Financial Sector (Transfer and Restructure) Act 1999

• APRA, which administers all aspects of the Act's transfer and restructure processes.
• Regulated bodies (ADIs, life insurance companies, and general insurers) that are parties to voluntary or compulsory transfers.
• Related bodies corporate within relevant groups that may be parties to compulsory transfers or restructures.
• Depositors and policy holders of transferring and receiving bodies, whose interests are a primary consideration in approval decisions.
• The Minister, who has consent powers in voluntary transfers and may trigger compulsory transfers.
• The ACCC, ASIC, and Commissioner of Taxation, who must be consulted (subject to opt-out rights) before APRA approves voluntary transfers.
• Employees whose contracts may be affected by transfers (subject to the Fair Work Act 2009 carve-out in section 43(7)).
• Counterparties to contracts with transferring bodies (whose consent requirements are generally overridden by section 43).
• Holders of approved netting arrangements and close-out netting contracts, whose rights are specifically preserved.

Voluntary transfer applicants (section 10): an application must be made in the form prescribed by the transfer rules and contain the required information. Only two ADIs or two life insurance companies (not general insurers) may apply for a voluntary transfer.

Adequate adoption (section 13): for APRA to approve a voluntary transfer, the transfer must be adequately adopted by each body in a manner prescribed by the transfer rules that APRA considers adequately takes into account the interests of members.

Condition compliance (section 16): voluntary transfer conditions imposed by APRA must be complied with before or after the certificate of transfer is issued (as specified). Non-compliance with post-certificate conditions is an offence (200 penalty units for the body).

Statement of detail for partial transfers (sections 18, 19): for a partial transfer, a statement of detail must be given to APRA before the certificate of transfer is issued. The statement must comply with the requirements in section 19.

Compulsory transfer consultation (sections 26, 28): before making a compulsory transfer of business determination for an ADI, APRA must consult the Minister, the Reserve Bank, the ACCC, and the ASIC. The transferring body must also be given notice and an opportunity to make submissions.

Filings for land and registered assets (sections 38, 39): where a receiving body acquires land or other registered assets, the parties may lodge APRA certificates with the relevant Registrar or register authority to record the transfer.

APRA's discretion in approvals (section 11): APRA must approve a voluntary transfer if the mandatory criteria are met, including: proper application, adequate adoption, approval as appropriate having regard to depositor/policy holder interests and the financial sector as a whole, consideration of complementary State/Territory legislation, and ministerial consent or its waiver. APRA has a residual discretion to refuse approval where another Act's prescribed provisions require it.

Compulsory transfer power (section 25): APRA's power to make a compulsory transfer of business determination arises only in specific circumstances, broadly: (a) the Minister has declared a transfer should occur; or (b) the transferring body is in breach of a prudential requirement, has declared inability to meet its obligations, is under APRA investigation, or is under statutory management or administration. Similar provisions exist for compulsory transfers of shares (section 25AA) and for life insurance companies and general insurers.

Minister's powers: the Minister may consent to or withhold consent from a voluntary transfer (section 11(1)(e) and 15), may declare that a compulsory transfer should occur (section 25A), and may declare that ministerial consent is not required for a class of voluntary transfers.

Override power (section 43): the Act overrides all inconsistent laws, contracts, deeds, undertakings, and agreements, subject to specific carve-outs for the Privacy Act 1988, the Competition and Consumer Act 2010, the Fair Work Acts, and section 63 of the Banking Act 1959. In particular, the Act deems advice and consents that would otherwise be required to have been obtained (section 43(3)).

Compensation (section 44): if the operation of the Act (other than Parts 3 and 4A) would result in an acquisition of property otherwise than on just terms, the Commonwealth is liable to pay reasonable compensation. For Parts 3 and 4A, the receiving body is liable. Compensation claims may be brought in the Federal Court.

Administrative Review Tribunal review (section 45): specified APRA decisions are reviewable, including refusals to approve voluntary transfers, conditions imposed, refusals to issue certificates, and restructure-related decisions.

Section 16(4): failure by a transferring or receiving body to comply with a post-certificate voluntary transfer condition: 200 penalty units (body corporate may face up to 5 times that amount under the Crimes Act 1914).

Section 25(7)-(8) and similar provisions: APRA may, in connection with a compulsory transfer, seek a court injunction requiring a person to do something or restraining a person from doing something that would be inconsistent with the Act.

Section 43: the override of other laws and contracts means that purported contractual provisions that would impede a transfer are unenforceable as against the transfer.

No specific criminal offences are created by the substantive transfer provisions (beyond condition compliance). The Criminal Code applies to all offences against the Act (section 7).

Voluntary transfer:

1. Application to APRA in prescribed form (section 10).
2. Adequate adoption by each body (section 13).
3. APRA may consult Reserve Bank, ACCC, ASIC, and ATO (sections 12, 12A).
4. APRA may consult State and Territory officers (section 12).
5. Ministerial consent (section 11(1)(e)) or waiver (section 15).
6. APRA issues voluntary transfer approval (section 11), which may impose conditions.
7. For partial transfers: statement of detail given to APRA (section 19); APRA approval of section 20 statement if applicable.
8. APRA issues certificate of transfer (section 18); transfer takes effect when certificate comes into force.

Compulsory transfer:

1. Grounds established (section 25 or 25AA trigger).
2. Consent of receiving body's board obtained.
3. APRA may consult ACCC, ASIC, Reserve Bank, and Minister (sections 26, 26A, 26B).
4. Transferring body given notice and opportunity to make submissions (sections 26, 28).
5. APRA makes compulsory transfer determination.
6. Determination may impose conditions (section 31).
7. APRA issues certificate of transfer (section 33); transfer takes effect on specified date (sections 35, 35A).

Restructure:

1. Application for restructure approval to APRA (section 36D).
2. APRA assesses application (sections 36E, 36F).
3. APRA may issue internal transfer certificates as part of approval (sections 36L, 36M).
4. Internal transfer certificate comes into force and effects the transfer of specified assets and liabilities (section 36R).

Banking Act 1959: the Act operates alongside the Banking Act framework for ADIs. Section 63 of the Banking Act (which preserves certain ADI protections) is a specific carve-out from the Act's override power (section 43(8)). The Act incorporates the Banking Act's information-gathering powers for ADI-related functions (section 41(1)).

Life Insurance Act 1995 and Insurance Act 1973: similar parallel frameworks apply for life insurance and general insurance transfers. The information-gathering provisions of those Acts are incorporated for APRA's functions under this Act (sections 41(2) and (4)). Part 9 of the Life Insurance Act 1995 provides an additional transfer mechanism outside this Act (section 8(6)).

Corporations Act 2001: the definition of "related body corporate" tracks the Corporations Act (section 4A). Part 4A restructures involve Corporations Act Part 5.1 (voluntary administration and DOCA) as the mechanism for restructuring the group, with APRA-issued internal transfer certificates facilitating asset and liability movements.

Competition and Consumer Act 2010: a transfer of business, shares, or assets under the Act is treated as an acquisition for the purposes of section 50 (merger provisions) of the CCA (section 43(9)). Compulsory transfers under Part 4 are specifically authorised for section 51(1) CCA purposes (section 43(9A)). The CCA is a specific carve-out from the Act's general override (section 43(6)).

Privacy Act 1988: a specific carve-out from the override provisions (section 43(5)).

Fair Work Act 2009 and related legislation: a specific carve-out from the override provisions (section 43(7)).

Payment Systems and Netting Act 1998: approved netting arrangements and close-out netting contracts are defined by reference to that Act.

Source text duplication: the stored source text has 17 concatenated copies of the Act. Practitioners should use the Federal Register of Legislation version for definitive reference.

General insurers cannot apply for voluntary transfers: section 10(3) provides that two regulated bodies are "of the same kind" only if they are both ADIs or both life insurance companies. General insurers must use compulsory transfer mechanisms under Part 4.

Partial transfer statement of detail is mandatory before certificate issue: section 18(1)(c) requires APRA to have received the statement of detail before issuing a certificate of transfer for a partial transfer. This is a precondition, not a ministerial condition, and APRA cannot issue the certificate without it.

Override of contracts is broad but has specific carve-outs: the override in section 43(1)-(3) is very broad. However, it does not override the Privacy Act, Competition and Consumer Act, Fair Work legislation, or Banking Act section 63. Practitioners drafting contracts for entities in financial sector groups should consider the impact of these provisions on change-of-control and confidentiality clauses.

Compensation for acquisition of property: section 44 draws a distinction between Parts 3 and 4A (where the receiving body is liable for compensation) and the rest of the Act (where the Commonwealth is liable). This matters if a compulsory transfer involves an acquisition of property otherwise than on just terms.

Transfer rules govern the form of applications: section 46 allows APRA to make transfer rules prescribing matters required by the Act. The content of applications, the form of statements, and the manner of adoption are all governed by transfer rules, which practitioners must check separately from the Act itself.

Merger of two building societies: two ADIs (both mutual building societies) propose to merge by transferring the business of one to the other. They jointly apply to APRA for a voluntary transfer approval under section 10. APRA consults ACCC, ASIC, and the ATO. The Minister's consent is sought. APRA issues a voluntary transfer approval with conditions (for example, maintaining certain deposit guarantees for a period). Once conditions are met, APRA issues a certificate of transfer. On the specified date, the transferring society's business (including loans, deposits, and staff contracts) vests in the receiving society by force of the certificate, without the need for individual novations.

Failing general insurer: APRA determines that a general insurer is in breach of its Insurance Act obligations and is likely to be unable to meet its claims obligations. APRA makes a compulsory transfer of business determination under section 25, transferring the insurer's business to a solvent receiving insurer. The Minister has declared the transfer should proceed. APRA issues a certificate of transfer on a specified date. Under section 43, the transfer does not constitute a breach of any contract between the failing insurer and its counterparties; no consent is required from reinsurers, landlords, or other contract parties.

Internal restructure of banking group: an ADI group seeks to restructure its Australian banking business, transferring certain loan portfolios from a subsidiary ADI to a parent ADI using internal transfer certificates. The group applies for a restructure approval under section 36D. APRA approves the restructure and issues internal transfer certificates under section 36L specifying which assets and liabilities are to transfer. The certificates take effect on the specified date, and the relevant property and contracts vest in the receiving entity automatically.