Banks (Shareholdings) Act 1972

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Banks (Shareholdings) Act 1972

Act No. 2 of 1972 as amended

Consolidated as in force on 30 September 1999

(includes amendments up to Act No. 54 of 1998) [Note: This Act is repealed by No. 54 of 1998]

Prepared by the Office of Legislative Drafting, Attorney-General’s Department, Canberra

Contents

Part I—Preliminary

1 Short title [see Note 1] 

2 Commencement [see Note 1] 

3 Crown to be bound 

4 Persons obliged to comply with this Act 

5 Extra-territorial operation 

6 Interpretation 

7 Stock deemed to be shares 

8 Interests in shares 

9 Associated shareholders 

Part II—Limitation of Shareholdings in Banks

10 Limitation of shareholdings in banks 

12 Powers of court with respect to defaulting substantial shareholders 

13 Defence to prosecutions 

Part III—Miscellaneous

14 Contracts etc. not affected 

15 Disclosure of information received under Act prohibited in certain circumstances             

17 Regulations 

Notes  

 

An Act relating to Shareholdings in certain Banks

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Part I—Preliminary

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1  Short title [see Note 1]

  This Act may be cited as the Banks (Shareholdings) Act 1972.

2  Commencement [see Note 1]

  This Act shall come into operation on a date to be fixed by Proclamation.

3  Crown to be bound

 (1) This Act binds the Crown in right of the Commonwealth, of each of the States, of the Northern Territory and of Norfolk Island.

 (2) Nothing in this Act renders the Crown liable to be prosecuted for an offence.

4  Persons obliged to comply with this Act

  The obligation to comply with this Act extends to all natural persons, whether resident in Australia or not and whether Australian citizens or not, and to all bodies corporate, whether incorporated or carrying on business in Australia or not.

5  Extra-territorial operation

  This Act extends to acts done or omitted to be done outside Australia.

6  Interpretation

 (1) In this Act, unless the contrary intention appears:

bank means:

 (a) a body corporate, being a body corporate incorporated in a State or Territory or in a Colony that became a State, in respect of which there is in force for the time being an authority referred to in section 9 of the Banking Act 1959; or

corporation includes a body politic or an association, a partnership or other organization, whether incorporated or not.

person includes a corporation.

voting share, in relation to a bank, means an issued share in the capital of that bank, not being:

 (a) a share to which, in no circumstances, is there attached a right to vote; or

 (b) a share to which there is attached a right to vote only in one or more of the following circumstances:

 (i) during a period during which a dividend (or part of a dividend) in respect of the share is in arrear;

 (ii) upon a proposal to reduce the share capital of the bank;

 (iii) upon a proposal that affects rights attached to the share;

 (iv) upon a proposal to wind up the bank;

 (v) upon a proposal for the disposal of the whole of the property, business and undertaking of the bank;

 (vi) during the winding up of the bank.

 (2) In this Act:

 (a) a reference to a share of a bank shall be read as a reference to a share in the capital of the bank; and

 (b) a reference to a share of a bank shall be read as including a reference to stock into which a share in the capital of the bank has been converted.

7  Stock deemed to be shares

  Where the whole or a part of the share capital of a bank consists of stock, an interest of a person in any such stock shall be deemed to be, for the purposes of this Act, an interest in an issued share of that bank having the same nominal amount as the amount of that stock and having attached to it the same rights as are attached to that stock.

8  Interests in shares

 (1) The following subsections of this section have effect for the purposes of this Act.

 (2) Where the property subject to a trust consists of or includes shares and a person knows or has reasonable grounds for believing:

 (a) that the person has an interest under the trust; and

 (b) that the property subject to the trust consists of or includes those shares;

the person shall be deemed to have an interest in those shares.

 (3) Where:

 (a) a right, being a right or an interest of a kind described in the definition of prescribed interest in section 9 of the Corporations Law, was issued or offered to the public for subscription or purchase;

 (b) the public was invited to subscribe for or purchase such a right and the right was so subscribed for or purchased; or

 (c) such a right was issued for the purposes of an offer to the public by, and is held by, the management company within the meaning of section 9 of the Corporations Law;

that right does not constitute an interest in a share.

 (4) Where a body corporate has an interest in a share and:

 (a) the body corporate is, or its directors are, accustomed, or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of a person in relation to that share;

 (b) a person has a controlling interest in the body corporate; or

 (c) a person is, the associates of a person are, or a person and the associates of that person are, entitled to exercise or control the exercise of not less than three-twentieths of the votes attached to the voting shares in the body corporate;

that person shall be deemed to have an interest in that share.

 (5) For the purposes of paragraph (4)(c), a person is an associate of another person:

 (a) if the first-mentioned person is:

 (i) a body corporate that, under section 50 of the Corporations Law, is related to that other person;

 (ii) a person in accordance with whose directions, instructions or wishes that other person is accustomed, or under an obligation, whether formal or informal, to act in relation to the share referred to in subsection (4);

 (iii) a person who is accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of that other person in relation to that share;

 (iv) a body corporate that is, or the directors of which are, accustomed, or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of that other person in relation to that share; or

 (v) a body corporate in accordance with the directions, instructions or wishes of which, or of the directors of which, that other person is accustomed, or under an obligation, whether formal or informal, to act in relation to that share; or

 (b) if:

 (i) the first-mentioned person is a corporation and that other person is an officer of that corporation;

 (ii) the first-mentioned person is a partner of that other person; or

 (iii) the first-mentioned person and that other person are members of a voting trust and the trust relates to shares of the bank concerned.

 (6) Where a person:

 (a) has entered into a contract to purchase a share;

 (b) has a right, otherwise than by reason of having an interest under a trust, to have a share transferred to that person or as that person directs, whether the right is exercisable presently or in the future and whether on the fulfilment of a condition or not;

 (c) has the right to acquire a share, or an interest in a share, under an option, whether the right is exercisable presently or in the future and whether on the fulfilment of a condition or not; or

 (d) is entitled (otherwise than by reason of having been appointed a proxy or representative to vote at a meeting of members of a corporation or of a class of its members) to exercise or control the exercise of a right attached to a share, not being a share of which that person is the registered holder;

that person shall be deemed to have an interest in that share.

 (7) A person shall not be deemed not to have an interest in a share by reason only that the person has the interest in the share jointly with another person.

 (8) It is immaterial, for the purposes of determining whether a person has an interest in a share, that the interest cannot be related to a particular share.

 (9) There shall be disregarded:

 (a) an interest in a share if the interest is that of a person who holds the share as bare trustee;

 (b) an interest in a share of a person whose ordinary business includes the lending of money if the person has the interest only by way of security for the purposes of a transaction entered into in the ordinary course of business in connection with the lending of money;

 (c) an interest of a person in a share that is an interest that the person has by reason of holding a prescribed office; and

 (d) a prescribed interest in a share that is an interest of such person, or of the persons included in such class of persons, as is prescribed.

 (10) An interest in a share shall not be disregarded by reason only of:

 (a) its remoteness;

 (b) the manner in which it arose; or

 (c) the fact that the exercise of a right conferred by the interest is, or is capable of being made, subject to restraint or restriction.

9  Associated shareholders

 (1) The following subsections of this section have effect for the purposes of this Act.

 (2) Where a person is to be deemed to be an associate of another person, as provided by this section, the first-mentioned person shall be deemed to have an interest in the shares in which that other person has an interest.

 (3) For the purposes of subsection (2), a person shall be deemed to be an associate of another person if:

 (a) the first-mentioned person is a corporation (other than a body politic) and that other person is an officer of that corporation;

 (b) the first-mentioned person is a partner of that other person;

 (c) the first-mentioned person is a corporation and that other person, whether a corporation or not, is in a position to control that corporation;

 (d) the first-mentioned person is a corporation and that other person is also a corporation and a person, whether a corporation or not, is in a position to control each of those corporations; or

 (e) the first-mentioned person and that other person are members of a voting trust and the trust relates to shares of the bank concerned.

 (4) Where, by reason of subsection (3), a person is to be deemed to be an associate of another person, that other person shall, for the purposes of subsection (2), be deemed to be an associate of the first-mentioned person.

Part II—Limitation of Shareholdings in Banks

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10  Limitation of shareholdings in banks

 (1) Subject to subsections (2D) and (3), a person shall not have an interest in one or more voting shares of a bank if the nominal amount of that share or the aggregate of the nominal amounts of those shares exceeds 10% of the aggregate of the nominal amounts of all the voting shares of the bank.

 (2) The Treasurer may, on application by a person, exempt the person, in writing, from compliance with subsection (1) in respect of voting shares of a bank.

 (2A) The Treasurer shall not refuse to give an exemption to a person under subsection (2) from compliance with subsection (1) in respect of voting shares of a bank unless the Treasurer is satisfied that the giving of the exemption would not be in the national interest.

 (2B) Where an exemption has been given to a corporation under subsection (2) from compliance with subsection (1) in respect of voting shares of a bank, the Treasurer may, on application by the corporation, exempt the persons who are from time to time relevant officers of the corporation from compliance with subsection (1) in respect of voting shares of the bank.

 (2C) An application under subsection (2B) may accompany an application under subsection (2).

 (2D) Subject to subsection (3), a person who is exempt from compliance with subsection (1) in respect of voting shares of a bank shall not have an interest in one or more voting shares of the bank if the nominal amount of that share or the aggregate of the nominal amounts of those shares exceeds 15% of the aggregate of the nominal amounts of all the voting shares of the bank.

 (2E) The Treasurer may, by notice in writing given to a person, revoke an exemption given to the person under subsection (2) if the Treasurer is satisfied that to do so is in the national interest, and, where the Treasurer so revokes an exemption, the revocation has effect as from the day specified in the notice, not being a day earlier than 3 months after the day on which the notice is given.

 (2F) Where an exemption given to a corporation under subsection (2) from compliance with subsection (1) in respect of voting shares in a bank is revoked, any exemption given under subsection (2B) in relation to the relevant officers of the corporation in respect of the bank shall be deemed to have been revoked, and that last-mentioned revocation has effect as from the day on which the first-mentioned revocation has effect.

 (2G) The Treasurer may, by notice in writing given to a corporation, revoke an exemption given under subsection (2B) in relation to relevant officers of the corporation as from a day specified in the notice, not being a day earlier than 3 months after the day on which the notice is given.

 (3) Where a percentage is under the succeeding provisions of this section applicable in relation to a person, that person shall not have an interest in one or more voting shares of the bank concerned if the nominal amount of that share or the aggregate of the nominal amounts of those shares is greater than that percentage of the aggregate of the nominal amounts of all the voting shares of that bank.

 (4) The Governor-General may, after application made to the Treasurer by a person, if the Governor-General is satisfied that to do so is in the national interest, by instrument in writing published in the Gazette, fix, for the purposes of this section in its application to that person in respect of a bank, a percentage exceeding 15%.

 (5) The Governor-General may, from time to time, of his or her own motion or after application made to the Treasurer by the person concerned, if the Governor-General is satisfied that to do so is in the national interest, by instrument in writing published in the Gazette, vary an instrument referred to in subsection (4) (including such an instrument that has previously been varied under this subsection) but so that the percentage fixed by the instrument as varied exceeds 15%.

 (5A) The Governor-General may, on or after the publication under subsection (4) of an instrument (including such an instrument that has been varied under subsection (5)) fixing a percentage applicable to a corporation in respect of a bank, after application made to the Treasurer by the corporation, by instrument in writing published in the Gazette, declare that, for the purposes of subsection (3):

 (a) the percentage so fixed is also applicable to the persons who are from time to time relevant officers of the corporation in respect of the bank; and

 (b) if that percentage is subsequently varied under subsection (5), that percentage as so varied is also applicable to those persons in respect of the bank as from the day on which that variation has effect.

 (5B) An application under subsection (5A) may accompany an application under subsection (4).

 (6) An application under subsection (2), (2B), (4), (5) or (5A) shall be in writing and shall give particulars of the interest of the applicant in voting shares of the bank concerned.

 (7) The Governor-General may, by instrument in writing published in the Gazette, revoke an instrument under subsection (4) (including such an instrument that has been varied under subsection (5)) or (5A) as from a day specified in the instrument, not being a day earlier than 3 months after the day on which the first-mentioned instrument is published in the Gazette.

 (7A) The Governor-General shall not revoke an instrument under subsection (4) (including such an instrument that has been varied under subsection (5)) in relation to a person in respect of a bank unless the Governor-General is satisfied that to do so is in the national interest.

 (7B) Where an instrument under subsection (4) (including such an instrument that has been varied under subsection (5)) fixing a percentage applicable to a corporation in respect of a bank is revoked, any instrument published under subsection (5A) in relation to the relevant officers of the corporation in respect of the bank shall be deemed to have been revoked, and that last-mentioned revocation has effect as from the day on which the first-mentioned revocation has effect.

 (8) An instrument under subsection (5) varying an instrument under subsection (4) (including such an instrument that has previously been varied under subsection (5)) so that the percentage fixed by the instrument as varied is less than the percentage so fixed before the variation has effect as from a day specified in the first-mentioned instrument, not being a day earlier than 3 months after the day on which that instrument is published in the Gazette.

 (9) A person shall not furnish to the Treasurer, in connexion with an application referred to in this section, information that, to the knowledge of the person, is false or misleading in a material particular.

 (10) Notwithstanding subsection 8(10), where a person has an interest in a share by reason only that the person is an associate of another person and, in the opinion of the Treasurer, the first- mentioned person’s control of, or capacity to influence, the voting power in respect of the share is, and is likely to remain, insignificant, the Treasurer may, of the Treasurer’s own motion or after application made by the person, by notice in writing given to the person, declare that the person’s interest in the share shall be disregarded for the purposes of the application of this section in relation to the person.

 (11) The Treasurer may, by notice in writing given to a person, revoke a declaration under subsection (10) in relation to the person as from a day specified in the notice, not being a day earlier than 3 months after the day on which the notice is given.

 (12) A person who intentionally or recklessly contravenes subsection (1), (2D) or (3) is guilty of an offence punishable on conviction by a fine of not more than 100 penalty units.

Note: If a body corporate is convicted of an offence, subsection 4B(3) of the Crimes Act 1914 allows a court to impose a fine that is not greater than 5 times the maximum fine that could be imposed by the Court on an individual convicted of the same offence.

 (13) A person who contravenes subsection (9) is guilty of an offence punishable on conviction by a fine of not more than 50 penalty units.

Note: If a body corporate is convicted of an offence, subsection 4B(3) of the Crimes Act 1914 allows a court to impose a fine that is not greater than 5 times the maximum fine that could be imposed by the Court on an individual convicted of the same offence.

 (14) In this section, relevant officer, in relation to a corporation that has an interest in one or more voting shares of a bank, means an officer of the corporation who has an interest in one or more voting shares of the bank by reason only of the application to the officer of paragraph 9(3)(a) in relation to the corporation.

12  Powers of court with respect to defaulting substantial shareholders

 (1) Where a person (in this section referred to as the substantial shareholder) has failed to comply with subsection 10(1), (2D) or (3), the Supreme Court of a State or Territory may, on the application of the Treasurer, whether or not that failure still continues, and whether or not other proceedings in respect of that failure have been instituted, make one or more of the following orders:

 (a) an order restraining the exercise of any voting or other rights attached to any share of the bank concerned in which the substantial shareholder has an interest;

 (b) an order directing the bank concerned not to make payment, or to defer making payment, of any sum due from the bank in respect of any share of that bank in which the substantial shareholder has an interest;

 (c) an order directing the sale of all or any of the shares of the bank concerned in which the substantial shareholder has an interest;

 (d) an order that any exercise of the voting or other rights attached to specified shares of the bank concerned in which the substantial shareholder has, or has had, an interest be disregarded;

 (e) for the purpose of securing compliance with any other order made under this section, an order directing the bank concerned or any other person to do or refrain from doing a specified act.

 (2) An order under this section may include such ancillary or consequential provisions as the court thinks just.

 (3) The court shall, before making an order under this section and in determining the terms of such an order, satisfy itself, so far as it can reasonably do so, that the order would not unfairly prejudice any person.

 (4) The court shall not make an order under subsection (1), other than an order restraining the exercise of voting rights, if it is satisfied:

 (a) that the failure of the substantial shareholder to comply as mentioned in subsection (1) was due to inadvertence or mistake or to not being aware of a fact or occurrence the existence of which was necessary to constitute that failure; and

 (b) that, in all the circumstances, the failure ought to be excused.

 (5) The court may, before making an order under this section, direct that notice of the application be given to such persons as it thinks fit or direct that notice of the application be published in such manner as it thinks fit, or both.

 (6) A Supreme Court may, by order, rescind, vary or discharge an order made by it under this section or suspend the operation of such an order.

 (7) A person who intentionally or recklessly contravenes an order under this section is guilty of an offence punishable on conviction by a fine of not more than 50 penalty units.

Note: If a body corporate is convicted of an offence, subsection 4B(3) of the Crimes Act 1914 allows a court to impose a fine that is not greater than 5 times the maximum fine that could be imposed by the Court on an individual convicted of the same offence.

 (8) Subsection (7) does not affect the powers of a Supreme Court in relation to the punishment of contempts of the court.

 (9) In this section, Territory means the Australian Capital Territory or the Northern Territory.

13  Defence to prosecutions

 (1) It is a defence to a prosecution for an offence against subsection 10(12) if the defendant proves that the failure was due to not being aware of a fact or occurrence the existence of which was necessary to constitute the offence.

 (2) For the purposes of subsection (1), a person shall conclusively be presumed to have been aware at a particular time of a fact or occurrence of which a servant or agent of the person, being a servant or agent having duties or acting in relation to the interest or interests of the servant’s or agent’s master or principal in a share or shares of the bank concerned, was aware at that time.

Part III—Miscellaneous

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14  Contracts etc. not affected

  A contract, instrument, dealing or transaction affecting shares of a bank is not unenforceable, voidable or void by reason only that, by reason of the contract, instrument, dealing or transaction having been entered into or having occurred, a person has committed a contravention of this Act.

15  Disclosure of information received under Act prohibited in certain circumstances

  Section 79A of the Reserve Bank Act 1959 prohibits certain disclosures of information received under this Act.

17  Regulations

  The Governor-General may make regulations, not inconsistent with this Act, prescribing all matters:

 (a) required or permitted by this Act to be prescribed; or

 (b) necessary or convenient to be prescribed for carrying out or giving effect to this Act.

Notes to the Banks (Shareholdings) Act 1972

Note 1

The Banks (Shareholdings) Act 1972 as shown in this reprint comprises Act No. 2, 1972 amended as indicated in the Tables below.

Table of Acts

(a) The Banks (Shareholdings) Amendment Act 1985 was amended by section 3 only of the Statute Law (Miscellaneous Provisions) Act (No. 2) 1985, subsection 2(3) of which provides as follows:

 (3) The amendment of the Banks (Shareholdings) Amendment Act 1985 made by this Act shall be deemed to have come into operation on 22 May 1985.

(b) The Banks (Shareholdings) Act 1972 was amended by section 62 only of the Commonwealth Banks Restructuring Act 1990, subsection 2(3) of which provides as follows:

 (3) Each of the remaining provisions of this Act commences on a day, or at a time, fixed by Proclamation in relation to the provision concerned.

(c) 32. On the succession day for the Commonwealth Bank and the Commonwealth Savings Bank, the Acts referred to in Schedule 3 are amended as set out in that Schedule.

 The succession day was 1 January 1993 (see Gazette 1992, No. GN36).

(d) The Banks (Shareholdings) Act 1972 was amended by the Commonwealth Bank Sale Act 1995, subsections 2(2) and (3) of which provide as follows:

 (2) Part 3, and all the items of the Schedule (except items 1, 12, 16, 17, 21, 22, 23, 26, 27, 31, 37 and 48), commence at the transfer time.

 (3) Item 12 of the Schedule commences on a date to be fixed by Proclamation.

 Subsection 10(11A) of the Banks (Shareholdings) Act 1972 was repealed by the Schedule (item 12) of the Commonwealth Bank Sale Act 1995 before a date was fixed for the commencement of subsection 10(11A).

 Item 12 of the Schedule commenced on 22 November 1996 (see Gazette 1996, No. S442).

(e) The Banks (Shareholdings) Act 1972 was amended by Schedule 2 (item 2) only of the Crimes and Other Legislation Amendment Act 1997, subsection 2(1) of which provides as follows:

 (1) Subject to subsection (2), this Act commences on the day on which it receives the Royal Assent.

(f) The Banks (Shareholdings) Act 1972 was amended by Schedule 2 only of the Financial Laws Amendment Act 1997, subsection 2(1) of which provides as follows:

 (1) Subject to this section, this Act commences on the day on which it receives the Royal Assent.

(g) The Banks (Shareholdings) Act 1972 was amended by Schedule 3 only of the Financial Sector Reform (Amendments and Transitional Provisions) Act 1998, subsection 2(2) of which provides as follows:

 (2) The following provisions of this Act commence on the commencement of the Australian Prudential Regulation Authority Act 1998:

 (c) Schedule 3.

 

Table of Amendments

• ad. = added or inserted am. = amended rep. = repealed rs. = repealed and substituted
• Provision affected How affected
• S. 3.................... rep. No. 216, 1973
• ad. No. 25, 1985
• S. 6.................... am. No. 216, 1973; No. 25, 1985; No. 118, 1990; No. 210, 1991; No. 161, 1995
• S. 8.................... am. No. 216, 1973; No. 92, 1981; No. 25, 1985 (as am. by No. 193, 1985); No. 107, 1997
• S. 9.................... am. No. 25, 1985
• S. 10................... am. No. 25, 1985; No. 118, 1990; No. 161, 1995; No. 107, 1997
• S. 10A.................. ad. No. 118, 1990
• am. No. 46, 1993
• rep. No. 161, 1995
• S. 11................... rep. No. 25, 1985
• S. 12................... am. No. 25, 1985; No. 118, 1990; No. 161, 1995; No. 107, 1997
• S. 13................... am. No. 25, 1985; No. 118, 1990; No. 161, 1995
• S. 15................... rep. No. 25, 1985
• ad. No. 107, 1997
• S. 16................... rep. No. 20, 1997
• S. 17................... rs. No. 25, 1985