Commonwealth Numbered Regulations - Explanatory Statements

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BANKS (SHAREHOLDINGS) REGULATIONS (AMENDMENT) 1996 NO. 34

STATUTORY RULES 1996 No. 34

Issued by the Authority of the Treasurer

Banks (Shareholdings) Act 1972

Banks (Shareholdings) Regulations (Amendment)

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, if the Governor-General is satisfied that to do so is in the national interest, fix a higher percentage for that person by instrument published in the Gazette. Subsection 10(5A) provides that the Governor-General may, on the publication under subsection 10(4) of an instrument flying 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.

Two Japanese banks, Bank of Tokyo and Mitsubishi Bank, have agreed to merge as of 1 April 1996. This merger will also entail a merger of their Australian subsidiaries, Bank of Tokyo Australia Limited and Mitsubishi Bank of Australia Limited (MBA). The merged entity in Japan will be known as Bank of Tokyo -Mitsubishi Limited (BOTM). The merged entity in Australia will be known as Bank of Tokyo - Mitsubishi (Australia) Limited (BOTMA). Most of the business of MBA will be transferred to BOTMA, and MBA will become a subsidiary of BOTMA. In due course, a separate application will be made for revocation of MBA's banking authority, but this probably will not happen until after 1 April 1996. In accordance with section 63 of the Banking Act 1959, the previous Assistant Treasurer gave written consent for the merger to proceed.

To reflect the ownership by BOTM of 100 per cent of BOTMA, an instrument will be gazetted in accordance with the Act, effectively fixing a percentage of 100 under subsection 10(4) for BOTM in relation to its interest in BOTMA.

Under section 9 of the Act the associates (including officers, partners, subsidiaries and related companies) of BOTM would also be deemed to have the same interest in BOTMA as that corporation. In the case of officers of BOTM, an instrument pursuant to subsection 10(5A) of the Act is proposed which would fix a percentage of 100 in relation to interests in BOTMA for those persons who are from time to time relevant officers of BOTM.

To reflect the ownership by BOTMA of 100 per cent of MBA, an instrument will be gazetted in accordance with the Act, effectively fixing a percentage of 100 under subsection 10(4) for BOTMA in relation to its interest in MBA.

Under section 9 of the Act the associates (including officers, partners, subsidiaries and related companies) of BOTMA would also be deemed to have the same interest in MBA as that corporation. In the case of officers of BOTMA, an instrument pursuant to subsection 10(5A) of the Act is proposed which would fix a percentage of 100 in relation to interests in MBA for those persons who .are from time to time relevant officers of BOTMA.

Under the Act, it is not possible to make a 'class' instrument for the interests of the associates of BOTM in relation to BOTMA, other than its relevant officers. Similarly, it is not possible to make a 'class' instrument for the interests of the associates of BOTMA in relation to MBA, 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 BOTMA arising from associate relationships with BOTM, and to disregard, for the purposes of the Act, interests in MBA arising from associate relationships with BOTMA. These amendments will take effect as of 1 April 1996.

The details of the proposed Regulations are as follows:

Item 6 of the Schedule to the Regulations is amended by omitting from column 2:

Bank of Tokyo Australia Limited,

and adding under column 2:

Bank of Tokyo - Mitsubishi (Australia) Limited.

Item 6 is also amended by omitting under column 3 the following corporation:

Bank of Tokyo Limited:

and adding under column 3:

Bank of Tokyo - Mitsubishi Limited.

Item 19 of the Schedule to the Regulations is amended by adding to column 3:

Bank of Tokyo - Mitsubishi (Australia) Limited.