Commonwealth Numbered Regulations - Explanatory Statements

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BANKS (SHAREHOLDINGS) REGULATIONS (AMENDMENT) 1996 NO. 223

STATUTORY RULES 1996 No. 223

Issued by the Authority of the Assistant 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 Treasure'r 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 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.

Suncorp Insurance and Finance (Suncorp), which is wholly owned by the Queensland Government, currently holds 44.4 per cent of Bank of Queensland Limited (BQL). In addition, Metway Bank Limited (Metway) holds 3 per cent of BQL. The Queensland Government is proceeding with a proposal to rationalise financial institutions in the State with the idea of creating a large Queensland based financial institution. Specifically, the proposal involves merging Suncorp, the Queensland Industry Development Corporation and Metway. The Queensland legislation giving effect to this proposal provides that the. Suncorp shareholding in BQL cannot be transferred to Metway without the approval of BQL shareholders, excluding Suncorp and Metway. In order to avoid this potential impasse, the Queensland Government proposes to transfer Suncorp's shareholding in BQL to a wholly Queensland Government owned entity called Queensland Treasury Holdings Pty Ltd (QTH). By virtue of the association provisions of the Act QTH will also be deemed to have an interest in the 3 per cent of BQL shares held by Metway, taking its interest in BQL to 47.4 per cent. The Queensland Treasurer has provided the Treasurer with an undertaking that QTH will sell down its interest in BQL to less than 10 per cent within 3 years.

An instrument under subsection 10(4) of the Act has been prepared, fixing a percentage of 48 for QTH in relation to its interest in BQL.

Under section 9 of the Act the associates (including officers, partners, subsidiaries and related companies) of QTH would also be deemed to have the same interest in BQL as that corporation. In the case of officers of QTH, an instrument pursuant to subsection 10(5A) of the Act is proposed which would fix a percentage of 48 in relation to interests in BQL for those persons who are from time to time relevant officers of QTH.

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

The details of the proposed Regulations are as follows:

The Schedule to the Banks (Shareholdings) Regulations is amended by adding the following corporation to column 2:

Bank of Queensland Limited;

and by adding the following corporation to column 3:

Queensland Treasury Holdings Pty Ltd.