This Act has been repealed and is no longer in force. It is retained for historical reference.
Jurisdiction
Commonwealth
Act Number
57 of 1947
Collection
act
Plain English Summary
8/10 complexity
What this law does, who it affects, and how it works (plain English)
What it changes mechanically
The Act gives the Commonwealth Bank of Australia powers to take over private banks operating in Australia by buying shares or by taking over their Australian banking business and assets (see s.12, s.13, s.22–s.24). Where the Commonwealth Bank acquires shares or assets under the Act, those shares and assets become vested in the Commonwealth Bank by force of law (s.13(3), s.24(4)).
The Act prohibits private banks from carrying on banking business in Australia after notices issued under the Act or after the operation of compulsory vesting and transfer provisions (s.3(c), s.46).
The Act establishes a specialist Federal Court of Claims to decide compensation and related disputes; its judgments are final and not appealable (ss.26, 33, 34).
The Act sets out detailed compensation procedures and registers for rights to compensation for compulsory share or asset acquisitions (ss.15, 25, 37–45). The Commonwealth Bank must pay "fair and reasonable" compensation; where parties cannot agree, the Court determines the amount (ss.15, 25, 40, 44).
The Act preserves and transfers many existing contractual relationships: where a private bank's Australian business is taken over, the Commonwealth Bank is substituted as party to relevant contracts and becomes entitled and liable under them (s.56).
The Act creates protections and transitional arrangements for employees and pension beneficiaries of private banks, including committees to determine terms and conditions, transfer of employees to the Commonwealth Bank, preservation of certain pay and pension entitlements, and procedures for apportioning pension fund liabilities (ss.47–55).
Sourced from the Federal Register of Legislation (legislation.gov.au), CC BY 4.0.
The Act authorises enforcement steps and penalties for non-compliance (for example, surrender of share certificates, inspection powers, and financial penalties for obstruction) (ss.41, 59, 60).
The Treasurer and the Governor of the Commonwealth Bank are given central roles in deciding purchases, notices, approvals and appointments; the Governor-General may make regulations to carry the Act into effect (see ss.12, 13, 18, 19, 22, 36, 62). The Commonwealth guarantees payment of compensation the Commonwealth Bank must pay (s.61).
Who decides and who pays
Decision-makers and discretion: The Treasurer has statutory discretion to declare shares vested in the Commonwealth Bank and to give notices requiring private banks to negotiate or to cease operations (ss.13, 22, 46). The Governor (Governor-General acting) and the Governor of the Commonwealth Bank also control implementation elements: appointment of directors in acquired banks (s.18), approval of agreements and purchases (ss.12(1), 19(2), 22(5), 43(2), 44(2)), and regulation-making (s.62). The Court of Claims determines compensation disputes and certain contested entitlements (ss.33, 40, 44).
Who bears the monetary cost: The Commonwealth Bank is required to pay compensation for compulsorily acquired shares and assets (ss.15, 25, 42–45). The Commonwealth guarantees those compensation payments (s.61), so the public finances ultimately back the costs. Pension liabilities assumed by the Commonwealth Bank can be met by payments from the private bank's provident or superannuation funds, as determined by agreement or by the Court (s.55).
Behavioural changes required
Private banks lose the legal ability to carry on banking business in Australia after specified notices or upon vesting (s.46). They must continue services as of a historical reference date until transfer or notice requires cessation (s.46(2)).
Private banks and their officers must cooperate with transfers, permit inspection, surrender share certificates, and provide assistance for the transfer of business and assets (ss.41, 59, 60). Failure to comply attracts specified penalties (ss.41, 59, 60).
Employees of acquired banks are to be continued in employment under preserved terms or transferred into Commonwealth Bank service with protections for salary, leave, long-service leave, pensions and continuity of service (ss.48–53, 54).
Stated purpose-claims and how the Act advances them
The Act explicitly states parliamentary objects including expansion of the Commonwealth Bank's banking business, takeover of private banks' Australian banking business, and prohibition of private banks carrying on banking business (s.3). To achieve those objects it provides compulsory vesting powers (s.13), negotiated and default takeover procedures (s.22, s.24), and a prohibition on private banking operations (s.46). It also creates institutional capacity to settle compensation claims (ss.26, 33–36).
Testing those purpose-claims against costs, incentives, trade-offs and implementation features (source-grounded)
Direct financial cost and backstop: the Commonwealth Bank must pay compensation for acquired shares and assets (ss.15, 25, 42–45). The Commonwealth guarantees those payments (s.61), which places a fiscal backstop on compensation obligations.
Incentives and concentration of decision-making: the Treasurer has wide powers to declare vesting dates and to require banks to negotiate or cease business (ss.13, 22, 46). The Governor of the Commonwealth Bank may appoint directors to manage acquired private banks (s.18) and approve disposals or transfer of business subject to Treasurer approval (s.19). Those provisions concentrate implementation discretion in executive offices (Treasurer, Governor of Commonwealth Bank) and thereby shape how and when private banks are acquired or wound down.
Compliance and administrative burdens on private banks: private banks must deliver share certificates (s.41), permit inspection and extracts of records and investments (s.59), and do all acts necessary for transfer (s.60). Non-compliance triggers monetary penalties and, in some cases, contempt proceedings (ss.59, 60). Those obligations create direct compliance tasks and potential legal exposures for private banks and their officers.
Legal certainty and finality vs. review risk: the Act establishes a specialist Court of Claims with final and conclusive judgments that are not subject to appeal or other judicial challenge (s.34). That mechanism reduces appellate review risk but concentrates authority in a single tribunal whose rulings are unreviewable, affecting dispute-resolution dynamics.
Employee and pension protections, and liability allocation: the Act sets committees and procedures to preserve terms for employees and pensions (ss.47–55). It requires the Commonwealth Bank to assume specified pension liabilities, but also authorises the Court to require payments from provident or superannuation funds to reimburse the Commonwealth Bank (s.55). That creates a defined but procedurally complex route to allocate pension liabilities between acquiring bank and prior funds.
Effects on private enterprise and contract freedom: the Act substitutes the Commonwealth Bank into many existing instruments and contracts that relate to the transferred business (s.56). That changes counterparties and the legal party to contracts by operation of statute rather than by private agreement.
Trade-offs and implementation risks evident in the text
Trade-off of speed vs. consensual negotiation: the Act permits negotiation of agreements for takeovers (s.22(5), s.43) but also sets tight timelines and default compulsory vesting if agreement is not reached (s.22(2), s.24(2)). That structure pressures private banks to accept negotiated terms or face statutory takeover and court-determined compensation.
Risk of concentrated executive discretion: the Treasurer's power to declare vesting dates and to order cessation of banking (ss.13, 46) and to approve transactions (multiple sections) centralises significant implementation choices in executive hands, which shifts many outcomes from private bargaining to administrative decision.
Administrative and judicial capacity demands: the Act creates a new court (ss.26–36) and authorises the Court to manage complicated compensation and actuarial matters (s.55(2)). Effective implementation therefore depends on staffing that Court and on the ability to resolve actuarial and valuation disputes promptly.
Concrete, source-cited consequences for markets and participants (what changes in practice)
Ownership: shares and assets specified as "Australian" in scope become vested in the Commonwealth Bank by statutory declaration or by operation of law (s.13, s.24(4)).
Competition and entry: private banks listed in the Schedules are subject to compulsory acquisition and prohibition on carrying on banking in Australia (s.3, s.46, First Schedule). That removes at least these private banks' ability to carry on banking business in Australia when the Act's vesting or notices take effect.
Contracts and counterparties: contracts relating to the taken-over business remain in force but with the Commonwealth Bank substituted as the party (s.56), changing counterparties without requiring bilateral novation.
This summary describes how the Act works mechanically, who must pay or decide, and the concrete compliance and institutional effects written into the statute (citations to relevant sections are included above). It does not assess political motives; it sets out the statutory mechanisms, costs and decision points the text itself creates.