Explanatory Memorandum
(Circulated by authority of the Treasurer, the Honourable Peter Costello MP)12 Schedule 8: Amendment of the Insurance Acquisitions and Takeovers Act 1991
Schedule 8 will streamline the Insurance Acquisitions and Takeovers Act 1991 (IATA) to facilitate integration with the proposed Financial Sector (Shareholdings) Act 1998 (FSSA) and transfer regulatory responsibility for IATA to APRA. The FSSA will streamline regulation by applying common shareholding rules to the deposit-taking and insurance sectors, and by allowing approvals for holding companies to carry through to all regulated members of a company group.
The FSSA requires a person to ensure that their stake (voting power of the person and their associates) does not exceed 15 per cent and that they do not have practical control (the power to control the policies and operations of the financial institution), regardless of the size of their shareholding. The regulations may require records to be kept, and information to be given, for the purposes of determining the restrictions on shareholdings.
Commencement
12.1 Schedule 8 will commence on the commencement of the proposed Australian Prudential Regulation Authority Act 1998.
Items 1 to 27 - Proposed amendments to sections 3, 4, 19, 63, 64, 65, 69, 74, 75, 77, 78, 79 81 and 82 of the IATA
12.2 The schedule proposes numerous minor amendments to the IATA reflecting that matters relating to acquisitions of insurance companies will be covered in the proposed FSSA. The proposed amendments also provide for the transfer of regulatory responsibility for the IATA from the Insurance and Superannuation Commissioner to APRA.
12.3 Item 10 proposes to repeal Part 2 of the IATA dealing with the control of acquisition or issue of shares in Australian-registered insurance companies and related companies. All matters relating to acquisitions of insurance companies will be covered in the proposed FSSA. The FSSA will enable the Treasurer to declare a person to have 'practicalcontrol', that is, the power to control the policies and operations of a financial sector company, regardless of the size of their shareholding. Under such a declaration the person must relinquish practical control or reduce their stake in the financial sector company.