13AConsequences of inability or failure of ADI etc. to meet certain requirements

#### 13A Consequences of inability or failure of ADI etc. to meet certain requirements Appointment of investigator or administrator, or investigation or control by APRA (1) APRA may investigate the affairs of an ADI, appoint a person to investigate the affairs of an ADI, take control of the ADI’s business or appoint an administrator to take control of the ADI’s business if: (a) the ADI informs APRA that the ADI considers that it is likely to become unable to meet its obligations or that it is about to suspend payment; or (b) APRA considers that, in the absence of external support: (i) the ADI may become unable to meet its obligations; or (ii) the ADI may suspend payment; or (iii) it is likely that the ADI will be unable to carry on banking business in Australia consistently with the interests of its depositors; or (iv) it is likely that the ADI will be unable to carry on banking business in Australia consistently with the stability of the financial system in Australia; or (c) the ADI becomes unable to meet its obligations or suspends payment; or (d) an external administrator has been appointed to a holding company of the ADI (or a similar appointment has been made in a foreign country in respect of such a holding company), and APRA considers that the appointment poses a significant threat to: (i) the operation or soundness of the ADI; or (ii) the interests of depositors of the ADI; or (iii) the stability of the financial system in Australia; or (e) if the ADI is a foreign ADI: (i) an application for the appointment of an external administrator of the foreign ADI, or for a similar procedure in respect of the foreign ADI, has been made in a foreign country; or (ii) an external administrator has been appointed to the foreign ADI, or a similar appointment has been made in respect of the foreign ADI, in a foreign country. > Note: For information about another circumstance in which APRA may take control of the business of an ADI, see section 65. (1A) The regulations may specify that a particular form of support for an ADI is not to be considered external support for the purposes of paragraph (1)(b). (1B) APRA may take any of the actions mentioned in subsection (1C) in relation to a body corporate (the target body corporate) if: (a) the target body corporate is any of the following: (i) an authorised NOHC of an ADI (the relevant ADI); (ii) a subsidiary of an authorised NOHC of an ADI (also the relevant ADI); (iii) a subsidiary of an ADI (also the relevant ADI); and (b) the condition in subsection (1D), (1E) or (1F) is satisfied; and (c) the target body corporate is incorporated in Australia; and (d) the target body corporate is not a body corporate of a kind specified in regulations (if any) made for the purposes of this paragraph. (1C) The actions are as follows: (a) taking control of the business of the target body corporate; (b) appointing an administrator to take control of the business of the target body corporate. > Note: For information about another circumstance in which APRA may take control of the business of the target body corporate, see section 65. (1D) The condition in this subsection is satisfied if: (a) either: (i) a Banking Act statutory manager has taken control of the relevant ADI; or (ii) the conditions in any or all of paragraphs (1)(a), (b), (c), (d) or (e) are satisfied in relation to the relevant ADI, and APRA intends that a Banking Act statutory manager will take control of the relevant ADI; and (b) APRA considers that the target body corporate provides services that are, or conducts business that is, essential to the capacity of the relevant ADI to maintain its operations. (1E) The condition in this subsection is satisfied if: (a) either: (i) a Banking Act statutory manager has taken control of the relevant ADI; or (ii) the conditions in any or all of paragraphs (1)(a), (b), (c), (d) or (e) are satisfied in relation to the relevant ADI, and APRA intends that a Banking Act statutory manager will take control of the relevant ADI; and (b) APRA considers that it is necessary for a Banking Act statutory manager to take control of the target body corporate, in order to facilitate the resolution of any of the following: (i) the relevant ADI; (ii) an authorised NOHC of the relevant ADI; (iii) a relevant group of bodies corporate of which the relevant ADI is a member; (iv) a particular member or particular members of such a group. (1F) The condition in this subsection is satisfied if: (a) there is an external administrator of the target body corporate, or APRA considers that, in the absence of external support: (i) the target body corporate may become unable to meet its obligations; or (ii) the target body corporate may suspend payment; and (b) APRA considers that it is necessary to take an action mentioned in subsection (1C) in respect of the target body corporate in order to enable the relevant ADI to maintain its operations, or in order to facilitate the resolution of any of the following: (i) the relevant ADI; (ii) an authorised NOHC of the relevant ADI; (iii) a relevant group of bodies corporate of which the relevant ADI is a member; (iv) a particular member or particular members of such a group. (2) If: (a) APRA is in control of a body corporate’s business under this Subdivision—APRA is the Banking Act statutory manager of the body corporate; or (b) an administrator appointed by APRA is in control of a body corporate’s business under this Subdivision—the administrator is the Banking Act statutory manager of the body corporate. > Note: This section and other provisions relating to statutory management do not apply to the aspects described in subsection 11E(1) of the business and management of a foreign ADI. (2A) If APRA appoints 2 or more Banking Act statutory managers of a body corporate, or appoints one or more additional Banking Act statutory managers of a body corporate: (a) the functions and powers under this Act of a Banking Act statutory manager of the body corporate may be performed or exercised by: (i) all of the Banking Act statutory managers of the body corporate acting jointly; or (ii) each of the Banking Act statutory managers of the body corporate acting individually (except to the extent (if any) specified in a notice given by APRA under paragraph (b)); and (b) at the time of appointment, APRA may give all of the Banking Act statutory managers of the body corporate a notice in writing for the purposes of subparagraph (a)(ii), specifying limits or conditions on their ability to perform functions and exercise powers individually; and (c) treat a reference in this Act to a Banking Act statutory manager as being a reference to whichever one or more of those Banking Act statutory managers the case requires. Priorities for application of assets of ADI in Australia (3) If an ADI becomes unable to meet its obligations or suspends payment, the assets of the ADI in Australia are to be available to meet the ADI’s liabilities in the following order: (a) first, the ADI’s liabilities (if any) to APRA because of the rights APRA has against the ADI because of section 16AI or 16AIC; (b) second, the ADI’s debts (if any) to APRA under section 16AO; (c) third, the ADI’s liabilities (if any) in Australia in relation to protected accounts that account‑holders keep with the ADI; (d) fourth, the ADI’s debts (if any) to the Reserve Bank; (e) fifth, the ADI’s liabilities (if any) under an industry support contract that is certified under section 11CB; (f) sixth, the ADI’s other liabilities (if any) in the order of their priority apart from this subsection. (3AA) Subsection (3) does not constrain: (a) the exercise of powers or the performance of functions under this Act of a Banking Act statutory manager of an ADI; or (b) an entity acting at the direction or request of a Banking Act statutory manager of an ADI exercising powers or performing functions under this Act. (3A) The assets of an ADI are taken for the purposes of subsection (3) not to include any interest in an asset (or a part of an asset) in a cover pool for which the ADI is the issuing ADI. ADI’s assets must at least equal its deposit liabilities (4) An ADI commits an offence if: (a) it does not hold assets (excluding goodwill and any assets or other amount excluded by the prudential standards for the purposes of this subsection) in Australia of a value that is equal to or greater than the total amount of its deposit liabilities in Australia; and (b) APRA has not authorised the ADI to hold assets of a lesser value. Penalty: 200 penalty units. > Note 1: Chapter 2 of the Criminal Code sets out the general principles of criminal responsibility. > Note 2: If a body corporate is convicted of an offence against this subsection, subsection 4B(3) of the Crimes Act 1914 allows a court to impose a fine of up to 5 times the penalty stated above. (4A) For the purposes of subsection (4): (a) the ADI’s deposit liabilities are taken not to include an amount equal to the total of the face values of all of the covered bonds issued by the ADI; and (b) the assets of the ADI are taken not to include: (i) any interest in an asset (or a part of an asset) in a cover pool for which the ADI is the issuing ADI; or (ii) any loan to a covered bond special purpose vehicle that relates to an asset (or a part of an asset) in a cover pool for which the ADI is the issuing ADI. (5) An offence against subsection (4) is an indictable offence. (6) If the circumstances relating to the asset holdings of an ADI are such that give rise to the ADI committing an offence against subsection (4), the ADI commits an offence against that subsection in respect of: (a) the first day on which the offence is committed; and (b) each subsequent day (if any) on which the circumstances that gave rise to the ADI committing the offence continue (including the day of conviction for any such offence or any later day). > Note: This subsection is not intended to imply that section 4K of the Crimes Act 1914 does not apply to offences against this Act or the regulations. (7) To avoid doubt, this section applies to a body corporate that is, or becomes, a Chapter 5 body corporate (within the meaning of the Corporations Act 2001) in the same way as this section applies to any other body corporate.