Financial Sector (Business Transfer and Group Restructure) determination No. 1 of 2017

This Determination, signed by the Chair of APRA and dated 22 September 2017, revokes the earlier Financial Sector (Business Transfer and Group Restructure) determination No. 1 of 2007 (including Transfer Rules No. 1 of 2007) and replaces it with Transfer Rules 2017 - Restructures. The instrument is made under s 46 of the Financial Sector (Business Transfer and Group Restructure) Act 1999 and, for the purposes stated in the instrument, prescribes the form and content of two categories of applications: (a) applications by an operating body for a restructure approval under subsection 36B(2) of the Act; and (b) applications by an operating body for an amendment to an internal transfer certificate under subsection 36P(2) of the Act (see the introductory paragraphs of the Schedule and paragraph 1). The Determination commences on registration on the Federal Register of Legislation (opening paragraph).

Mechanically, the Transfer Rules 2017 set out detailed mandatory documentary content requirements for a restructure approval application (paragraph 3) and for an application to amend an internal transfer certificate (paragraph 6). The Rules require that both types of applications be in writing and signed by the CEO of the operating body (paras 3 and 6). The Rules also create express powers for the decision-maker to waive or permit variation or supplementation of required information: the Minister can waive or allow variation for restructure approval applications (paragraph 4), and APRA can do the same for internal transfer certificate amendment applications (paragraph 7).

The Rules expressly preserve information redundancies in one circumstance: where material has already been provided to APRA as part of a NOHC authorisation application, the applicant need not repeat that information in the restructure application (paragraph 3, initial proviso). The Rules also require, via a note in paragraph 2, that a copy of a restructure application be provided to APRA in addition to the Minister, citing subsection 36B(4) of the Act.

In short, this instrument replaces the 2007 transfer rules with a concise set of requirements that operationalise subsections 36B(3) and 36P(4) of the Act by prescribing what must be contained in applications for restructure approvals and for amendments to internal transfer certificates, while allocating waiver discretion between the Minister and APRA and defining certain terms used in the Rules (paragraph 8).

The Determination focuses on two procedural application types: (1) restructure approval applications under s 36B of the Act; and (2) applications to amend internal transfer certificates under s 36P of the Act (paragraph 1). The central legal mechanism is prescriptive application content: the Rules list specific items that must be included in each application (paragraphs 3 and 6). Those items are the primary concepts practitioners must map to their factual scenarios.

Key definitional concepts are provided in paragraph 8. ACN and ARBN are defined by reference to s 9 of the Corporations Act 2001. CEO is defined functionally: it means the Chief Executive Officer where there is one, and if not, the most senior executive officer of the body for the time being, irrespective of title or whether that executive is a member of the governing body (paragraph 8). NOHC authorisation application is defined by reference to three statutory regimes: authorised NOHC under the Banking Act 1959, authorised NOHC under the Insurance Act 1973, and registered NOHC under the Life Insurance Act 1995 (paragraph 8).

Content requirements for restructure applications are multi-dimensional. The applicant must state reasons for the restructure and identify the operating body and the proposed NOHC by name and (where known) ACN/ARBN (paragraph 3(a)-(b)). Applicants must provide both pre- and post-restructure group charts and ownership chains (paragraph 3(c)). The Rules differentiate transfers effected by internal transfer certificate from transfers effected by other means, and require schedules describing transferring and receiving bodies where internal transfers are proposed, or a description of alternative transfer mechanics where transfers are to occur other than by internal transfer certificate, along with schedules (paragraphs 3(d)-(e)). Financial information requirements include current and projected financial positions and details of capital measures for both the operating body and, to the extent known, the proposed NOHC and its consolidated group (paragraph 3(f)(ii)(B)-(C)).

The Rules require information about prudential supervision impacts and depositor/policy owner interests: applicants must say how the restructure will improve the operating body’s ability to meet prudential requirements, how it will affect depositors or policy owners and the safety and soundness of those interests (including details of any proposed transfer of deposits or policies) and how the restructure will affect APRA’s ability to supervise and the interests of the financial sector as a whole, to the extent known (paragraph 3(f)(i)-(iii)). The Rules also require a description of the proposed restructure process and timetable, a list of required regulatory and court approvals with contingency plans, and details of board and senior management composition pre- and post-restructure for the operating body, NOHC and other prudentially regulated subsidiaries (paragraphs 3(g)-(h)). If the operating body and proposed NOHC are foreign owned, written advice from the home supervisor about consent to the NOHC establishment and proposed transfers is required (paragraph 3(i)). If relief is sought under s 36G of the Act, the application must state which entities would be covered, the nature of the relief sought and reasons (paragraph 3(j)).

The Rules operate on operating bodies as defined in the Act; they apply specifically to an application made by an operating body for a restructure approval under subsection 36B(2) and to an application by an operating body for an amendment to an internal transfer certificate under subsection 36P(2) (paragraph 1). In practice, the “operating body” will be the regulated entity seeking to be reorganised under the Financial Sector (Business Transfer and Group Restructure) Act 1999 framework. The Rules also directly affect proposed new head companies (NOHCs), regulated subsidiaries, boards and senior management because the application must include specified information about these entities and persons (paragraphs 3(b), (c), (h)).

Foreign-owned operating bodies and proposed NOHCs are explicitly pulled into a further administrative interaction: they must provide written advice from the home supervisor as to whether that supervisor consents to the establishment of the NOHC and to the transfer of business proposed (paragraph 3(i)). This imports a third-party process and potential timing dependency into the Australian application process. Regulated members of the group headed by the NOHC are also affected because applications must explain how depositors, policy owners and the safety and soundness of those interests will be affected, and how APRA’s supervisory capacity will be affected (paragraph 3(f)(ii)-(iii)).

Ministerial and APRA decision-makers are implicated. For restructure approvals, the Minister is the formal addressee of the application and possesses discretion to waive or allow variation or supplementation of required information (paragraph 4). The Rules also require that a copy of the application be provided to APRA in addition to the Minister (paragraph 2, note referencing subsection 36B(4) of the Act), bringing APRA into the administrative loop even where the Minister is the statutory decision-maker. For internal transfer certificate amendments, APRA is the recipient and may waive or allow supplementation or variation of required information (paragraph 7).

Professional advisers will be affected by the content requirements. The application content list includes detailed financial projections, capital measures, group charts, schedules of assets and liabilities proposed for transfer, a list of required regulatory and court approvals and contingency plans, and particulars of board and senior management composition (paragraphs 3(c)-(h)). Preparing that material will require legal, accounting, actuarial and possibly foreign regulatory liaison resources for foreign-owned entities (paragraph 3(i)). Where relief is sought under s 36G, additional legal drafting and factual justification will be required to identify covered entities and the nature and reasons for relief (paragraph 3(j)).

The Determination prescribes documentary duties on operating bodies making the two covered application types. A restructure approval application must be in writing and signed by the CEO, and must contain or attach a prescribed set of items enumerated in paragraph 3. Those items include reasons for the restructure, identification of the operating body and proposed NOHC (with ACN/ARBN where known), pre- and post-restructure group charts, schedules describing transferring and receiving bodies for internal transfer certificates or descriptions of other transfer mechanisms, statements about prudential outcomes and effects on depositors and policy owners, projected financial information and capital measures for the operating body and proposed NOHC, a description of the restructure process with required regulatory and court approvals and contingency plans, and details of board and senior management composition pre- and post-restructure (paragraph 3(a)-(h)). If foreign-owned, applicants must supply written advice from the home supervisor as to consent to the NOHC establishment and proposed transfers (paragraph 3(i)). If relief under s 36G is sought, the application must identify entities, the nature of the relief and reasons (paragraph 3(j)). The application must also include any other information the Minister specifies in writing (paragraph 3(k)).

For applications to amend an internal transfer certificate, the duty is to lodge a written application signed by the CEO specifying the requested change, the transferring and receiving bodies, the proposed effective date of transfers under the amended certificate, the impact of delay on assets or liabilities, reasons for the change and any other information APRA specifies in writing (paragraph 6(a)-(f)).

There are two distinct waiver/variation rights allocated in the Rules. For restructure approval applications, the Minister may waive a requirement to provide particular information or may allow the operating body to supplement or vary information provided (paragraph 4(a)-(b)). For internal transfer certificate amendment applications, APRA may in writing waive a requirement to provide particular information or allow supplementation or variation (paragraph 7(a)-(b)). Those provisions are rights exercisable by the Minister or APRA, not rights available to the applicant as of course.

A filing duty has a practical form: paragraph 2 notes that a copy of the restructure application must be provided to APRA in addition to the Minister, citing subsection 36B(4) of the Act. The Rules also provide an exception to duplication where information has already been provided to APRA in connection with a NOHC authorisation application; in that case, the application need not repeat information already provided (paragraph 3, first proviso).

The Transfer Rules themselves do not create criminal offences or civil pecuniary penalties, and they do not specify enforcement mechanisms or sanctions within the text of the Determination. The instrument prescribes procedural requirements for applications and grants waiver discretion to the Minister (for restructure approvals) and APRA (for internal transfer certificate amendments) (paragraphs 4 and 7), but it does not include express penalty provisions for non‑compliance with those procedural requirements.

Enforcement and consequences therefore operate through the Act’s decision-making processes, not through new sanctions in the Determination. The Rules are made under s 46 of the Act for the purposes of subsections 36B(3) and 36P(4), which, by their citation, indicate that the substantive statutory framework in the Act governs approvals and amendments. The Rules implement the Act’s procedural content requirements; failure to comply with these requirements may affect the acceptability, completeness and processing of an application under the Act, and may inform whether the Minister or APRA accepts, requests further information or exercises waiver powers. The Rules do not themselves state the consequences of lodging an incomplete application.

Two administrative controls are explicit in the text. First, the Minister and APRA each have power to waive or allow supplementation or variation of information requirements (paragraphs 4 and 7). That discretion provides a mechanism to cure or accept partial non-compliance at the decision-maker’s election. Second, paragraph 2 includes a note that a copy of the restructure application is to be provided to APRA, pursuant to subsection 36B(4) of the Act; that cross-filing creates an administrative check because APRA will be a recipient and may review application completeness even if the Minister holds the formal decision power.

Because the Rules require signed applications (paras 3 and 6) and specify the authorised signatory, they impose an evidentiary and auditing control: the signature by the CEO (or the most senior executive officer if no CEO) provides a certification function, but the Rules do not state penalties for false or misleading statements in an application. Any such penalties, or civil exposure for misstatements to regulators, would derive from other statutory provisions or general law (not from this Determination itself), and are not recited in the instrument.

Practitioners should therefore treat the Rules as procedural and documentary obligations that interact with the Act’s substantive decision framework and other statutory obligations that may penalise misleading conduct; the Determination itself limits its remit to content requirements, waiver powers and definitions.

The Transfer Rules explicitly interact with several other statutory regimes by cross-reference and by defining when duplication of information is unnecessary. Paragraph 8 adopts statutory definitions from the Corporations Act 2001 by defining ACN and ARBN with reference to section 9 of that Act. Paragraph 8 also defines “NOHC authorisation application” by reference to three separate statutory regimes: authorised NOHC within the meaning of the Banking Act 1959, authorised NOHC within the meaning of the Insurance Act 1973, and registered NOHC within the meaning of the Life Insurance Act 1995. That cross-reference is operational: paragraph 3 contains an express proviso that certain information need not be repeated in a restructure application if it has already been provided to APRA in connection with a NOHC authorisation application. This reduces duplication where an applicant is already engaged with APRA under those other statutory regimes.

The Determination itself is made under s 46 of the Financial Sector (Business Transfer and Group Restructure) Act 1999; it is specifically made for the purposes of subsections 36B(3) and 36P(4) of that Act (opening paragraphs). That means the Rules are procedural instruments subordinate to the Act and function to operationalise the Act’s application content requirements for the two named processes: restructure approvals and internal transfer certificate amendments. Paragraph 2’s note further cites subsection 36B(4) of the Act to require that a copy of the restructure application be provided to APRA in addition to the Minister.

The Rules import supervisory interaction with foreign home supervisors where foreign-owned bodies are involved: paragraph 3(i) requires written advice from the home supervisor as to whether it consents to the establishment of the NOHC and the proposed transfers. That creates a point of procedural overlap with foreign regulatory frameworks, potentially producing timing dependencies and aligning domestic application processing with foreign supervisory views.

The Detemination revokes the prior 2007 Determination (opening paragraph (a)). This is an internal repeal within the subordinate instrument framework; any reliance on the 2007 Transfer Rules must be re-evaluated because they are no longer in force as of this Determination’s commencement on registration.

Procedural interactions with regulatory or court approvals are imposed on applicants by paragraph 3(g). Applicants must list required regulatory and court approvals and provide timeframes and contingency plans. That requirement forces the applicant to coordinate the restructure application under this Act with other approvals and judicial processes elsewhere , for example, approvals under corporations law restructuring mechanisms or approvals required under other industry statutes. The Determination does not itself canvass those other statutory mechanisms, but it requires applicants to identify them.

The document sets out a narrow amendment history in its opening paragraphs. It expressly revokes Financial Sector (Business Transfer and Group Restructure) determination No. 1 of 2007, including Transfer Rules No. 1 of 2007 (opening paragraph (a)). It then makes Transfer Rules 2017 - Restructures in the form set out in the Schedule for the purposes of subsections 36B(3) and 36P(4) of the Act (opening paragraph (b)). The Determination is dated 22 September 2017 and states that it commences on the day it is registered on the Federal Register of Legislation (end of opening paragraph).

No earlier or later amendments to the 2017 Rules are recorded in the text provided. The Transfer Rules 2017 are presented as a self-contained schedule replacing the 2007 rules. Paragraph 1 of the Schedule reiterates the legal basis for the Rules (s 46 of the Act) and specifies the two application types they cover. The subsequent paragraphs set out the content requirements, waiver powers and definitions.

Because the Determination itself is a single, self-contained instrument, any subsequent amendments or instruments that alter these Rules would be separate instruments and are not recorded in this text. Therefore, the only amendment history explicitly recorded here is the revocation of the 2007 Determination and the making of the 2017 Rules, effective on registration of the instrument dated 22 September 2017.

Practitioners should note that the revocation clause means the 2007 Transfer Rules no longer apply to applications lodged after the commencement of this Determination. The document does not state transitional arrangements or grandfathering provisions; it simply revokes the prior instrument and makes the new Rules. If transitional or saving clauses exist elsewhere in the Act or in the revoked instrument, they are not reproduced in this Determination and are not evidenced in the text provided.

The Determination contains no mention of litigation. The text does not record any proceedings challenging the instrument, nor does it cite any judicial or tribunal decisions interpreting the Transfer Rules 2017 or the 2007 Transfer Rules that it revokes. Because the Schedule is a regulatory instrument prescribing application requirements, any litigation arising from these Rules would be external to the instrument and is not referenced in the text.

Consequently, the instrument itself provides no litigation history to report. Practitioners requiring information about judicial treatment or administrative law challenges to these Rules will need to search case law and tribunal decisions outside the instrument. The Determination only sets out the operative procedural requirements and waiver discretions; it does not elucidate how courts or tribunals have treated those requirements, or whether disputes about the sufficiency of applications, WAIVER decisions, or procedural compliance have been litigated. The instrument does not create an internal record of such disputes.

Several practical pitfalls and traps for the unwary are embedded in the Rules’ text. First, the signature requirement: both types of applications must be signed by the CEO (paras 3 and 6). The Rules address the situation where no person carries the title “CEO” by defining CEO as the most senior executive officer if no CEO exists (paragraph 8). However, an application signed by a lower-level officer or an unauthorised representative may fail the formal signature requirement and be returned or held defective. Ensure the authorised senior executive signs and retains evidence of authority.

Second, the Rules demand detailed, multi-jurisdictional information in many cases. Paragraph 3(i) requires written advice from the home supervisor for foreign-owned operating bodies and proposed NOHCs. That imports foreign supervisory timelines and standards into the Australian application process and can produce unexpected delays if the home supervisor is slow or refuses to provide the consent or advice.

Third, applicants must describe transfers effected by internal transfer certificate separately from transfers effected by other means (paragraphs 3(d)-(e)). If transfers might occur by a mixture of mechanisms, applicants must prepare schedules and descriptions for both streams. The Rules require schedules “to the extent known” but also give the Minister (for restructure approvals) and APRA (for certificate amendments) power to require additional information in writing (paragraphs 3(k) and 6(f)). That open-ended ability to demand extra material means applicants should expect follow-up requests.

Fourth, financial projections and capital measures are required “to the extent known” for both the operating body and (to the extent known) the NOHC and consolidated group (paragraph 3(f)(ii)(B)-(C)). Those projections must show the projected position “upon completion of the restructure,” which in practice requires coordinated modelling of post-restructure balance sheets, capital adequacy and the effect of any asset or liability transfers. Producing robust, audit-ready projections requires time and preparation; late-stage amendments to plans can force repeated modelling runs.

Fifth, paragraph 3(g) requires applicants to list required regulatory and court approvals, provide proposed timeframes and contingency plans should approvals not be obtained in the proposed timeframe. That compels applicants to consider not only the Australian approvals regime but also other regulatory regimes and potential litigation or court processes. Contingency plans may force disclosure of commercial fallback positions or restructuring alternatives that the applicant might prefer to keep confidential.

To comply with the Transfer Rules 2017 for restructure approval applications and internal transfer certificate amendments, follow a clear, document-led checklist aligned with the paragraphs of the Rules.

For a restructure approval application (paragraph 3):

• Ensure the application is in writing and signed by the CEO (or the most senior executive officer if there is no CEO), as defined in paragraph 8.
• Provide the reasons for the proposed restructure (paragraph 3(a)).
• Identify the operating body and proposed NOHC by name and, where known, provide ACN or ARBN (paragraph 3(b)). Use the Corporations Act definitions of ACN/ARBN (paragraph 8).
• Attach or include a group chart and ownership chain showing the structure at the time of application and the proposed post-restructure structure headed by the proposed NOHC (paragraph 3(c)).
• If internal transfer certificates will be used for particular transfers, supply a schedule describing transferring and receiving bodies, to the extent known (paragraph 3(d)). If transfers will be effected other than by internal transfer certificate, describe the manner of those transfers and provide a schedule of relevant bodies (paragraph 3(e)).
• Prepare and include a statement covering:
  • how the restructure will improve the operating body’s ability to meet prudential requirements (paragraph 3(f)(i));
  • how the restructure will affect depositors or policy owners, including details of any proposed transfer of deposits or policies (paragraph 3(f)(ii)(A));
  • current and projected financial particulars of the operating body and the NOHC consolidated group upon completion of the restructure, including details of capital measures, to the extent known (paragraph 3(f)(ii)(B)-(C));
  • how the restructure will affect APRA’s ability to supervise and address risks to the operating body and other regulated members of the group (paragraph 3(f)(iii));
  • how the restructure will affect the interests of the financial sector as a whole, to the extent known (paragraph 3(f)(iv)).
• Provide a detailed description of the proposed restructure process, including:
  • a list of required regulatory and court approvals, proposed timeframes for seeking approvals and contingency plans if approvals are not obtained in time (paragraph 3(g)(i));
  • a timetable for establishing any new receiving entities within the group, including the NOHC (paragraph 3(g)(ii)).