House of Representatives

Explanatory Memorandum

(Circulated by authority of the Minister for Financial Services and Regulation, the Honourable J.B. Hockey, MP)

5 - Schedule 2 - Amendment of the Banking Act 1959

Commencement

5.1 Schedule 2 will commence on the day the Bill receives Royal Assent.

ASIC Definition

Item 1

5.2 This item inserts a definition of the Australian Securities and Investments Commission (ASIC) into the Banking Act 1959 .

Section 63 - Demutualisation

Item 2

5.3 Section 63 of the Banking Act 1959 requires that an ADI, other than a foreign ADI, must seek the Treasurers prior consent before entering into an arrangement or agreement to sell or dispose of its business or effect a reconstruction of the ADI.

5.4 This item extends the term reconstruction in section 63 to capture all demutualisations.

5.5 The Treasurer may, in writing, determine what demutualisation of an ADI, other than a foreign ADI, means for the purpose of section 63. If the Treasurer does not make a determination then demutualisation would be accorded its common usage. This approach has been adopted given the legal uncertainty about what constitutes a demutualisation.

5.6 The Treasurer may issue a determination on disclosure of information by an ADI to its members with respect to a proposed demutualisation. In preparing these disclosure guidelines, the Treasurer must consult with both APRA and ASIC.

5.7 The Treasurer must take any guidelines, if any, into account when deciding whether to provide his or her prior consent for an ADI effecting a demutualisation.

5.8 This item does not limit the operation of the existing provisions in section 63.