11CAAPRA may give directions in certain circumstances

11CA APRA may give directions in certain circumstances

(1) APRA may give a body corporate that is an ADI or an authorised NOHC a direction of a kind specified in subsection (2) if APRA has reason to believe that: (a) the body corporate has contravened a provision of: (i) this Act; or (ii) the Financial Sector (Collection of Data) Act 2001; or (b) the body corporate has contravened a prudential requirement regulation or a prudential standard; or (c) the body corporate is likely to contravene this Act, a prudential requirement regulation, a prudential standard or the Financial Sector (Collection of Data) Act 2001, and the direction is reasonably necessary for one or more prudential matters relating to the body corporate; or (d) the body corporate has contravened a condition or direction under this Act or the Financial Sector (Collection of Data) Act 2001; or (e) the direction is necessary in the interests of: (i) if the body corporate is an ADI—depositors of the ADI; or (ii) if the body corporate is an authorised NOHC—depositors of any ADI that is a subsidiary of the NOHC; or (f) the body corporate is, or is about to become, unable to meet its liabilities; or (g) there is, or there might be, a material risk to the security of the body corporate’s assets; or (h) there has been, or there might be, a material deterioration in the body corporate’s financial condition; or (i) the body corporate is conducting its affairs in an improper or financially unsound way; or (j) the failure to issue a direction would materially prejudice the interests of: (i) if the body corporate is an ADI—depositors of the ADI; or (ii) if the body corporate is an authorised NOHC—depositors of any ADI that is a subsidiary of the NOHC; or (k) the body corporate is conducting its affairs in a way that may cause or promote instability in the Australian financial system. (1AA) APRA may give a body corporate that is an ADI or is an authorised NOHC a direction of a kind specified in subsection (2) if APRA has reason to believe that: (a) a subsidiary of the body corporate has contravened a provision of: (i) this Act; or (ii) the Financial Sector (Collection of Data) Act 2001; or (b) a subsidiary of the body corporate has contravened a prudential requirement regulation or a prudential standard; or (c) a subsidiary of the body corporate is likely to contravene this Act, a prudential requirement regulation, a prudential standard or the Financial Sector (Collection of Data) Act 2001; or (d) the direction is in respect of a subsidiary of the body corporate and is necessary in the interests of: (i) if the body corporate is an ADI—depositors of the ADI; or (ii) if the body corporate is an authorised NOHC—depositors of any ADI that is a subsidiary of the NOHC; or (e) a subsidiary of the body corporate is, or is about to become, unable to meet the subsidiary’s liabilities; or (f) there is, or there might be, a material risk to the security of the assets of a subsidiary of the body corporate; or (g) there has been, or there might be, a material deterioration in the financial condition of a subsidiary of the body corporate; or (h) a subsidiary of the body corporate is conducting the subsidiary’s affairs in an improper or financially unsound way; or (j) a subsidiary of the body corporate is conducting the subsidiary’s affairs in a way that may cause or promote instability in the Australian financial system; or (k) a subsidiary of the body corporate is conducting the subsidiary’s affairs in a way that may cause it to be unable to continue to supply services to: (i) if the body corporate is an ADI—the ADI; or (ii) if the body corporate is an authorised NOHC—any ADI that is a subsidiary of the NOHC; or (l) the direction is in respect of a subsidiary of the body corporate and the failure to issue a direction would materially prejudice the interests of: (i) if the body corporate is an ADI—depositors of the ADI; or (ii) if the body corporate is an authorised NOHC—depositors of any ADI that is a subsidiary of the NOHC. (1AB) However, APRA can only make a direction as a result of a ground referred to in paragraph (1AA)(a), (b), (c), (e), (f), (g), (h) or (k) if APRA considers that the direction is reasonably necessary for one or more prudential matters relating to the body corporate. (1AC) APRA may give a body corporate that is a subsidiary of an ADI or of an authorised NOHC a direction of a kind specified in subsection (2) if: (a) APRA has given the ADI or authorised NOHC a direction under subsection (1AA) because one or more of the grounds referred to in that subsection have been satisfied in respect of the subsidiary; or (b) APRA may give the ADI or authorised NOHC a direction under subsection (1AA) because one or more of the grounds referred to in that subsection have been satisfied in respect of the subsidiary. (1AD) APRA cannot give a direction under subsection (1AC) to a body corporate of a kind specified in regulations (if any) made for the purposes of this subsection. (1AE) Subsections (1), (1AA) and (1AC) do not limit each other. (1A) The direction must: (a) be given by notice in writing to the body corporate; and (b) specify: (i) in the case of a direction under subsection (1AC)—the ground referred to in subsection (1AA) as a result of which the direction is given; or (ii) otherwise—the ground referred to in subsection (1) or (1AA) as a result of which the direction is given. (1B) In deciding whether to give a direction under subsection (1), (1AA) or (1AC) to a body corporate, APRA may disregard any external support for the body corporate. (1C) The regulations may specify that a particular form of support is not external support for the purposes of subsection (1B). (2) The kinds of direction that the body corporate may be given are directions to do, or to cause a body corporate that is its subsidiary to do, any one or more of the following: (aa) to comply with the whole or a part of: (i) this Act; or (ii) the Financial Sector (Collection of Data) Act 2001; (ab) to comply with the whole or a part of a condition or direction referred to in paragraph (1)(d); (a) to comply with the whole or a part of a prudential requirement regulation or a prudential standard; (b) to order an audit of the affairs of the body corporate, at the expense of the body corporate, by an auditor chosen by APRA; (c) to remove a director or senior manager of the body corporate from office; (d) to ensure a director or senior manager of the body corporate does not take part in the management or conduct of the business of the body corporate except as permitted by APRA; (e) to appoint a person or persons as a director or senior manager of the body corporate for such term as APRA directs; (f) to remove any auditor of the body corporate from office and appoint another auditor to hold office for such term as APRA directs; (g) not to give any financial accommodation to any person; (h) not to accept the deposit of any amount; (i) not to borrow any amount; (j) not to accept any payment on account of share capital, except payments in respect of calls that fell due before the direction was given; (k) not to repay any amount paid on shares; (l) not to pay a dividend on any shares; (m) not to repay any money on deposit or advance; (n) not to pay or transfer any amount or asset to any person, or create an obligation (contingent or otherwise) to do so; (o) not to undertake any financial obligation (contingent or otherwise) on behalf of any other person; (p) to make changes to the body corporate’s systems, business practices or operations; (q) to reconstruct, amalgamate or otherwise alter all or part of any of the following: (i) the business, structure or organisation of the body corporate; (ii) the business, structure or organisation of the group constituted by the body corporate and its subsidiaries; (r) to do, or to refrain from doing, anything else in relation to the affairs of the body corporate. A direction under paragraph (n) not to pay or transfer any amount or asset does not apply to the payment or transfer of money pursuant to an order of a court or a process of execution. (2AA) However, APRA must not direct, or give a direction that would cause or require, a covered bond special purpose vehicle to: (a) deal, or not deal, with an asset to the extent that the asset secures covered bond liabilities of an ADI; or (b) make a payment, or not make a payment, in relation to a covered bond liability of an ADI.