Commonwealth Numbered Regulations - Explanatory Statements

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BANKS (SHAREHOLDINGS) REGULATIONS (AMENDMENT) 1998 NO. 49

STATUTORY RULES 1998 NO. 49

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 Emits 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 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.

Rothschild Australia Limited is a merchant bank operating in Australia but N M Rothschild & Sons (Australia) Pty Limited has sought to upgrade this to a locally incorporated bank. RAL would be a 100 per cent owned subsidiary of NMRA Investments Pty Limited which is wholly owned by the ultimate Australian holding company N M Rothschild & Sons (Australia) Pty Limited.

The ultimate parent company is a private Swiss company, Rothschilds Continuation Holdings AG (RCH). RCH is controlled by the Rothschild family, which owns 75% of the shares. Two major United Kingdom financial institutions, Royal & Sun Alliance Insurance Group plc (20%) and Eagle Star Group (5%), hold the balance.

An instrument under subsection 10(4) of the Act has been prepared, fixing a percentage of 100 for NMRA Investments Pty Limited; N M Rothschild & Sons Limited, N M Rothschild & Sons (Australia) Pty Limited; N M Rothschild & Sons (Singapore) Limited; N M Rothschild & Sons (Hong Kong) Limited; N M Rothschild Corporate Finance Limited; N M Rothschild Holdings Limited; Rothschilds Continuation Limited; Rothschilds Continuation Holding s AG and Rothschild Partnership Holdings AG in relation to their interests in Rothschild Australia Limited.

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

Under the Act, it is not possible to make a 'class' instrument for the interests of the associates of the aforementioned corporations, other than its relevant officers. These other associates generally 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 amendments to the Regulations would be to disregard, for the purposes of the Act, interests in RAL arising from associate relationships with the aforementioned corporations.

The details of the Regulations are as follows:

The Schedule to the Banks (Shareholdings) Regulations has been amended by including the following corporations to column 3 (Persons having an interest in one or more voting shares of the bank):

NMRA Investments Pty Limited, being the corporation formed or incorporated under that name in Australia

N M Rothschild & Sons Limited, being the corporation formed or incorporated under that name in the United Kingdom

N M Rothschild & Sons, (Australia) Pty Limited, being the corporation formed or incorporated under that name in Australia

N M Rothschild & Sons (Singapore) Limited, being the corporation formed or incorporated under that name in Singapore

N M Rothschild & Sons (Hong Kong) Limited, being the corporation formed or incorporated under that name in. Hong Kong

N M Rothschild Corporate Finance Limited, being the corporation formed or incorporated under that name in the United Kingdom

N M Rothschild Holdings Limited, being the corporation formed or incorporated under that name in the United Kingdom

Rothschilds Continuation Limited, being the corporation formed or incorporated under that name in the United Kingdom

Rothschilds Continuation Holdings AG, being the corporation formed or incorporated under that name in Switzerland

Rothschild Partnership Holdings AG, being the corporation formed or incorporated under that name in Switzerland

Regulations commenced on Gazettal.