Explanatory Memorandum
(Circulated by authority of the Treasurer,the Hon Peter Costello, MP)8 - Schedule 5 amendment of the insurance acquisitions and takeovers act 1991
Items 1 to 24
8.1 These items amend the Insurance Acquisitions and Takeovers Act 1991 (the IAT Act) by removing the 30-day time limit to make a decision to allow a merger or acquisition to take place and to make the necessary consequential amendments.
8.2 The IAT Act contains a provision that gives the Minister 30 days in which to make a go-ahead decision to allow a merger or acquisition to take place. If the Minister does not make a decision within 30 days, the Minister is unable to make a conditional decision or place a temporary or permanent restraining order on the transaction taking place. That is, the transaction goes through unchallenged. This time limit prevents the Minister (or APRA under delegation) from undertaking all necessary investigation prior to allowing a merger or acquisition to proceed. In practice the process generally takes longer than 30 days. In many cases any additional information needs to be obtained from overseas sources (and in some circumstances needs to be translated).
8.3 Problems have arisen when the 30-day time limit is about to expire and a decision has not been made. In this situation, it is necessary to either make a temporary restraining order on the transaction (which requires gazettal) or ask the companies involved to withdraw their application (on the grounds that there was insufficient information to make a decision). Placing a restraining order on the transaction in this circumstance is unnecessarily severe, as all that may be required for approval is an additional document. Gazettal of the restraining order could be detrimental to the companies involved due to market speculation.
Commencement
8.4 These amendments will commence the day after the day on which this Act receives the Royal Assent.