AUSTRALIA: Proposed changes to Australia substantial acquisitions in financial sector companies

Wednesday August 27 2014

The Australian Treasury has published an exposure draft proposing amendments to the Australia substantial acquisitions rules in financial sector companies.

The changes will amend the Financial Sector (Shareholdings) Act 1998 (FSSA) so that persons who do not hold a direct control interest in a financial sector company will be deemed to have no stake in that financial sector company. The amendments will mean that where the associate of the person does not have a direct control interest in a financial sector company, it is no longer necessary to include the associate’s interest with the aggregate direct control interest held by a person.

Current rules
Under the current rules, a person must obtain approval from the Treasurer to hold a stake in a financial sector company of more than 15%. A stake is defined in clause 10 of Schedule 1 of the FSSA as the aggregate of the direct control interest held by that person and the direct control interest held by associates of that person. Associates is defined to include a person’s relatives, partners, related companies and other parties.

For an associate holding a direct control interest in a financial sector company, the associate’s stake is equivalent to the aggregate of their own stake, and other associates, including the person acquiring the actual direct control interest. The associate is required to seek the Treasurer’s approval where the aggregated stake exceeds the 15 per cent shareholding limit.

Proposed new rules
The amendments proposed will remove the requirement on associates with no direct control interest in a financial sector company to seek the Treasurer’s approval for a shareholding in excess of 15%.

A person who does not hold a direct control interest in a financial sector company would be deemed to hold no stake in that company. Only where they held a direct control interest of any size would the interest be aggregated with that of the person’s associates to determine the total stake held.

For an associate holding a direct control interest in a financial sector company, the associate’s stake would be equivalent to the aggregate of their own stake, and other associates, including the person acquiring the actual direct control interest. The associate would be required to seek the Treasurer’s approval where the aggregated stake exceeds the 15% shareholding limit.

Consultation deadline and process
Submissions on the above changes may be submitted by email or by post to the Treasury by 17th September 2014.

Click on the above link for the exposure draft.