstanding the operation of the instrument, APRA may give a person a direction to relinquish control of an RSE licensee where the threshold specified in section 131EB of the SIS Act is satisfied.
Explanation of each provision in the instrument
Paragraphs 1 to 4 of the Schedule to the instrument are the operative provisions relating to the instrument’s name and commencement date, the legal authority under which the instrument is made and the relevant definitions, including the definition of ‘SM Officer’ above.
Paragraph 5 of the Schedule to the instrument outlines the application provisions, namely that the exemption applies to the class of persons that are defined in the instrument as an SM Officer, who acquires a controlling stake in an RSE licensee on or after the date of commencement of the instrument and where the SM Officer holds a direct control interest in the RSE licensee of less than 2%.
Paragraph 6 of the Schedule to the instrument exempts the class of persons identified in paragraph 5 of the Schedule to the instrument from compliance with the specified ‘modifiable provisions’, being sections 29HA and 29JCB of the SIS Act. ‘Modifiable provision’ has the meaning given in section 327 of the SIS Act and includes a provision of Part 2A of the SIS Act.
Exemption from disallowance and sunsetting
This instrument is exempt from disallowance in accordance with section 44(2)(b) of the Legislation Act 2003 (Legislation Act) and regulation 9 of the Legislation (Exemptions and Other Matters) Regulations 2015 (Legislation Regulations) as this instrument is an ‘instrument (other than a regulation) relating to superannuation’.[1]
This instrument is also exempt from sunsetting in accordance with section 54(2)(b) of the Legislation Act and regulation 11 of the Legislation Regulations as this instrument is ‘an instrument (other than a regulation) relating to superannuation’.[2]
As this instrument falls within the above-mentioned exemptions from disallowance and sunsetting, APRA does not have discretion to subject the instrument to disallowance and sunsetting. To mitigate against any adverse impact arising from the above-mentioned exemptions from disallowance and sunsetting, APRA undertook consultation on the proposed exemption (refer to paragraph 3 for further details) and will conduct reviews of the operation of the instrument from time to time to ensure it remains applicable and fit for purpose.
- Consultation
On 18 November 2025, APRA released a consultation letter requesting feedback on the draft class exemption by 16 December 2025. The consultation letter sought views on any risks associated with the draft class exemption and whether there are other circumstances that APRA should consider when finalising the class exemption.
APRA received four public submissions from industry bodies and two submissions from RSE licensees. All submissions generally supported the proposal and endorsed the expected reduction in regulatory burden.
Some submissions were strongly supportive of APRA’s proposal. Other submissions noted support for the general direction of the exemption while expressing that the exemption did not go far enough. The latter submissions proposed further broadening of the class of persons captured by and application of the exemption. For example, some submissions suggested broadening the exemption to directors or raising the direct control interest threshold prescribed. Given the significance and intent of the change of ownership and control provisions in the SIS Act and the need for APRA to maintain a rigorous approval process over persons acquiring a controlling stake in an RSE licensee, APRA does not support broadening the exemption further.
Submissions suggested some minor technical changes to ensure that the exemption would not be unnecessarily narrow and could be confidently relied upon, and APRA has made some minor changes to address this feedback.
APRA is satisfied that consultation was appropriate.
4. Impact Analysis
The Office of Impact Analysis has confirmed that detailed analysis is not required under the Australian Government’s Policy Impact Analysis Framework.
5. Statement of compatibility prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
A Statement of compatibility prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 is provided at Attachment A to this Explanatory Statement.
ATTACHMENT A
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Superannuation Industry (Supervision) Act exemption determination No. 1 of 2026
This Legislative Instrument is compatible with the human rights and freedoms recognised or declared in the international instrument listed in section 3 of the Human
Rights (Parliamentary Scrutiny) Act 2011 (HRPS Act).
Overview of the Legislative Instrument
The purpose of the Legislative Instrument is to exempt a class of persons from compliance with sections 29HA and 29JCB of the SIS Act.
Human rights implications
APRA has assessed the Legislative Instrument and is of the view that it does not engage any of the applicable rights or freedoms recognised or declared in the international instruments listed in section 3 of the HRPS Act. Accordingly, in APRA's assessment, the Legislative Instrument is compatible with human rights.
Conclusion
This Legislative Instrument is compatible with human rights as it does not raise any human rights issues.
[1] For paragraph 44(2)(b) of the Legislation Act, section 42 of the Legislation Act (disallowance of legislative instruments) does not apply to a legislative instrument in a class of legislative instrument referred to in an item of the table contained in regulation 9 of the Legislation Regulations. Item 3 of the table contained in regulation 9 of the Legislation Regulations provides that ‘an instrument (other than a regulation) relating to superannuation’ is a class of legislative instrument not subject to disallowance.
[2] For paragraph 54(2)(b) of the Legislation Act, Part 4 of Chapter 3 of the Legislation Act (sunsetting of legislative instruments) does not apply to a legislative instrument in a class of legislative instruments referred to in an item of the table contained in regulation 11 of the Legislation Regulations. Item 6 of the table contained in regulation 11 of the Legislation Regulations provides that ‘an instrument (other than a regulation) relating to superannuation’ is a class of legislative instrument not subject to sunsetting.