Commonwealth Numbered Regulations - Explanatory Statements

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BANKS (SHAREHOLDINGS) REGULATIONS (AMENDMENT) 1995 NO. 435

EXPLANATORY STATEMENT

STATUTORY RULES 1995 No. 435

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 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 lime to time relevant officers of the corporation m respect of the bank.

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

Standard Chartered Bank Australia Limited (SCBAL) has operated in Australia since 1986. Standard Chartered Plc (SCPLC) (incorporated in the United Kingdom) is the ultimate parent of the Standard Chartered international banking and financial services group, including SCBAL. Standard Chartered Bank (incorporated in the United Kingdom) is a subsidiary of Standard Chartered Holdings Limited (SCH) (incorporated in the United Kingdom), which is in turn owned by SCPLC. Standard Chartered Nominees Limited (SCNL), Stanchart Nominees Limited (SNL), and Standard Chartered Overseas Holdings Limited (SCOHL) are wholly owned subsidiaries of SCPLC, and each hold one share in SCBAL. SCBAL is the wholly owned subsidiary of the Australian company, Standard Chartered Investments Pry Limited (SCIPL).

Between 1986 and 1991 the Governor-General in Counsel fixed, under subsection 10(4) of the Act, interests of SCPLC, SCH, SCB, SCNL, SNL, SCOHL, and SCIPL, in respect of SCBAL, at 100 per cent. The GovernorGeneral has also fixed, under subsection 10(5A) of the Act, interests of persons who are from time to time relevant officers of SCPLC, SCH, SCB, SCNL, SNL, SCOHL, and SCIPL, in respect of SCBAL, at 100 per cent. In addition, for the purposes of section 17 and paragraph 8(9)(d), SCPLC, SCH, SCB, SCNL, SNL, SCOHL, and SCIPL are listed in Column 3 of Schedule 1 of the Banks (Shareholdings) Regulations.

The Standard Chartered group proposes to restructure its international banking and financial services group. The effect of the proposed restructure is to interpose two wholly owned subsidiaries, Standard Chartered Holdings (International) BV (SCHIBV) (incorporated in the Netherlands) and Standard Chartered Merchant Bank Overseas Limited (SCMBOL) (incorporated in the United Kingdom), between SCB and SCIPL.

Instruments have been gazetted in accordance with the Act, effectively fixing a percentage of 100 for SCHIBV and SCMBOL in relation to their interests in SCBAL. Fixing this percentage will allow SCHIBV and SCMBOL to hold up to 100 per cent of the shares in SCBAL.

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

Under the Act, it is not possible to make a 'class' instrument for the interests of the associates of SCHIBV and SCMBOL, 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 SCBAL arising from associate relationships with SCHIBV and SCMBOL.

The amendment also includes a new regulation to assist in determining whether a corporation is a subsidiary of another corporation. This regulation refers to the Corporations Law for determining whether a corporation is a subsidiary of another corporation and will assist in determining associate relationships under the Act.

The details of the proposed Regulations are as follows:

The Schedule to the Banks (Shareholdings) Regulations is amended by adding the following corporations to column 3 under Item 25:

Standard Chartered Holdings (International) BV, being the corporation formed or incorporated under that name in the Netherlands.

Standard Chartered Merchant Bank Overseas Limited, being a corporation formed or incorporated under that name in the United Kingdom.

The proposed Regulations also include the following clause to assist in determining a subsidiary:

For the purposes of these Regulations, whether a corporation is a subsidiary of another corporation or not is to be determined in accordance with the Corporations Law.


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