Division 5Record‑keeping and giving of information

An Act relating to shareholdings in certain financial sector companies, and for related purposes ## Part 1—Preliminary #### 1 Short title This Act may be cited as the Financial Sector (Shareholdings) Act 1998. #### 2 Commencement This Act commences on the commencement of the Australian Prudential Regulation Authority Act 1998. #### 3 Definitions In this Act, unless the contrary intention appears: > 100% subsidiary has the same meaning as in the Income Tax Assessment Act 1997. > agreement means any agreement, whether formal or informal and whether express or implied. > APRA means the Australian Prudential Regulation Authority. > assets threshold has the meaning given by subsections 14A(6) and (7). > Australia, when used in a geographical sense, includes the external Territories. > authorised deposit‑taking institution has the same meaning as in the Banking Act 1959. > authorised insurance company means: (a) a company authorised under the Insurance Act 1973 to carry on insurance business; or (b) a company registered under section 21 of the Life Insurance Act 1995. > civil penalty provision has the same meaning as in the Regulatory Powers Act. > company means a body corporate. > Federal Court means the Federal Court of Australia. > financial sector company means: (a) an authorised deposit‑taking institution; or (b) an authorised insurance company; or (c) a holding company of a company covered by paragraph (a) or (b). > holding company has the meaning given by section 4. > Regulatory Powers Act means the Regulatory Powers (Standard Provisions) Act 2014. > relevant licensed company, in relation to an approval under paragraph 14(1)(b), means the company to which subsection 14A(3) or (4) applied in granting the approval. > rules means rules made under subsection 45A(1). > scheme means: (a) any agreement, arrangement, understanding, promise or undertaking, whether express or implied and whether or not enforceable, or intended to be enforceable, by legal proceedings; and (b) any scheme, plan, proposal, action, course of action or course of conduct, whether unilateral or otherwise. > total resident assets has the meaning given by subsection 14A(5). > unacceptable shareholding situation has the meaning given by section 10. > Note: Schedule 1 sets out definitions of expressions used in Part 2 (which deals with restrictions on shareholdings). #### 4 Holding companies For the purposes of this Act, a company (the first company) is the holding company of another company if the other company is a 100% subsidiary of the first company. #### 5 Crown to be bound (1) This Act binds the Crown in right of the Commonwealth, of each of the States, of the Australian Capital Territory and of the Northern Territory. (2) This Act does not make the Crown liable to be prosecuted for an offence. #### 6 External Territories This Act extends to all the external Territories. #### 7 Extra‑territorial operation This Act extends to acts, omissions, matters and things outside Australia. ## Part 2—Restrictions on shareholdings in financial sector companies ### Division 1—Introduction #### 8 Simplified outline of this Part If a person holds a stake in a financial sector company that exceeds the allowed percentage, the Federal Court may make orders to ensure that the situation ceases to exist. A person commits an offence if, by acquiring shares in a company (alone or under an arrangement with others), the person causes or worsens such a situation. A person’s stake is the percentage of voting power in the company controlled by the person and the person’s associates. The allowed percentage is 20% or a higher percentage approved by the Treasurer for the person either: (a) on national interest grounds; or (b) on the basis that the person is a fit and proper person and the company concerned is new or recently established, with assets below a certain threshold amount. A person who holds a stake of no more than 20% of a financial sector company may be declared by the Treasurer to have practical control of the company. The person must then take steps to end that control. The regulations may require records to be kept, and information to be given, for purposes relating to these restrictions. #### 9 Definitions in Schedule 1 Schedule 1 sets out definitions of expressions used in this Part. ### Division 2—20% shareholding limit #### 10 Meaning of unacceptable shareholding situation For the purposes of this Act, an unacceptable shareholding situation exists in relation to a particular financial sector company and in relation to a particular person if the person holds a stake in the company of more than: (a) 20%; or (b) if an approval of a higher percentage is in force under Division 3 in relation to the company and in relation to the person—that higher percentage. > Note: A person’s stake includes the interests of the person’s associates—see Schedule 1. #### 11 Acquisitions of shares If: (a) a person, or 2 or more persons under an arrangement, acquire shares in a company; and (b) the acquisition has the result, in relation to a financial sector company, that: (i) an unacceptable shareholding situation comes into existence in relation to the company and in relation to a person; or (ii) if an unacceptable shareholding situation already exists in relation to the company and in relation to a person—there is an increase in the stake held by the person in the company; and (c) the person or persons mentioned in paragraph (a) were reckless as to whether the acquisition would have that result; the person or persons mentioned in paragraph (a) commit an offence punishable on conviction by a fine not exceeding 400 penalty units. > Note: Chapter 2 of the Criminal Code sets out the general principles of criminal responsibility. #### 12 Remedial orders (1) If an unacceptable shareholding situation exists in relation to a financial sector company, the Federal Court may, on application by the Treasurer or the company, make such orders as the court considers appropriate for the purpose of ensuring that that situation ceases to exist. (2) If an unacceptable shareholding situation has existed in relation to a financial sector company, the Federal Court may, on application by the Treasurer or the company, make such orders as the court considers appropriate. (3) The Federal Court’s orders include: (a) an order directing the disposal of shares; or (b) an order restraining the exercise of any rights attached to shares; or (c) an order prohibiting or deferring the payment of any sums due to a person in respect of shares held by the person; or (d) an order that any exercise of rights attached to shares be disregarded. (4) Subsection (3) does not, by implication, limit subsection (1) or (2). (5) In addition to the Federal Court’s powers under subsections (1), (2) and (3), the court: (a) has power, for the purpose of securing compliance with any other order made under this section, to make an order directing any person to do or refrain from doing a specified act; and (b) has power to make an order containing such ancillary or consequential provisions as the court thinks just. (6) The Federal 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 be published in such manner as it thinks fit, or both. (7) The Federal Court may, by order, rescind, vary or discharge an order made by it under this section or suspend the operation of such an order. ### Division 3—Approval to exceed 20% shareholding limit #### 13 Application for approval to exceed 20% shareholding limit (1) A person may apply to the Treasurer for approval to hold a stake in a particular financial sector company of more than 20%. (1A) The application may be in relation to a company that is not a financial sector company at the time the application is made. (2) The application must: (aa) specify whether the applicant is seeking for the approval to be granted on the basis of either paragraph 14(1)(a) or (b); and (a) specify the percentage of the stake (if any) the person currently holds in the company concerned; and (b) specify the percentage of the stake the person is seeking approval to hold in the company; and (c) set out the person’s reasons for making the application; and (d) be accompanied by the prescribed fee (if any). #### 14 Approval of application (1) The Treasurer may, by notifiable instrument, grant the application if: (a) the applicant satisfies the Treasurer that it is in the national interest to approve the applicant holding a stake in the company of more than 20%; or (b) the applicant satisfies the Treasurer that the criteria in subsection 14A(1) are met in relation to the applicant and the company. (1A) The instrument of approval must: (a) specify the percentage of the stake the Treasurer approves the applicant holding in the company (which may or may not be the percentage the applicant applied for); and (b) if the application is granted under paragraph (1)(a)—either: (i) specify the period during which the approval remains in force; or (ii) specify that the approval remains in force indefinitely; and (c) if the application is granted under paragraph (1)(b)—specify that the approval remains in force for the period worked out under section 15A. Grant of application (2) If the Treasurer grants the application, the Treasurer must give written notice of the approval (including a copy of the instrument of approval) to: (a) the applicant; and (b) the company concerned; and (c) in the case of an approval granted under paragraph (1)(b), if the company concerned is not the relevant licensed company for the approval—the relevant licensed company for the approval. Refusal of application (3) If the Treasurer refuses the application, the Treasurer must give written notice of the refusal to the applicant. #### 14A Criteria for applications relating to new or recently established financial sector companies (1) For the purposes of paragraph 14(1)(b), the criteria are: (a) the applicant is a fit and proper person to hold a stake in the company of more than 20%; and (b) the company is: (i) a company to which subsection (3) or (4) applies; or (ii) a holding company of a company to which subsection (3) or (4) applies. Fit and proper person (2) The rules may prescribe matters that must be considered in determining whether a person is a fit and proper person for the purposes of paragraphs (1)(a) and 18(1)(d). However, such rules do not limit the matters that may be considered. New or recently established financial sector company (3) This subsection applies to a company if: (a) the company is a body corporate incorporated in Australia; and (b) the company has applied for one of the following, but that application has not yet been decided: (i) authority under the Banking Act 1959 to carry on banking business; (ii) authorisation under the Insurance Act 1973 to carry on insurance business; (iii) registration under section 21 of the Life Insurance Act 1995; and (c) the value of the total resident assets of the company is less than the assets threshold for the company (assuming the company is granted the authority, authorisation or registration concerned). (4) This subsection applies to a company if: (a) the company is a body corporate incorporated in Australia; and (b) the company is: (i) an authorised deposit‑taking institution; or (ii) a company that is authorised under the Insurance Act 1973 to carry on insurance business; or (iii) a company that is registered under section 21 of the Life Insurance Act 1995; and (c) at the time of the application under subsection 13(1), the company has been such an institution, or so authorised or registered (whichever is applicable), for less than 5 years; and (d) the value of the total resident assets of the company is less than the assets threshold for the company. Total resident assets (5) The rules must prescribe the meaning of total resident assets in relation to a financial sector company. > Note: The rules may prescribe different meanings for different classes of financial sector company (see subsection 13(3) of the Legislation Act 2003). Assets threshold (6) If a company is: (a) an authorised deposit‑taking institution; or (b) registered under section 21 of the Life Insurance Act 1995; the assets threshold for the company is: (c) $200 million; or (d) if another amount is determined in an instrument under subsection (8)—that other amount. (7) If a company is authorised under the Insurance Act 1973 to carry on insurance business, the assets threshold for the company is: (a) $50 million; or (b) if another amount is determined in an instrument under subsection (8)—that other amount. (8) The Treasurer may, by legislative instrument, determine an amount for the purposes of paragraph (6)(d) or (7)(b). #### 15 Duration of approval granted on national interest grounds (1) An approval under paragraph 14(1)(a) remains in force: (a) if the instrument of approval specifies a period during which the approval remains in force—until the end of that period, or if the Treasurer extends that period, until the end of that extended period; or (b) otherwise—indefinitely. > Note: See also section 18 (revoking an approval). Extension of approval (2) A person who holds an approval under paragraph 14(1)(a) that is in force for a specified period may apply to the Treasurer to extend that period. (3) The application must: (a) set out the person’s reasons for making the application; and (b) be accompanied by the prescribed fee (if any). (4) If the applicant satisfies the Treasurer that it is in the national interest to grant the extension, the Treasurer may, by notifiable instrument, grant the application by amending the instrument of approval to specify the extended period during which the approval remains in force (which may or may not be the period the applicant applied for). (5) If the Treasurer grants the application, the Treasurer must give written notice of the extension (including a copy of the instrument made under subsection (4)) to: (a) the applicant; and (b) the financial sector company concerned. (6) If the Treasurer refuses the application, the Treasurer must give written notice of the refusal to the applicant. #### 15A Duration of approval granted in relation to a new or recently established financial sector company (1) An approval under paragraph 14(1)(b), in relation to a person and in relation to a financial sector company, remains in force until the end of 2 years after the day (the threshold day) that the value of the total resident assets of the relevant licensed company for the approval first exceeds the assets threshold for the relevant licensed company. (2) However, if the person applies within 90 days of the threshold day for an approval under paragraph 14(1)(a) in relation to the financial sector company, the approval under paragraph 14(1)(b) remains in force: (a) if the application is refused—until the end of 2 years after the day the refusal was notified to the person; or (b) if subsection 20(4) applies to the application—until the end of 2 years after the day the application is taken to be withdrawn under that subsection; or (c) if the application is granted—until the approval under paragraph 14(1)(a) comes into force. (3) Also, if: (a) the person applies for an approval under paragraph 14(1)(a) in relation to the financial sector company more than 90 days after the threshold day; and (b) the application is granted within 2 years of the threshold day; the approval under paragraph 14(1)(b) remains in force until the approval under paragraph 14(1)(a) comes into force. > Note: See also section 18 (revoking an approval). When approval for new financial sector company comes into force (4) An approval under paragraph 14(1)(b) that is granted on the basis that subsection 14A(3) applies to a company does not come into force until the company is a financial sector company. Notification of approval ceasing to be in force (5) If an approval ceases to be in force because of the operation of this section, the Treasurer must: (a) by notifiable instrument, publish notice of the cessation of the approval; and (b) give written notice of the cessation to the financial sector company concerned. #### 16 Conditions of approval (1) An approval under section 14 is subject to such conditions (if any) as are specified in the instrument of approval. (2) The Treasurer may, by notifiable instrument, amend an instrument of approval under section 14 to: (a) specify one or more conditions or further conditions to which the approval is subject; or (b) revoke or vary any condition: (ii) specified in the instrument of approval; or (iii) to which the approval is subject under section 16A. (2A) If, because of an approval under section 14, another approval is taken to be in force under section 19 or 19A, the other approval is subject to such conditions (if any) as: (a) are specified in the instrument of approval under section 14; and (b) are expressed to apply to approvals taken to be in force under section 19 or 19A. Procedures (3) The Treasurer’s power under subsection (2) may be exercised: (a) on the Treasurer’s own initiative; or (b) on application made to the Treasurer by the person who holds the approval. (4) An application made by a person under paragraph (3)(b) must: (a) set out the person’s reasons for making the application; and (b) be accompanied by the prescribed fee (if any). (5) If the Treasurer refuses an application under paragraph (3)(b), the Treasurer must give written notice of the refusal to the applicant. Notification (6) If the Treasurer makes an amendment under subsection (2), the Treasurer must give written notice of the amendment (including a copy of the instrument made under that subsection) to: (a) the person who holds the approval; and (b) the financial sector company concerned. #### 16A Additional conditions for approval granted in relation to a new or recently established financial sector company (1) An approval under paragraph 14(1)(b) is also subject to the conditions set out in this section, in addition to any conditions to which the approval is subject under section 16. Notification if assets threshold exceeded (2) If the holder of the approval receives a notice under section 21A from the relevant licensed company for the approval, the holder must give a written notice to the Treasurer within 30 days that specifies whether the holder intends to either: (a) reduce the stake held in the financial sector company to which the approval relates, to ensure an unacceptable shareholding situation does not come into existence when the approval ceases to be in force; or (b) apply for an approval under paragraph 14(1)(a) in relation to the financial sector company. > Note 1: The relevant licensed company for an approval is required to notify the holder of the approval if the assets threshold for the company is exceeded (see section 21A). > Note 2: See section 15A in relation to the duration of the approval once the assets threshold is exceeded. 5 yearly review of approval (3) After the end of every 5 year period following the approval coming into force, the holder of the approval must undergo a review by APRA of the approval. Yearly report of relevant information to APRA (4) The holder of the approval must give to APRA a yearly report of prudential information relevant to the ongoing operation of the approval. (5) The report must: (a) be in the approved form; and (b) contain the information (if any) prescribed by the rules; and (c) be provided to APRA within 30 days of the end of each financial year, or such longer period as agreed by APRA. Functions and powers of APRA (6) The functions of APRA include conducting reviews mentioned in subsection (3). (7) APRA may, in writing, approve a form for the purposes of paragraph (5)(a). #### 17 Varying percentage stake approved Application by holder of approval (1) A person who holds an approval under section 14 may apply to the Treasurer to vary the percentage specified in the approval. (2) The application must: (a) specify the percentage of the stake the person currently holds in the financial sector company concerned; and (b) specify the percentage of the stake the person is seeking approval to hold in the company; and (c) set out the person’s reasons for making the application; and (d) be accompanied by the prescribed fee (if any). (3) If the applicant satisfies the Treasurer that it is in the national interest to vary the percentage, the Treasurer may, by notifiable instrument, grant the application by varying the percentage specified in the approval (which may or may not be the percentage the applicant applied for). (5) If the Treasurer refuses an application, the Treasurer must give written notice of the refusal to the applicant. Treasurer’s own initiative (6) The Treasurer may, by notifiable instrument, vary the percentage specified in an instrument of approval under subsection 14(1) if the Treasurer is satisfied that it is in the national interest to do so. Percentage varied upwards (7) If the Treasurer varies a percentage upwards, the variation takes effect on the day the instrument under subsection (3) or (6) is registered on the Federal Register of Legislation under the Legislation Act 2003. Percentage varied downwards (8) If the Treasurer varies a percentage downwards, the variation takes effect on the day specified in the instrument under subsection (3) or (6). The specified day must be a day at least 90 days after the day the instrument is registered on the Federal Register of Legislation under the Legislation Act 2003. Notification of variation (9) If the Treasurer makes a variation under this section, the Treasurer must give written notice of the variation (including a copy of the instrument made under subsection (3) or (6)) to: (a) the applicant; and (b) the financial sector company concerned. #### 18 Revoking an approval Revocation on specified grounds (1) The Treasurer may, by notifiable instrument, revoke an approval that a person holds under section 14 in relation to a financial sector company if the Treasurer is satisfied that: (a) it is in the national interest to do so; or (b) an unacceptable shareholding situation exists in relation to the financial sector company and in relation to the person; or (c) there has been a contravention of a condition to which the approval is subject; or (d) if the approval was granted under paragraph 14(1)(b)—the person is no longer a fit and proper person to hold the approval. (2) The revocation takes effect on the day specified in the instrument of revocation. The specified day must be a day at least 90 days after the day the instrument is registered on the Federal Register of Legislation under the Legislation Act 2003. Revocation on request (3) If a person who holds an approval under section 14 requests the Treasurer to revoke the approval, the Treasurer must, by notifiable instrument, revoke the approval. Notification of revocation (4) If the Treasurer revokes an approval under this section, the Treasurer must give written notice of the revocation (including a copy of the instrument made under subsection (1) or (3)) to: (a) the person who held the approval; and (b) the financial sector company concerned. #### 19 Flow‑on approvals—approval granted on national interest grounds 100% subsidiaries of holding company (1) If: (a) at a particular time, a person holds an approval under paragraph 14(1)(a) to hold a stake in a financial sector company of more than 20%; and (b) the financial sector company is a holding company of an authorised deposit‑taking institution or an authorised insurance company; there are taken to be in force at that time approvals of the Treasurer, under section 14, for the person to hold the same percentage stake in each financial sector company that is a 100% subsidiary of the holding company. (2) If, on a particular day, a financial sector company that is a 100% subsidiary of the holding company ceases to be a 100% subsidiary of the holding company, the approval that is taken to be in force, because of subsection (1), in relation to that financial sector company continues in force until: (a) the end of 90 days after that day; or (b) if, during that period of 90 days, the person becomes the holder of another approval under section 14 in relation to the financial sector company—that other approval comes into force. Officers of company (3) If, at a particular time, a company (the approval company) holds an approval under paragraph 14(1)(a) to hold a stake in a financial sector company of more than 20%, there is taken to be in force at that time an approval of the Treasurer, under section 14, for each officer of the approval company to hold the same percentage stake in the financial sector company. #### 19A Flow‑on approvals—approval granted in relation to new or recently established financial sector company 100% subsidiaries of holding company (1) If: (a) at a particular time, a person holds an approval under paragraph 14(1)(b) to hold a stake in a financial sector company of more than 20%; and (b) the financial sector company is a holding company of the relevant licensed company for the approval; there are taken to be in force at that time approvals of the Treasurer, under section 14, for the person to hold the same percentage stake in: (c) the relevant licensed company; and (d) each financial sector company that is both: (i) a 100% subsidiary of the holding company; and (ii) a holding company of the relevant licensed company. (2) If, on a particular day, the relevant licensed company for the approval ceases to be a 100% subsidiary of the holding company, the approval that is taken to be in force, because of subsection (1), in relation to that relevant licensed company continues in force until: (a) the end of 90 days after that day; or (b) if, during that period of 90 days, the person becomes the holder of another approval under section 14 in relation to the relevant licensed company—that other approval comes into force. (3) If, on a particular day, a financial sector company that is covered by paragraph (1)(d): (a) ceases to be a 100% subsidiary of the holding company; or (b) ceases to be a holding company of the relevant licensed company for the approval; the approval that is taken to be in force, because of subsection (1), in relation to that financial sector company continues in force until: (c) the end of 90 days after that day; or (d) if, during that period of 90 days, the person becomes the holder of another approval under section 14 in relation to the financial sector company—that other approval comes into force. Officers of company (4) If, at a particular time, a company (the approval company) holds an approval under paragraph 14(1)(b) to hold a stake in a financial sector company of more than 20%, there is taken to be in force at that time an approval of the Treasurer, under section 14, for each officer of the approval company to hold the same percentage stake in the financial sector company. #### 20 Further information about applications (1) This section applies to an application under this Division. (2) The Treasurer may, by written notice given to the applicant, require the applicant to give the Treasurer, within a specified period, further information about the application. (3) The Treasurer may refuse to consider the application until the applicant gives the Treasurer the information. (4) If the applicant does not provide the specified information before the end of the specified period or any longer period agreed to in writing by the Treasurer, the application is taken to be withdrawn. (5) A notice under subsection (2) must include a statement about the effect of subsections (3) and (4). #### 21 Electronic lodgment of applications (1) The Treasurer may require or permit an application under this Division to be given, in accordance with specified software requirements and specified authentication requirements: (a) on a specified kind of data storage device; or (b) by way of a specified kind of electronic transmission. (2) If an application is given by way of electronic transmission, the application is taken to be accompanied by a fee if the fee is paid within 7 days after the transmission. (3) In this section: > data storage device means any article or material (for example, a disk) from which information is capable of being reproduced with or without the aid of any other article or device. ### Division 3A—Reporting by the relevant licensed company for an approval #### 21A Reporting when assets threshold exceeded (1) This section applies to the relevant licensed company for an approval under paragraph 14(1)(b). (2) The company must give written notice, in accordance with subsection (3), to APRA and the holder of the approval within 10 days of the day that the value of the total resident assets of the company first exceeds the assets threshold for the company. Civil penalty: 60 penalty units. (3) The notice must specify the day on which the threshold was exceeded. > Note: An approval under paragraph 14(1)(b) is subject to a condition that the holder of the approval take certain actions if a notice is received under this section (see subsection 16A(2)). ### Division 4—Practical control where 20% shareholding limit not exceeded #### 22 Meaning of control In this Division: > control includes control as a result of, or by means of, trusts, agreements, arrangements, understandings and practices, whether or not having legal or equitable force and whether or not based on legal or equitable rights. #### 23 Treasurer may declare person to have practical control of a financial sector company Declaration (1) If: (a) the Treasurer is satisfied that: (i) the directors of a financial sector company are accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of a person (either alone or together with associates); or (ii) a person (either alone or together with associates) is in a position to exercise control over a financial sector company; and (b) the Treasurer is satisfied that: (i) the person does not hold a stake in the company; or (ii) if the person holds a stake in the company—that stake is not more than 20%; and (c) the Treasurer is satisfied that it is in the national interest to declare that the person has practical control of the company for the purposes of this Act; the Treasurer may declare that the person has practical control of the company for the purposes of this Act. Declaration has effect (2) A declaration under this section has effect accordingly. Revocation of declaration (3) The Treasurer must revoke a declaration under this section if the Treasurer ceases to be satisfied of the matters referred to in paragraphs (1)(a), (b) and (c). Notification of declaration (4) If a declaration under this section is made or revoked, the Treasurer must arrange for a copy of the declaration or revocation to be given to the financial sector company and the person concerned. #### 24 Requirement to relinquish practical control or reduce stake (1) If a person has practical control of a financial sector company, the person must take such steps as are necessary to ensure that: (a) the directors of the company are not accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of the person (either alone or together with associates); and (b) the person (either alone or together with associates) is not in a position to exercise control over the company; and (c) either: (i) the person does not hold a stake in the company; or (ii) if the person holds a stake in the company—that stake is not more than 20%. > Note: Practical control has the meaning given by section 23. (2) The person must take those steps: (a) within 90 days after receiving the copy of the most recent declaration under section 23 relating to the practical control of the company; or (b) if the Treasurer, by written notice given to the person, allows a longer period for compliance—before the end of that longer period. (3) A person commits an offence if: (a) the person is subject to a requirement under this section; and (b) the person intentionally or recklessly contravenes the requirement. Penalty: 400 penalty units. > Note: Chapter 2 of the Criminal Code sets out the general principles of criminal responsibility. #### 25 Remedial orders (1) If: (a) a declaration under section 23 is in force in relation to a person and in relation to a financial sector company; and (b) the Federal Court is satisfied that: (i) the directors of the company are accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of the person (either alone or together with associates); or (ii) the person (either alone or together with associates) is in a position to exercise control over the company; and (c) the Federal Court is satisfied that: (i) the person does not hold a stake in the company; or (ii) if the person holds a stake in the company—that stake is not more than 20%; the court may, on application by the Treasurer, make such orders as the court considers appropriate to ensure that: (d) the directors of the company are not accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of the person (either alone or together with associates); and (e) the person (either alone or together with associates) is not in a position to exercise control over the company; and (f) either: (i) the person does not hold a stake in the company; or (ii) if the person holds a stake in the company—that stake is not more than 20%. (2) The Federal Court’s orders include: (a) an order directing the disposal of shares; or (b) an order restraining the exercise of any rights attached to shares; or (c) an order prohibiting or deferring the payment of any sums due to a person in respect of shares held by the person; or (d) an order that any exercise of rights attached to shares be disregarded. (3) Subsection (2) does not, by implication, limit subsection (1). (4) In addition to the Federal Court’s powers under subsections (1) and (2), the court: (a) has power, for the purpose of securing compliance with any other order made under this section, to make an order directing any person to do or refrain from doing a specified act; and (b) has power to make an order containing such ancillary or consequential provisions as the court thinks just. (5) The Federal Court may, before making an order under this section, direct that notice of the Treasurer’s application be given to such persons as it thinks fit or be published in such manner as it thinks fit, or both. (6) The Federal Court may, by order, rescind, vary or discharge an order made by it under this section or suspend the operation of such an order. ### Division 5—Record‑keeping and giving of information #### 26 Record‑keeping and giving of information (1) The regulations may make provision for and in relation to requiring a person: (a) to keep and retain records, where the records are relevant to an ownership matter; and (b) to give information to the Treasurer that is relevant to an ownership matter; or (c) to give information to a financial sector company, where the information is relevant to an ownership matter that concerns the company. > Note: Ownership matter is defined by subsection (6). Statutory declarations (2) The regulations may provide that information given in accordance with a requirement covered by paragraph (1)(b) or (c) must be verified by statutory declaration. No self‑incrimination (3) An individual is not required to give information in accordance with a requirement covered by paragraph (1)(b) or (c) if the information might tend to incriminate the individual or expose the individual to a penalty. Offence (4) A person commits an offence if: (a) the person is subject to a requirement covered by paragraph (1)(a), (b) or (c); and (b) the person intentionally or recklessly contravenes the requirement. Penalty: 50 penalty units. > Note: Chapter 2 of the Criminal Code sets out the general principles of criminal responsibility. Regulations may confer discretionary powers on the Treasurer (5) Regulations made for the purposes of this section may make provision for or in relation to a matter by conferring a power on the Treasurer. For example, the regulations could provide that the Treasurer may, by written notice given to a financial sector company, require the company to give the Treasurer, within the period and in the manner specified in the notice, specified information about an ownership matter relating to the company. Definition (6) For the purposes of this section, each of the following matters is an ownership matter: (a) whether a person holds a stake in a financial sector company and, if so, the percentage of that stake; (b) whether the directors of a financial sector company are accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of a person (either alone or together with associates); (c) whether a person (either alone or together with associates) is in a position to exercise control over a financial sector company. For this purpose, control has the same meaning as in section 22. ### Division 6—Ancillary matters #### 27 Provision to attract the corporations power, the banking power and the insurance power (1) This Part does not apply in relation to a financial sector company unless the company is: (a) a constitutional corporation (other than a corporation that carries on State banking, or State insurance, not extending beyond the limits of the State concerned); or (b) a body corporate that carries on the business of banking; or (c) a body corporate that carries on the business of insurance. Severability (2) Without prejudice to its effect apart from this subsection, subsection (1) also has the effect it would have if: (a) the reference in paragraph (1)(b) to a body corporate that carries on the business of banking were, by express provision, confined to a body corporate that carries on as its sole or principal business the business of banking; and (b) the reference in paragraph (1)(c) to a body corporate that carries on the business of insurance were, by express provision, confined to a body corporate that carries on as its sole or principal business the business of insurance. Definitions (3) In this section: > business of banking does not include State banking not extending beyond the limits of the State concerned. > business of insurance does not include State insurance not extending beyond the limits of the State concerned. > constitutional corporation means a corporation to which paragraph 51(xx) of the Constitution applies. #### 28 Concurrent operation of State/Territory laws It is the intention of the Parliament that this Part is not to apply to the exclusion of a law of a State or Territory to the extent that that law is capable of operating concurrently with this Part. #### 29 Validity of acts done in contravention of this Part An act is not invalidated by the fact that it constitutes an offence against this Part. #### 30 Acquisition of property (1) The Federal Court must not make an order under this Part if: (a) the order would result in the acquisition of property from a person otherwise than on just terms; and (b) the order would be invalid because of paragraph 51(xxxi) of the Constitution. (2) In this section: > acquisition of property has the same meaning as in paragraph 51(xxxi) of the Constitution. > just terms has the same meaning as in paragraph 51(xxxi) of the Constitution. ## Part 3—Anti‑avoidance #### 31 Anti‑avoidance (1) If: (a) one or more persons enter into, begin to carry out or carry out a scheme; and (b) it would be concluded that the person, or any of the persons, who entered into, began to carry out or carried out the scheme or any part of the scheme did so for the sole or dominant purpose of avoiding the application of any provision of Part 2 in relation to any person or persons (whether or not mentioned in paragraph (a)); and (c) as a result of the scheme or a part of the scheme, a person (the stakeholder) increases the stake the stakeholder holds in a financial sector company; the Treasurer may give the stakeholder a written direction to cease holding that stake within a specified time. Offence (2) A person commits an offence if: (a) the person is subject to a direction under subsection (1); and (b) the person intentionally contravenes the direction. Penalty: 400 penalty units. > Note: Chapter 2 of the Criminal Code sets out the general principles of criminal responsibility. Definitions (3) In this section: > hold, in relation to a stake in a company, has the same meaning as in Schedule 1. > increase, in relation to a stake held in a company, includes an increase from a starting point of nil. > stake, in relation to a company, has the same meaning as in Schedule 1. ## Part 4—Injunctions #### 32 Injunctions Restraining injunctions (1) If a person has engaged, is engaging or is proposing to engage in any conduct in contravention of section 11, the Federal Court may, on the application of the Treasurer, grant an injunction: (a) restraining the person from engaging in the conduct; and (b) if, in the court’s opinion, it is desirable to do so—requiring the person to do something. (2) If: (a) a person has engaged, is engaging or is proposing to engage in any conduct in contravention of section 11; and (b) the contravention relates to the existence of an unacceptable shareholding situation in relation to a financial sector company; the Federal Court may, on the application of the company, grant an injunction: (c) restraining the person from engaging in the conduct; and (d) if, in the court’s opinion, it is desirable to do so—requiring the person to do something. (3) If a person has engaged, is engaging or is proposing to engage in any conduct in contravention of a condition to which an approval under section 14 is subject, the Federal Court may, on the application of the Treasurer, grant an injunction: (a) restraining the person from engaging in the conduct; and (b) if, in the court’s opinion, it is desirable to do so—requiring the person to do something. Performance injunctions (4) If: (a) a person has refused or failed, or is refusing or failing, or is proposing to refuse or fail, to do an act or thing; and (b) the refusal or failure was, is or would be a contravention of section 26 or 31; the Federal Court may, on the application of the Treasurer, grant an injunction requiring the person to do that act or thing. (5) If: (a) a person has refused or failed, is refusing or failing, or is proposing to refuse or fail, to do an act or thing; and (b) the refusal or failure was, is or would be a contravention of subsection 26(4) that relates to a requirement covered by paragraph 26(1)(c) to give information to a financial sector company; the Federal Court may, on the application of the company, grant an injunction requiring the person to do that act or thing. (6) If: (a) a person has refused or failed, or is refusing or failing, or is proposing to refuse or fail, to do an act or thing; and (b) the refusal or failure was, is or would be a contravention of a condition to which an approval under section 14 is subject; the Federal Court may, on the application of the Treasurer, grant an injunction requiring the person to do that act or thing. #### 33 Interim injunctions Grant of interim injunction (1) If an application is made to the court for an injunction under section 32, the court may, before considering the application, grant an interim injunction restraining a person from engaging in conduct of a kind referred to in that section. No undertakings as to damages (2) The court is not to require an applicant for an injunction under section 32, as a condition of granting an interim injunction, to give any undertakings as to damages. #### 34 Discharge etc. of injunctions The court may discharge or vary an injunction granted under this Part. #### 35 Certain limits on granting injunctions not to apply Restraining injunctions (1) The power of the court under this Part to grant an injunction restraining a person from engaging in conduct of a particular kind may be exercised: (a) if the court is satisfied that the person has engaged in conduct of that kind—whether or not it appears to the court that the person intends to engage again, or to continue to engage, in conduct of that kind; or (b) if it appears to the court that, if an injunction is not granted, it is likely that the person will engage in conduct of that kind—whether or not the person has previously engaged in conduct of that kind and whether or not there is an imminent danger of substantial damage to any person if the person engages in conduct of that kind. Performance injunctions (2) The power of the court under this Part to grant an injunction requiring a person to do an act or thing may be exercised: (a) if the court is satisfied that the person has refused or failed to do that act or thing—whether or not it appears to the court that the person intends to refuse or fail again, or to continue to refuse or fail, to do that act or thing; or (b) if it appears to the court that, if an injunction is not granted, it is likely that the person will refuse or fail to do that act or thing—whether or not the person has previously refused or failed to do that act or thing and whether or not there is an imminent danger of substantial damage to any person if the person refuses or fails to do that act or thing. #### 36 Other powers of the court unaffected The powers conferred on the court under this Part are in addition to, and not instead of, any other powers of the court, whether conferred by this Act or otherwise. ## Part 5—Offences #### 38 Incorrect records A person commits an offence if: (a) the person is subject to a requirement covered by paragraph 26(1)(a); and (b) in purported compliance with that requirement, the person makes a record of any matter or thing; and (c) the person makes the record in such a way that it does not correctly record the matter or thing. Penalty: Imprisonment for 6 months. > Note: Chapter 2 of the Criminal Code sets out the general principles of criminal responsibility. #### 39 Indictable offences An offence against section 11, 24 or 31 is an indictable offence. #### 40 Application of Criminal Code Chapter 2 of the Criminal Code applies to all offences against this Act. #### 41 Service of summons or process on foreign corporations—criminal proceedings (1) This section applies to a summons or process in any criminal proceedings under this Act, where: (a) service of the summons or process is required to be served on a body corporate incorporated outside Australia; and (b) the body corporate does not have a registered office or a principal office in Australia; and (c) the body corporate has an agent in Australia. (2) Service of the summons or process may be effected by serving it on the agent. (3) Subsection (2) has effect in addition to section 28A of the Acts Interpretation Act 1901. > Note: Section 28A of the Acts Interpretation Act 1901 deals with the service of documents. (4) In this section: > criminal proceeding includes a proceeding to determine whether a person should be tried for an offence. ## Part 6—Civil liability ### Division 1—Civil liability in certain civil proceedings #### 41A Application of this Division This Division does not apply to a civil proceeding in relation to a civil penalty provision of this Act. #### 42 Civil liability of corporations State of mind (1) If, in a civil proceeding under this Act in respect of conduct engaged in by a corporation, it is necessary to establish the state of mind of the corporation, it is sufficient to show that: (a) a director, employee or agent of the corporation engaged in that conduct; and (b) the director, employee or agent was, in engaging in that conduct, acting within the scope of his or her actual or apparent authority; and (c) the director, employee or agent had that state of mind. Conduct (2) If: (a) conduct is engaged in on behalf of a corporation by a director, employee or agent of the corporation; and (b) the conduct is within the scope of his or her actual or apparent authority; the conduct is taken, for the purposes of a civil proceeding under this Act, to have been engaged in by the corporation unless the corporation establishes that it took reasonable precautions and exercised due diligence to avoid the conduct. Extended meaning of state of mind (3) A reference in subsection (1) to the state of mind of a person includes a reference to: (a) the knowledge, intention, opinion, belief or purpose of the person; and (b) the person’s reasons for the intention, opinion, belief or purpose. Extended meaning of director (4) A reference in this section to a director of a corporation includes a reference to a constituent member of a body corporate incorporated for a public purpose by a law of the Commonwealth, a State or a Territory. Extended meaning of engaging in conduct (5) A reference in this section to engaging in conduct includes a reference to failing or refusing to engage in conduct. #### 43 Civil liability of persons other than corporations State of mind (1) If, in a civil proceeding under this Act in respect of conduct engaged in by a person other than a corporation, it is necessary to establish the state of mind of the person, it is sufficient to show that: (a) the conduct was engaged in by an employee or agent of the person within the scope of his or her actual or apparent authority; and (b) the employee or agent had that state of mind. Conduct (2) If: (a) conduct is engaged in on behalf of a person other than a corporation by an employee or agent of the person; and (b) the conduct is within the employee’s or agent’s actual or apparent authority; the conduct is taken, for the purposes of a civil proceeding under this Act, to have been engaged in by the person unless the person establishes that he or she took reasonable precautions and exercised due diligence to avoid the conduct. Extended meaning of state of mind (3) A reference in this section to the state of mind of a person includes a reference to: (a) the knowledge, intention, opinion, belief or purpose of the person; and (b) the person’s reasons for the intention, opinion, belief or purpose. Extended meaning of engaging in conduct (4) A reference in this section to engaging in conduct includes a reference to failing or refusing to engage in conduct. ### Division 2—Civil penalties #### 43A Civil penalty provisions Enforceable civil penalty provisions (1) Each civil penalty provision of this Act is enforceable under Part 4 of the Regulatory Powers Act. > Note: Part 4 of the Regulatory Powers Act allows a civil penalty provision to be enforced by obtaining an order for a person to pay a pecuniary penalty for the contravention of the provision. Authorised applicant (2) For the purposes of Part 4 of the Regulatory Powers Act, each of the following persons is an authorised applicant in relation to the civil penalty provisions of this Act: (a) the Treasurer; (b) APRA. Relevant court (3) For the purposes of Part 4 of the Regulatory Powers Act, the Federal Court is a relevant court in relation to the civil penalty provisions of this Act. Extension to external Territories etc. (4) Part 4 of the Regulatory Powers Act, as it applies in relation to the civil penalty provisions of this Act, extends to: (a) every external Territory; and (b) acts, omissions, matters and things outside Australia. Liability of Crown (5) Part 4 of the Regulatory Powers Act, as that Part applies in relation to the civil penalty provisions of this Act, does not make the Crown liable to a pecuniary penalty. ## Part 7—Miscellaneous #### 44 Delegation by Treasurer (1) Subject to subsection (1A), the Treasurer may, by writing, delegate any or all of the Treasurer’s powers under this Act to: (a) APRA; or (b) an APRA member (within the meaning of the Australian Prudential Regulation Authority Act 1998); or (c) an APRA staff member (within the meaning of the Australian Prudential Regulation Authority Act 1998). (1A) The Treasurer must not delegate the Treasurer’s power under subsection 45A(2) (power to consent to APRA making rule). (2) The delegate is, in the exercise of any power delegated under subsection (1), subject to the directions of the Treasurer. #### 45 Foreign Acquisitions and Takeovers Act 1975 and this Act to operate independently of each other (1) This Act and the Foreign Acquisitions and Takeovers Act 1975 operate independently of each other. (2) In particular, a decision under either Act has effect only for the purposes of the Act concerned. #### 45A Rules (1) APRA may, by legislative instrument, make rules prescribing matters: (a) required or permitted by this Act to be prescribed by the rules; or (b) necessary or convenient to be prescribed for carrying out or giving effect to this Act. Ministerial consent to rules required (2) APRA must not make a rule under subsection (1) unless the Treasurer has consented, in writing, to the making of the rule. (3) A consent under subsection (2) is not a legislative instrument. Incorporation of other instruments (4) Despite subsection 14(2) of the Legislation Act 2003, the rules may make provision in relation to a matter by applying, adopting or incorporating, with or without modification, any matter contained in an instrument or other writing as in force or existing from time to time. Scope of the rule‑making power (5) To avoid doubt, the rules may not do the following: (a) create an offence or civil penalty; (b) provide powers of: (i) arrest or detention; or (ii) entry, search or seizure; (c) impose a tax; (d) set an amount to be appropriated from the Consolidated Revenue Fund under an appropriation in this Act; (e) directly amend the text of this Act. (6) Rules that are inconsistent with the regulations have no effect to the extent of the inconsistency, but rules are taken to be consistent with the regulations to the extent that the rules are capable of operating concurrently with the regulations. #### 46 Regulations The Governor‑General may make regulations prescribing 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. #### 47 Transitional—pre‑commencement stakes in financial sector companies (1) This section applies if, immediately before the commencement of this section: (a) a person held a stake in a particular financial sector company of more than 15%; and (b) the holding of that stake did not, to any extent, involve a contravention of a provision of the Banks (Shareholdings) Act 1972 or the Insurance Acquisitions and Takeovers Act 1991. (2) This Act has effect as if the Treasurer had, immediately after the commencement of this section, by written notice under section 14, approved the person holding the same percentage stake in the company. > Note: This approval can be varied or revoked in accordance with the provisions of Division 3 of Part 2. (3) For the purposes of this section, Part 1 and Schedule 1 are taken to have been in force immediately before the commencement of this section. (4) For the purposes of this section, a company that is an authorised deposit‑taking institution immediately after the commencement of this section is taken to have been an authorised deposit‑taking institution immediately before the commencement of this section.