Commonwealth Numbered Regulations - Explanatory Statements

[Index] [Search] [Download] [Related Items] [Help]


BANKS (SHAREHOLDINGS) REGULATIONS (AMENDMENT) 1991 NO. 225

EXPLANATORY STATEMENT

STATUTORY RULES 1991 No. 225

ISSUES BY THE AUTHORITY OF THE TREASURER

BANKS (SHAREHOLDINGS) ACT 1972

BANKS (SHAREHOLDINGS) REGULATIONS (AMENDMENT)

Section 7 of the Banks (Shareholdings) Act 1972 (the Act) provides that regulations may be made for the purposes of the Act.

The Act prohibits any person from having an interest in more than 5 per cent of the aggregate nominal amount of all voting shares of the Commonwealth Bank of Australia (CBA) under subsection 10A(3). The underwriting of more than 5 per cent of CBA shares would be in breach of this subsection as the underwriting agreement commits the underwriter to purchase the shares if they have not been subscribed to by investors. This commitment to purchase represents an interest in the shares for the purposes of the Act.

Paragraph 8(9)(d) of the Act provides that the interest of a person in a share may be disregarded if it is a prescribed interest in a share of a person, or a class of persons, as may be prescribed by regulation. This provision provides the power to make the proposed regulations.

The proposed amendment to regulation 6 would allow underwriters to underwrite more than 5 per cent of CBA shares. This would allow the CBA issue to be underwritten in the traditional way with a major broker taking the underwriting role and arranging sub-underwriting. Alternative underwriting structures conforming with the 5 per cent limit have been explored and found to be not practical. Persons who are underwriters in relation to the issue of shares by the CBA under its first registered prospectus are defined as a prescribed class of persons. The regulation specifies that any interest this class of persons has in the course of, or arising out of, underwriting of the CBA's issue is a prescribed interest.

The proposed new regulations would cease to have effect on 1 July 1992. This means that any shares in excess of the 5 per cent limit acquired by underwriters under this regulation would have to be sold by that date.


[Index] [Related Items] [Search] [Download] [Help]