Commonwealth Numbered Acts

LIFE INSURANCE AMENDMENT ACT 1977 No. 32 of 1977 - SECT 10

10. (1) Section 39 of the Principal Act is amended by omitting sub-section (2)
and substituting the following sub-sections:-

''(2) Subject to sub-section (3), a company shall not, except with the
approval of the Commissioner or in accordance with sub-section (4), (5) or
(6), invest any assets of a statutory fund maintained by the company-

   (a)  by way of a loan to, or in shares in or debentures of, a company
        related to the first-mentioned company;

   (b)  by way of a loan to, or in shares in or debentures of, a company
        carrying on, or related to a company carrying on, life insurance
        business (whether in Australia or elsewhere);

   (c)  in, or by way of a loan to, an undertaking (not being a company)
        carrying on life insurance business or in a share or interest in such
        an undertaking;

   (d)  by way of a loan to, or in shares in or debentures of, a company that
        is a substantial shareholder in a company carrying on, or related to a
        company carrying on, life insurance business (whether in Australia or
        elsewhere);

   (e)  by way of a loan to, or in shares in or debentures of, an investment
        company;

   (f)  in, or by way of a loan to, or in a share or interest in, and
        investment undertaking; or

   (g)  under a unit trust scheme.

''(3) Sub-section (2) does not prevent a company investing, without obtaining
the approval of the Commissioner, any assets of a statutory fund maintained by
the company-

   (a)  by way of a loan to (including deposit with), or in shares in or
        debentures of, a bank as defined by sub-section 5 (1) of the
        Banking Act 1959 or a bank constituted by a law of a State; or

   (b)  by way of a loan to (including deposit with) a prescribed dealer in
        the short-term money market.

''(4) A company may, without obtaining the approval of the Commissioner,
invest moneys, being assets of a statutory fund maintained by the company-

   (a)  by way of a loan to, or in shares in or debentures of, a company
        related to the first-mentioned company;

   (b)  by way of a loan to, or in shares in or debentures of, an investment
        company;

   (c)  in, or by way of a loan to, or in a share or interest in, an
        investment undertaking; or

   (d)  under a unit trust scheme, if the sum of those moneys and the value of
        any assets of the fund that consist of investments of any of the kinds
        referred to in paragraphs (a), (b), (c) and (d) does not exceed-

   (e)  $100,000; or

   (f)  2.5 per centum of the value of the assets of the fund, whichever is
        the greater.

''(5) A company may, without obtaining the approval of the Commissioner,
invest moneys, being assets of a statutory fund maintained by the company, in
shares in another company, being-

   (a)  a company carrying on, or related to a company carrying on, life
        insurance business; or

   (b)  a company that is a substantial shareholder in a company carrying on,
        or related to a company carrying on, life insurance business, if-

   (c)  the sum of those moneys and the value of the assets of the fund that
        consist of shares in that other company does not exceed 10 per centum
        of the paid-up capital of that other company; and

   (d)  the sum of those moneys and the value of the assets of the fund that
        consist of investments by way of loan to, or in shares in or
        debentures of, that other company does not exceed 10 per centum of the
        value of the assets of that other company.

''(6) A company may, without obtaining the approval of the Commissioner,
invest moneys, being assets of a statutory fund maintained by the company, by
way of a loan to, or in debentures of, another company, being-

   (a)  a company carrying on, or related to a company carrying on, life
        insurance business; or

   (b)  a company that is a substantial shareholder in a company carrying on,
        or related to a company carrying on, life insurance business, if the
        sum of those moneys and the value of the assets of the fund that
        consist of investments by way of loan to, or in shares in or
        debentures of, that other company does not exceed 10 per centum of the
        value of the assets of that other company.

''(7) The Commissioner shall not refuse to give his approval under sub-section
(2) to a proposed investment of assets of a statutory fund maintained by a
company unless-

   (a)  the Commissioner is of the opinion that the proposed investment is
        likely to prejudice the interests of policy owners, being persons who
        are or become the owners of policies included in the class of policies
        in respect of the business of which, in relation to the issuing of
        which or in relation to the undertaking of liabilities under which the
        statutory fund was established; or

   (b)  the Commissioner has requested the company, by notice served on the
        company, to provide information in relation to the proposed
        investment, the company has failed to furnish that information fully
        and satisfactorily to the Commissioner and a period of at least 1
        month has elapsed after the notice was served on the company.

''(8) A transaction shall not be invalidated by reason only that it has been
entered into in contravention of sub-section (2), but nothing in this
sub-section shall affect the liability of any person to a penalty in respect
of any such contravention.

''(9) For the purposes of this section, the question whether companies are
related to each other shall be determined in the same manner as the question
whether corporations, within the meaning of the Companies Ordinance 1962 of
the Australian Capital Territory, are related to each other would be
determined under that Ordinance.

''(10) For the purposes of this section, the question whether a company is a
substantial shareholder in another company shall be determined in the same
manner as the question whether a person is a substantial shareholder in a
company for the purposes of Division 3A of Part IV of the Companies Ordinance
1962 of the Australian Capital Territory would be determined under that
Ordinance.

''(11) For the purposes of this section-

   (a)  the value on a particular date of the assets, or of particular assets,
        of a statutory fund maintained by a company is the amount that would
        be treated as the value of those assets for the purpose of preparing a
        balance-sheet of the company if a balance-sheet were prepared as at
        that date; and

   (b)  the value on a particular date of the assets of a company is the
        amount that would be shown in the balance-sheet of the company as the
        value of those assets if a balance-sheet were prepared as at that
        date.

''(12) In this section-

'debenture', in relation to a company, includes debenture stock, bonds, notes
and any other document evidencing or acknowledging indebtedness of the
company, whether constituting a charge on the property of the company or not;

'investment company' means a company that is engaged primarily in the business
of investment in marketable securities;

'investment undertaking' means an undertaking (not being a company) that is
engaged primarily in the business of investment in marketable securities;

'marketable securities' has the same meaning as in the Companies Ordinance
1962 of the Australian Capital Territory;

'share', in relation to a company, means a share in the capital of the
company, and includes stock;

'unit trust scheme' means a contract, scheme or arrangement made for the
purpose of, or having the effect of, providing facilities for the
participation by persons, as beneficiaries under a trust, in profits or income
arising from the acquisition, holding, management or disposal of marketable
securities.''.

(2) The amendment of section 39 of the Principal Act effected by sub-section
(1) does not apply in relation to a transaction, being a transaction by way of
investment of the assets of a statutory fund maintained by a company, that was
entered into before the commencement of this section.