Commonwealth Numbered Regulations - Explanatory Statements

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Section 10 of the Banks (Shareholdings) Act 1972 (the Act) generally limits the nominal amount of the voting shares of a bank in which a person (including a corporation) may have an interest to 10 per cent, or 15 per cent with the approval of the Treasurer, of the total nominal amount of the voting shares of the bank. Under subsection 10(4) of the Act the Governor-General may, after application made to the Treasurer by a person. fix a higher percentage for that person by an instrument published in the Gazette. Subsection 10(5A) provides that the Governor-General may, on the publication under subsection 10(4) of an instrument fixing a percentage applicable to a corporation in respect of a bank, after application made to the Treasurer by the corporation, by instrument in writing published in the Gazette, declare that the percentage so fixed is also applicable to the persons who are from time to time relevant officers of the corporation in respect of the bank.

Section 17 of the Act provides that the Governor-General may make regulations for the purposes of the Act.

As required by the Act an instrument has been gazetted which fixes a percentage of 100% under subsection 10(4) for NBNZ Holdings Limited (NBNZ Holdings) in relation to its interests in Lloyds Bank NZA Limited (LBNZA).

Under section 9 of the Act the associates (including all officers, partners, subsidiaries and related companies) of NBNZ Holdings would also be deemed to have the same interest in LBNZA as NBNZ Holdings. In the case of officers of NBNZ Holdings, an instrument has been gazetted pursuant to subsection 10(5A) of the Act which would fix a percentage of 100% in relation to interests in LBNZA for those persons who are from time to time relevant officers of NBNZ Holdings.

Under the Act, it is not possible to make a 'class' instrument for the interests of the associates of NBNZ Holdings other than its relevant officers. These other associates represent a large and ever-changing group of persons and corporations. Rather than make an instrument pursuant to subsection 10(4) for every person within the meaning of section 9, it is convenient to prescribe these interests - that is, to have them disregarded for the purposes of section 10 of the Act - by regulation, as provided for by section 17 and paragraph 8(9)(d).

Paragraph 8(9)(d) of the Act provides that a prescribed interest in a share that is an interest of such a person or class of persons as is prescribed shall be disregarded. The Banks (Shareholdings) Regulations (the Regulations) currently prescribe a class of persons in relation to their interests in the banks listed in the Schedule to the Regulations, where those interests are deemed to be held by virtue of an associate relationship. The effect of the proposed amendments to the Regulations would be to disregard for the purposes of the Act interests in LBNZA arising from associate relationships with NBNZ Holdings.

The details of the proposed Regulations are as follows:

The Schedule to the Banks (Shareholdings) Regulations is amended by adding the following corporation in relation to Lloyds Bank NZA Limited

       NBNZ Holdings Limited, being the corporation formed or incorporated under that name in New Zealand

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