Explanatory Memorandum
(Circulated by authority of the Treasurer, the Honourable Peter Costello MP)7 Schedule 3: Repeal of the Banks (Shareholdings) Act 1972
The proposed streamlining of legislation governing ownership of financial institutions is outlined in the proposed Financial Sector (Shareholdings) Act (FSSA). The FSSA streamlines 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 sector company), regardless of the size of their shareholding. The Treasurer may declare a person to have practical control of a financial sector company and under such a declaration the person must relinquish practical control or reduce their stake in the financial sector company.
The regulations may require records to be kept, and information to be given, for the purposes of determining the restrictions on shareholdings.
The proposed FSSA will replace the Banks (Shareholdings) Act.
Commencement
7.1 Schedule 3 will commence on the commencement of the proposed Australian Prudential Regulation Authority Act 1998.
7.2 Item BS1 proposes to repeal the Banks (Shareholdings) Act 1972 (BSA).
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