FINANCIAL SECTOR REFORM (AMENDMENTS AND TRANSITIONAL PROVISIONS) ACT (NO. 1) 1999 - SCHEDULE 4

Commonwealth Consolidated Acts

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FINANCIAL SECTOR REFORM (AMENDMENTS AND TRANSITIONAL PROVISIONS) ACT (NO. 1) 1999 - SCHEDULE 4

- Amendment of the Life Insurance Act 1995

1 Subsection 3(1)

Before "object", insert "principal".

Note: The heading to section 3 is altered by omitting "Object" and substituting "Objects".

2 After subsection 3(1)

Insert:

(1A): An additional object of this Act is to protect the interests of persons entitled to other kinds of benefits provided in the course of carrying on life insurance business (including business that is declared to be life insurance business).

3 Subsection 3(2)

Omit "this object", substitute "these objects".

4 At the end of section 3

Add:

(3): Generally, this Act achieves these objects by provisions applying to all life companies. However, there are a number of special provisions that apply only to friendly societies (see in particular Part 2A).

5 Subsection 9A(7)

Omit "within the meaning of section 67 of the National Health Act 1953 ".

6 At the end of subsection 11(1)

Add:

Note: Declarations under sections 12A and 12B have the effect of extending the kinds of business that are life insurance business for the purposes of this Act.

7 Paragraph 11(3)(a)

Omit "friendly society or".

8 At the end of subsection 11(3)

Add:

Note: This subsection has effect subject to sections 12A and 12B (under which certain business may be declared to be life insurance business for the purposes of this Act).

9 Subsection 12(2)

Repeal the subsection, substitute:

(2): APRA may, at the request of a life company, declare, in writing, that life insurance business carried on by the life company and included in one class of life insurance business is to be treated, for the purposes of this Act, as if it were included in the other class of life insurance business.

10 After section 12

Insert:

12A Declarations that insurance or annuity business is life insurance business

(1): APRA may, on the application of a company, declare, in writing, that insurance business (other than health insurance business or business of insurance against loss of, or damage to, property) or business relating to the payment of annuities:

(a): that is carried on by the company; or
(b): that the company proposes to carry on;

is to be treated, for the purposes of this Act, as if it were life insurance business.

(2): The application must comply with any applicable requirements in Prudential Rules.
(3): APRA must only make the declaration if it is satisfied that:

(a): the company is a life company; or
(b): the company is not currently a life company, but the only business it proposes to carry on if the declaration is made is:

(i): the business in respect of which the declaration is sought; or
(ii): that business and other business that will be, or is likely to be declared to be, life insurance business.

(4): In deciding whether to make the declaration, APRA may also have regard to the following matters:

(a): whether the business in respect of which the declaration is sought is similar in nature to other life insurance business;
(b): whether it would be appropriate for the business to be regulated under this Act;
(c): whether it would be more appropriate for the business to be regulated under some other law (for example, the Insurance Act 1973 );
(d): the tax treatment of benefits provided in the course of the business;
(e): if the company is not registered under this Act—whether the company would be able to be registered under this Act;
(f): any other matter that APRA considers is relevant.

(5): The declaration must also state the class of life insurance business in which the business is to be treated as being included.
(6): If APRA makes a declaration:

(a): this Act has effect accordingly; and
(b): APRA must give a copy of the declaration to the company.

12B Declarations that other financial business is life insurance business

(1): This section applies to business consisting of the provision of eligible financial benefits. For this purpose, an eligible financial benefit is a benefit in relation to which the following conditions are satisfied:

(a): the benefit is to be provided by a company to a person in accordance with a contract;
(b): the person's entitlement to the benefit is conditional on amounts being paid in accordance with the contract;
(c): the benefit is an amount of money (and is not, for example, the provision of a service or facility);
(d): the benefit is not an excluded benefit under any of the following subparagraphs:

(i): the benefit is an excluded benefit if the contract is entered into in the course of banking business, as defined in section 5 of the Banking Act 1959 , carried on by the company;
(ii): the benefit is an excluded benefit if the right to the benefit constitutes an interest in a registered scheme, as defined in section 9 of the Corporations Law;
(iii): the benefit is an excluded benefit if the right to the benefit constitutes an interest in a regulated superannuation fund, an approved deposit fund, a pooled superannuation trust or a public sector superannuation scheme, as defined in section 10 of the Superannuation Industry (Supervision) Act 1993 ;
(iv): the benefit is an excluded benefit if it is provided under a contract of insurance entered into in the course of carrying on health insurance business;
(v): the benefit is an excluded benefit if it is a benefit of a kind specified in regulations for the purposes of this subparagraph.

(2): APRA may, on the application of a company, declare, in writing, that business:

(a): that:

(i): is carried on by the company; and
(ii): is business to which this section applies; or

(b): that:

(i): the company proposes to carry on; and
(ii): will, when it is carried on, be business to which this section applies;

is to be treated, for the purposes of this Act, as if it were life insurance business.

(3): The application must comply with any applicable requirements in Prudential Rules.
(4): APRA must only make the declaration if it is satisfied that:

(a): the company is a life company; or
(b): the company is not currently a life company, but the only business it proposes to carry on if the declaration is made is:

(i): the business in respect of which the declaration is sought; or
(ii): that business and other business that will be, or is likely to be declared to be, life insurance business.

(5): In deciding whether to make the declaration, APRA may also have regard to the following matters:

(a): whether the business in respect of which the declaration is sought is similar in nature to other life insurance business;
(b): whether it would be appropriate for the business to be regulated under this Act;
(c): whether it would be more appropriate for the business to be regulated under some other law (for example, Chapter 5C of the Corporations Law);
(d): the tax treatment of benefits provided in the course of the business;
(e): if the company is not registered under this Act—whether the company would be able to be registered under this Act;
(f): any other matter that APRA considers is relevant.

(6): The declaration must also state the class of life insurance business in which the business is to be treated as being included.
(7): If APRA makes a declaration:

(a): this Act has effect accordingly; and
(b): APRA must give a copy of the declaration to the company.

11 After Part 2

Insert:

Part 2A—Special provisions relating to life companies that are friendly societies
Division 1—Preliminary
16A Overview

(1): The concept of a friendly society is defined for the purposes of this Act in section 16C.
(2): A friendly society will be a life company if it carries on life insurance business in Australia.
(3): In working out whether a friendly society does carry on life insurance business (within the meaning of section 11), the effect of Division 3 must be taken into account. The effect of any relevant declarations under section 12A or 12B must also be taken into account.
(4): This Act applies to life companies that are friendly societies subject to:

(a): the modified operation of key concepts set out in Division 3; and
(b): the modifications relating to statutory funds set out in Division 4; and
(c): any other modifications set out in Division 5 or in regulations for the purposes of section 16ZC.

(5): In addition to the modifications set out in this Part and in regulations for the purposes of section 16ZC, this Act includes some other special provisions in relation to friendly societies. See in particular:

(a): various provisions in Division 2 of Part 6 about auditors of friendly societies; and
(b): various provisions in Division 2 of Part 8 about winding up of friendly societies.

(6): Unless a contrary intention appears, a reference in this Act to a particular provision of this Act also includes, if that provision has been modified as mentioned in subsection (4), a reference to that provision as so modified.

Note: So, for example, if a provision to which section 125A or 125B applies has been modified, an exemption order under that section may be made in relation to the provision as so modified.

16B Definitions

(1): For the purposes of this Act:

"adequately adopted", in relation to benefit fund rules or an amendment of benefit fund rules, has the meaning given by subsection (2).

"approved benefit fund" means a benefit fund for which there are approved benefit fund rules.

"approved benefit fund rules "means rules (as amended from time to time by amendments in force under section 16T) in relation to which the following conditions are satisfied:

(a): an approval under section 16L is in force in relation to the rules; and
(b): the rules are in force under section 16N.

"benefit fund" means a fund:

(a): that is established to provide benefits in accordance with rules of a friendly society; and
(b): that is established in the records of the friendly society.

"benefit fund rules", in relation to a benefit fund, means the rules referred to in paragraph (a) of the definition of benefit fund .

"friendly society" has the meaning given by section 16C.

"jointly regulated friendly society" has the meaning given by subsection 16ZB(2).

(2): For the purposes of this Act, benefit fund rules of a company have, or an amendment of benefit fund rules of a company has, been adequately adopted if:

(a): the rules have, or the amendment has, been adopted by or on behalf of the company, or by or on behalf of the members or a class of the members of the company, in a way set out in Prudential Rules for the purposes of this subsection; and
(b): APRA considers that adoption of the rules or the amendment in that way adequately takes into account the interests of members of the company.

APRA may consult ASIC in considering the matters referred to in paragraph (b).

Division 2—Friendly societies and how this Act applies to them
16C What is a friendly society?

(1): For the purposes of this Act, a friendly society is a body:

(a): that is registered as a company under the Corporations Law of a State or an internal Territory; and
(b): that is either:

(i): taken to be registered under this Act because of item 11 of Schedule 8 to the Financial Sector Reform (Amendments and Transitional Provisions) Act (No. 1) 1999 ; or
(ii): covered by a determination under subsection (2).

(2): APRA may, in writing, determine that a specified body that is registered as a company under the Corporations Law of a State or an internal Territory is a friendly society for the purposes of this Act.

Note: A company may be specified by name, by inclusion in a specified class or in some other way.

(3): APRA may, in writing, vary or revoke a determination made under subsection (2).
(4): APRA must comply with any applicable requirements in Prudential Rules relating to the circumstances in which the powers under subsections (2) and (3) may be exercised.
(5): If APRA:

(a): makes a determination under subsection (2); or
(b): varies or revokes a determination under subsection (3);

APRA must cause notice of that action to be published in the Gazette . If the action relates to a particular company, otherwise than because the company is included in a specified class of companies, APRA must also give the company written notice of the action.

(6): If APRA:

(a): makes a determination under subsection (2); or
(b): varies or revokes a determination under subsection (3);

APRA must also give notice of that action to ASIC.

16D Act applies to friendly societies in accordance with this Part

This Act applies to a friendly society subject to the provisions of this Part.

Note: As noted in subsection 16A(5), this Act also contains some other special provisions in relation to friendly societies.

16E Restriction on use of expression friendly society

(1): A body corporate is guilty of an offence if:

(a): it assumes or uses, in Australia, the expression friendly society in relation to a financial business carried on by the body corporate (whether or not in Australia); and
(b): it is not a friendly society; and
(c): APRA did not consent to that assumption or use of that expression.

Maximum penalty: 50 penalty units.

Note: If a body corporate is convicted of an offence against this subsection, subsection 4B(3) of the Crimes Act 1914 allows a court to impose a fine of up to 5 times the penalty stated above.

(2): If a body corporate assumes or uses the expression friendly society in circumstances that give rise to the body corporate committing an offence against subsection (1), the body corporate is guilty of an offence against that subsection in respect of:

(a): the first day on which the offence is committed; and
(b): each subsequent day (if any) on which the circumstances that gave rise to the body corporate committing the offence continue (including the day of conviction for any such offence or any later day).

Note: This subsection is not intended to imply that section 4K of the Crimes Act 1914 does not apply to offences against this Act or the regulations.

(3): A consent may be expressed to apply to a particular body corporate or to bodies corporate included in a class of bodies corporate.
(4): APRA may, at any time:

(a): impose conditions, or additional conditions, on a consent; or
(b): vary or revoke conditions imposed on a consent; or
(c): revoke a consent.

(5): The form of the granting of a consent, or the taking of action under subsection (4) in relation to a consent, is to be as follows:

(a): if the consent applies to a particular body corporate—notice in writing served on the body corporate;
(b): if the consent applies to a class of bodies corporate—notice in writing published in the Gazette .

(6): If APRA:

(a): grants a consent; or
(b): takes action under subsection (4) in relation to a consent;

APRA must also give ASIC notice of the granting of the consent or the taking of that action.

(7): A body corporate is guilty of an offence if:

(a): it has been given a consent under this section; and
(b): it contravenes a condition to which the consent is subject.

Maximum penalty: 50 penalty units.

Note: If a body corporate is convicted of an offence against this subsection, subsection 4B(3) of the Crimes Act 1914 allows a court to impose a fine of up to 5 times the penalty stated above.

(8): If a body corporate does or fails to do an act in circumstances that give rise to the body corporate committing an offence against subsection (7), the body corporate is guilty of an offence against that subsection in respect of:

(a): the first day on which the offence is committed; and
(b): each subsequent day (if any) on which the circumstances that gave rise to the body corporate committing the offence continue (including the day of conviction for any such offence or any later day).

Note: This subsection is not intended to imply that section 4K of the Crimes Act 1914 does not apply to offences against this Act or the regulations.

(9): In this section:

"financial business" means a business that:

(a): consists of, or includes, the provision of financial services; or
(b): relates, in whole or in part, to the provision of financial services.

Division 3—Modified operation of key concepts
16F Issue, ownership etc. of policies

New interests in benefit funds

(1): A friendly society is taken to issue a policy to a person when it accepts an application by the person for an interest in a benefit fund of the friendly society in accordance with the benefit fund rules. However, acceptance of an application for an increase to, or a continuation of, an existing interest in a benefit fund does not constitute the issue of a policy.

Interests in benefit funds existing as at the transfer date

(2): An interest that a person holds in a benefit fund of a friendly society on the date that is the transfer date for the purposes of the Financial Sector Reform (Amendments and Transitional Provisions) Act (No. 1) 1999 is taken to be a policy issued to the person by the friendly society.

Terms etc. of the policy

(3): If subsection (1) or (2) applies, then:

(a): the benefit fund rules are taken to be the terms of the policy referred to in that subsection; and
(b): the owner of the policy is taken to be:

(i): the person referred to in that subsection; or
(ii): if that person's rights to the interest in the benefit fund have been assigned under this Act or transferred by the operation of the benefit fund rules—the person who has those rights; and

(c): an amount that is required or permitted, by the benefit fund rules, to be paid in respect of those rights is taken to be a premium in respect of the policy; and
(d): the policy is taken to be referable to the benefit fund.

Note 1: Approved benefit fund rules have effect as a contract (see section 16Z).

Note 2: The policy that a friendly society is taken by subsection (1) or (2) to issue or to have issued will, depending on the terms of the benefit fund rules, be:

(a) a life policy (see section 9); or
(b) a sinking fund policy (see the definition in the Schedule); or
(c) a section 12A or 12B policy (see the definition in the Schedule); or
(d) some other kind of policy.

(4): Subsections (1), (2) and (3) have effect:

(a): for the purposes of this Act; and
(b): for the purposes of all other laws of the Commonwealth, subject to the expression of a contrary intention.

(5): In this section:

policy is not limited to a life policy, a sinking fund policy or a section 12A or 12B policy.

Division 4—Modified operation of provisions relating to statutory funds
Subdivision 1—Modifications
16G Act generally applies as if references to a statutory fund were references to an approved benefit fund

(1): Subject to subsection (2), this Act applies to a friendly society as if each reference to a statutory fund were instead a reference to an approved benefit fund.

Note: An approved benefit fund is a benefit fund for which there are approved benefit fund rules (see the definition in section 16B). Benefit fund rules are approved benefit fund rules if an approval under section 16L is in force in relation to the rules and the rules are in force under section 16N.

(2): Subsection (1) has effect subject to:

(a): the other provisions of this Subdivision; and
(b): the expression of a contrary intention in a particular provision; and
(c): the expression of a contrary intention in a particular provision of regulations for the purposes of section 16ZC.

(3): Other laws of the Commonwealth have effect in relation to friendly societies as if any reference in such a law to a statutory fund of a life company also included a reference to an approved benefit fund of a friendly society, subject to the expression of a contrary intention.

16H Modification of section 34

(2): Assets or investments obtained by the application of assets (other than money) of an approved benefit fund are themselves assets of the fund. If an investment is a joint investment (see subsection (4A)), the asset is an asset of each of the contributing funds in proportion to their respective contributions.
(3): Subject to subsections (4) and (4A), a friendly society must keep assets of an approved benefit fund distinct and separate from assets of other approved benefit funds and from all other money, assets or investments of the friendly society.
(4): A friendly society may maintain a single bank account for money that constitutes assets of 2 or more approved benefit funds if the account is maintained in accordance with Prudential Rules.
(4A): A friendly society may invest assets of 2 or more approved benefit funds in a single investment if:

(a): the approved benefit fund rules of each of those funds provide for the assets of the fund to be invested together with the assets of the other fund or funds; and
(b): the investment complies with the applicable requirements (if any) in Prudential Rules relating to assets of one fund being invested together with assets of another fund or funds.

The investment is referred to as a joint investment , each of the funds is referred to as a contributing fund and the assets of a fund that are invested in the investment are referred to as the fund's contribution .

16I Modification of section 38

(8): Nothing in this section authorises a friendly society to apply assets of an approved benefit fund, or to mortgage or charge such assets, otherwise than as provided by the approved benefit fund rules.

16J Modification of section 43

Section 43 has effect in relation to a friendly society as if the following paragraph were inserted after paragraph (3)(b):

(ba): nothing in this Act authorises a friendly society to make an investment of assets of an approved benefit fund unless:

(i): the investment is of a kind provided for by the approved benefit fund rules; and
(ii): the investment complies with the requirements (if any) in Prudential Rules;

16K Modification of section 45

(5): In this section as it applies to a company that is a friendly society, a reference to an approved benefit fund includes a reference to the management fund of the society. The management fund of the society is the fund of the society that consists of the assets and liabilities of the society that do not form part of an approved benefit fund of the society.

Subdivision 2—Approved benefit fund rules
16L Approval of benefit fund rules

(1): A body that is registered as a company under the Corporations Law of a State or an internal Territory may apply in writing to APRA for approval of benefit fund rules for a benefit fund operated or to be operated by the company.

Note 1: The application may also include an application for approval of consequential amendments of the company's constitution (see section 16U).

Note 2: Rules of a jointly regulated friendly society relating to its health insurance business are not covered by this Subdivision.

(2): The application must be accompanied by a copy of the benefit fund rules and must comply with any applicable requirements in Prudential Rules.
(3): APRA must, in writing, approve the benefit fund rules if:

(a): application has been made for approval of the rules in accordance with subsection (2); and
(b): APRA is satisfied that:

(i): the carrying on of the activities to which the rules relate constitutes the carrying on of life insurance business; and
(ii): the rules are consistent with this Act; and

(c): APRA is satisfied that the rules have been adequately adopted.

APRA must give the company written notice of its decision whether to approve the rules.

(4): The company is guilty of an offence if:

(a): APRA has approved the benefit fund rules; and
(b): Prudential Rules require the company to notify some or all of its members of the rules; and
(c): the company does not notify those members of the rules in accordance with that requirement.

Maximum penalty for contravention of this subsection: 50 penalty units .

Note: If a body corporate is convicted of an offence against this subsection, subsection 4B(3) of the Crimes Act 1914 allows a court to impose a fine of up to 5 times the penalty stated above.

16M Lodging of benefit fund rules with ASIC after approval by APRA

(1): This section applies if, under section 16L, APRA approves benefit fund rules pursuant to an application made by a company.
(2): The company must lodge a copy of the rules with ASIC in accordance with any requirements determined by ASIC.
(3): The company is guilty of an offence if it does not comply with subsection
(2): within 14 days after the day on which APRA approved the rules.

Maximum penalty for contravention of this subsection: 5 penalty units.

Note: If a body corporate is convicted of an offence against this subsection, subsection 4B(3) of the Crimes Act 1914 allows a court to impose a fine of up to 5 times the penalty stated above.

16N When benefit fund rules approved by APRA come into force

Benefit fund rules approved by APRA under section 16L come into force on the later of the following days:

(a): the day on which a copy of the rules is lodged with ASIC;
(b): the day (if any) specified in the rules as the day on which they are to come into force;
(c): if the company that applied for approval of the rules was not a friendly society on the day on which the application was made—the day on which the company becomes a friendly society.

16O Benefit fund rules approved by APRA and in force form part of company's constitution

Benefit fund rules that:

(a): have been approved by APRA under section 16L; and
(b): have come into force under section 16N;

are, by force of this section, part of the constitution of the company that applied for approval of the rules.

16P Amendment of approved benefit fund rules not effective unless approved by APRA

(1): An amendment of approved benefit fund rules of a friendly society is effective if, and only if:

(a): the amendment has been approved by APRA under subsection 16Q(3) and is in force under section 16T; or
(b): the amendment is determined by APRA under subsection 16R(4) and is in force under section 16T.

(2): Without limiting subsection (1), an amendment of approved benefit fund rules that is in force under section 16T takes effect, by force of this section, as an amendment of the constitution of the friendly society.

16Q Amendment of approved benefit fund rules on initiative of friendly society

(1): A friendly society may apply in writing for approval of a proposed amendment of approved benefit fund rules of the friendly society.

Note: The application may also include an application for approval of consequential amendments of the company's constitution (see section 16U).

(2): The application must be accompanied by a copy of the amendment and must comply with any applicable requirements in Prudential Rules.
(3): APRA must, in writing, approve the amendment if:

(a): application has been made for approval of the amendment in accordance with subsection (2); and
(b): APRA is satisfied that the rules, as proposed to be amended, will satisfy the requirements of paragraph 16L(3)(b); and
(c): APRA is satisfied that the amendment has been adequately adopted.

APRA must give the friendly society written notice of its decision whether to approve the amendment.

(4): The friendly society is guilty of an offence if:

(a): APRA has approved the amendment; and
(b): Prudential Rules require the friendly society to notify some or all of its members of the amendment; and
(c): the friendly society does not notify those members of the amendment in accordance with that requirement.

Maximum penalty for contravention of this subsection: 50 penalty units.

Note: If a body corporate is convicted of an offence against this subsection, subsection 4B(3) of the Crimes Act 1914 allows a court to impose a fine of up to 5 times the penalty stated above.

16R Amendment of approved benefit fund rules as required by APRA

When this section applies

(1): This section applies if APRA considers that approved benefit fund rules of a friendly society are deficient because they are inconsistent with this Act.

APRA may give notice requiring amendment

(2): APRA may, by written notice given to the friendly society, require the friendly society:

(a): to propose an amendment of the approved benefit fund rules, to rectify the deficiency, in accordance with requirements specified in, or determined in accordance with, the notice; and
(b): to submit the amendment for APRA's approval.

The notice must specify a reasonable period for the submission of the amendment.

Compliance with notice—submission of amendment for approval under section 16Q

(3): To submit an amendment for APRA's approval, the friendly society must apply in writing to APRA for approval of the amendment under section 16Q.

Non-compliance with notice—APRA's power to determine amendment

(4): If:

(a): the friendly society submits an amendment for APRA's approval before the end of the period specified in the notice, but APRA refuses to approve the amendment under section 16Q; or
(b): the friendly society fails to submit an amendment for APRA's approval before the end of that period;

APRA may, in writing, determine an amendment of the rules to rectify the deficiency.

Non-compliance with notice—notifying friendly society of amendment determined

(5): If APRA determines an amendment of the approved benefit fund rules under subsection (4), APRA must immediately give the friendly society written notice of the amendment.

Non-compliance with notice—notifying members of amendment

(6): The friendly society is guilty of an offence if:

(a): APRA gives the friendly society notice of an amendment of the benefit fund rules that APRA has determined; and
(b): Prudential Rules require the friendly society to notify some or all of its members of the amendment; and
(c): the friendly society does not notify those members of the amendment in accordance with that requirement.

Maximum penalty for contravention of this subsection: 50 penalty units.

Note: If a body corporate is convicted of an offence against this subsection, subsection 4B(3) of the Crimes Act 1914 allows a court to impose a fine of up to 5 times the penalty stated above.

16S Lodging of amendment of benefit fund rules with ASIC after approval by APRA

(1): This section applies if, under section 16Q, APRA approves an amendment of benefit fund rules lodged by a friendly society.
(2): The friendly society must lodge a copy of the amendment with ASIC in accordance with any requirements determined by ASIC.
(3): The friendly society is guilty of an offence if it does not comply with subsection (2) within 14 days after the day on which APRA approved the amendment.

Maximum penalty for contravention of this subsection: 5 penalty units.

Note: If a body corporate is convicted of an offence against this subsection, subsection 4B(3) of the Crimes Act 1914 allows a court to impose a fine of up to 5 times the penalty stated above.

16T When amendment of benefit fund rules approved or determined by APRA come into force

An amendment of approved benefit fund rules:

(a): approved by APRA under section 16Q; or
(b): determined by APRA under section 16R;

comes into force on the later of the following days:

(c): the day on which a copy of the amendment is lodged with ASIC;
(d): the day (if any) specified in the amendment as the day on which it is to come into force.

16U Approval of consequential amendments of company's constitution

(1): An application:

(a): by a company under section 16L for approval of benefit fund rules; or
(b): by a company under section 16Q for approval of a proposed amendment of approved benefit fund rules;

may also include an application for approval of proposed amendments (the consequential amendments ) of the constitution of the company that are consequential on the proposed benefit fund rules or amendment of benefit fund rules.

Note: This covers applications by friendly societies, all of which are companies.

(2): The application for approval of the consequential amendments must be accompanied by a copy of the consequential amendments and must comply with any applicable requirements in Prudential Rules.
(3): APRA may approve the consequential amendments if APRA is satisfied that the changes proposed to be made by the consequential amendments:

(a): are consequential on the proposed benefit fund rules or amendment of benefit fund rules; and
(b): do not also deal with other matters.

APRA may consult ASIC in considering the matters referred to in paragraphs (a) and (b). APRA must give the company written notice of its decision whether to approve the consequential amendments.

(4): The company is guilty of an offence if:

(a): APRA has approved the consequential amendments; and
(b): Prudential Rules require the company to notify some or all of its members of the consequential amendments; and
(c): the company does not notify those members of the consequential amendments in accordance with that requirement.

Maximum penalty for contravention of this subsection: 50 penalty units.

Note: If a body corporate is convicted of an offence against this subsection, subsection 4B(3) of the Crimes Act 1914 allows a court to impose a fine of up to 5 times the penalty stated above.

16V Consequential amendments of constitution as required by APRA

When this section applies

(1): This section applies if APRA considers that the constitution of a company is deficient because, as a result of the adoption or amendment of approved benefit fund rules of the company, the constitution is inconsistent with those rules.

APRA may give notice requiring amendments

(2): APRA may, by written notice given to the company, require the company:

(a): to propose consequential amendments to its constitution, to rectify the deficiency, in accordance with requirements specified in, or determined in accordance with, the notice; and
(b): to submit the amendments for APRA's approval.

The notice must specify a reasonable period for the submission of the amendments.

Compliance with notice—submission of amendments for approval

(3): To submit consequential amendments for APRA's approval, the company must apply in writing to APRA for approval of the amendments under this subsection. The application must be accompanied by a copy of the amendments and must comply with any applicable requirements in Prudential Rules.

Approval of submitted amendments

(4): APRA may approve the consequential amendments if APRA is satisfied that:

(a): an application has been made for approval of the amendments in accordance with subsection (3); and
(b): the amendments rectify the deficiency referred to in subsection (1).

APRA must give the company written notice of its decision whether to approve the consequential amendments.

Non-compliance with notice—APRA's power to determine amendments

(5): If:

(a): the company submits consequential amendments for APRA's approval before the end of the period specified in the notice, but APRA refuses to approve the amendments under subsection (4); or
(b): the company fails to submit consequential amendments for APRA's approval before the end of that period;

APRA may, in writing, determine consequential amendments of the constitution to rectify the deficiency.

Non-compliance with notice—notifying company of amendments determined

(6): If APRA determines consequential amendments of the constitution under subsection (5), APRA must immediately give the company written notice of the amendments.

Notifying members of amendments

(7): The company is guilty of an offence if:

(a): APRA has either:

(i): approved consequential amendments under subsection (4); or
(ii): given the company notice of consequential amendments that APRA has determined under subsection (5); and

(b): Prudential Rules require the company to notify some or all of its members of the consequential amendments; and
(c): the company does not notify those members of the consequential amendments in accordance with that requirement.

Maximum penalty for contravention of this subsection: 50 penalty units.

Note: If a body corporate is convicted of an offence against this subsection, subsection 4B(3) of the Crimes Act 1914 allows a court to impose a fine of up to 5 times the penalty stated above.

16W Lodging of consequential amendments with ASIC after approval by APRA

(1): This section applies if, under subsection 16U(3) or subsection 16V(4), APRA approves consequential amendments of the constitution of a company pursuant to an application by the company.
(2): The company must lodge a copy of the consequential amendments with ASIC in accordance with any requirements determined by ASIC.
(3): The company is guilty of an offence if it does not comply with subsection
(2): within 14 days after the day on which APRA approved the consequential amendments.

Maximum penalty for contravention of this subsection: 5 penalty units.

Note: If a body corporate is convicted of an offence against this subsection, subsection 4B(3) of the Crimes Act 1914 allows a court to impose a fine of up to 5 times the penalty stated above.

16X When consequential amendments approved or determined by APRA come into force

Consequential amendments:

(a): approved by APRA under subsection 16U(3) or subsection 16V(4); or
(b): determined by APRA under subsection 16V(5);

come into force on the later of the following days:

(c): the day on which a copy of the amendments is lodged with ASIC;
(d): the day (if any) specified in the amendments as the day on which they are to come into force.

16Y Consequential amendments approved by APRA and in force take effect as amendments of company's constitution

A consequential amendment of a company's constitution that is in force under section 16X takes effect, by force of this section, as an amendment of the constitution of the company.

16Z Contractual effect of approved benefit fund rules and policies

(1): Approved benefit fund rules of a friendly society have effect as a contract between the friendly society and each person who is, because of section 16F, taken to be the owner of a policy referable to the benefit fund.
(2): Without limiting the generality of subsection (1), a policy that is, because of section 16F, taken to be issued by a friendly society has effect, and may be enforced, as a contract between:

(a): the person who is, because of that section, taken to be the owner of the policy; and
(b): either:

(i): the friendly society that is taken to have issued the policy; or
(ii): if that friendly society's liabilities under the policy have been transferred or assigned to another company—that other company.

Division 5—Other modifications
16ZA Assignment of an interest in a benefit fund that is, because of section 16F, taken to be a policy

An assignment of an interest in a benefit fund that is, because of section 16F, taken to be a policy is taken to satisfy the requirements of subsection 200(2) if:

(a): the relevant benefit fund rules set out the requirements for the assignment to take place; and
(b): the assignment is made in a way that meets those requirements.

16ZB Certain friendly societies may continue to carry on health insurance business—modified operation of this Act

(1): A friendly society:

(a): that is taken to be registered under this Act because of item 11 of Schedule 8 to the Financial Sector Reform (Amendments and Transitional Provisions) Act (No. 1) 1999 ; and
(b): that was carrying on health insurance business immediately before being taken to be so registered;

may continue to carry on that health insurance business after being taken to be so registered.

(2): A reference in this Act to a jointly regulated friendly society is a reference to a friendly society that carries on life insurance business and that also carries on health insurance business in accordance with subsection (1).

Note: The society's life insurance business is regulated under this Act, while its health insurance business is regulated under the National Health Act 1953 .

(3): Section 234 has effect subject to subsection (1) of this section.
(4): Without limiting the matters that may be dealt with in regulations under section 16ZC, regulations under that section may set out modifications of this Act as it applies in relation to jointly regulated friendly societies.

16ZC Other modifications

(1): The regulations may set out modifications of this Act that are to apply in relation to friendly societies (in addition to the modifications set out in the other provisions of this Part).
(2): Modifications set out in regulations for the purposes of subsection (1) cannot:

(a): modify a provision of this Act that creates an offence; or
(b): include new provisions that create offences.

(3): This Act applies to a friendly society subject to any modifications set out in regulations for the purposes of subsection (1).
(4): In this section:

"modifications" includes omissions, additions and substitutions.

12 At the end of section 17

Add:

(4): If a declaration is in force under section 12A or 12B in relation to business carried on or proposed to be carried on by a company, the company must not intentionally carry on that business unless the company is registered under this Act.

Note: The heading to section 17 is replaced by the heading "When registration is required".

13 Paragraphs 21(3)(a), (b), (c) and (ca)

Repeal the paragraphs.

14 Paragraph 21(3)(e)

Repeal the paragraph, substitute:

(e): that the company is not able, or is unlikely to be able, to comply with the provisions of this Act;

15 Subsections 21(4) and (8)

Repeal the subsections.

16 Sections 23 and 24

Repeal the sections.

17 Paragraph 30(e)

Omit "divided or amalgamated", substitute "restructured or terminated".

18 At the end of subsection 35(4)

Add:

Note: If the fund or funds to which a policy is referable is changed in this way, section 55 must be complied with.

19 Paragraphs 46(a) and (b)

Repeal the paragraphs, substitute:

(a): change the statutory fund or funds to which a policy is referable; or
(b): terminate a statutory fund;

Note: The heading to section 46 is replaced by the heading "Restriction on restructure or termination of statutory funds".

20 Section 46

Omit "except with the written approval of APRA under Division 3", substitute:

except in accordance with:

(c): subsection 35(4) and section 55; or
(d): Division 3.

21 At the end of section 46

Add:

(2): Subsection (1) does not prevent a liquidator doing anything authorised or required by or under this Act or any other law of the Commonwealth or of a State or Territory.

22 Division 3 of Part 4

Repeal the Division, substitute:

Division 3—Restructure and termination of statutory funds
52 Restructure of statutory funds

(1): Prudential Rules may provide that:

(a): a life company may apply to APRA to restructure its statutory funds by making one or more policies that are referable to a statutory fund or funds of the company become referable to another statutory fund or funds of the company (whether existing or proposed); and
(b): if the application is approved, the restructure is to take place.

(2): The fund, or each fund, to which the policies are referable before the restructure is a transferring fund , and the fund, or each fund, to which the policies will become referable after the restructure is a receiving fund .
(3): Without limiting the generality of subsection (1), Prudential Rules may provide for the following:

(a): requirements for making the application;
(b): criteria for approving or refusing to approve the application;
(c): requirements to notify interested persons of the outcome of the application;
(d): matters connected with how the restructure takes place, including the following:

(i): policies becoming referable to a receiving fund or funds;
(ii): policy and other liabilities becoming referable to a receiving fund or funds;
(iii): assets of a transferring fund becoming assets of a receiving fund or funds;
(iv): the timing of the restructure;
(v): if a receiving fund is a proposed new statutory fund—the establishment of that fund;

(e): requirements for the company to give APRA information following the restructure.

(4): APRA cannot approve the application if it considers that:

(a): the restructure will result in unfairness to the owners of policies referable to a transferring fund or a receiving fund when those owners are viewed as a group; or
(b): immediately after the restructure:

(i): a transferring fund will not satisfy the solvency standard applicable to it; or
(ii): a receiving fund will not satisfy the solvency standard applicable to it; or

(c): the company is being wound up when the application is made.

53 Termination of statutory funds

(1): Prudential Rules may provide that:

(a): a life company may apply to APRA to terminate one or more of its statutory funds; and
(b): if the application is approved, the termination is to take place.

(2): Without limiting the generality of subsection (1), Prudential Rules may provide for the following:

(a): requirements for making the application;
(b): criteria for approving or refusing to approve the application;
(c): requirements to notify interested parties of the outcome of the application;
(d): matters connected with how the termination takes place, including the following:

(i): distribution or application of assets;
(ii): settling of liabilities;
(iii): the timing of the termination;

(e): requirements for the company to give APRA information following the termination.

(3): APRA cannot approve the application if it considers that:

(a): the termination will result in unfairness to the owners of policies referable to the fund or funds when those owners are viewed as a group; or
(b): the company is being wound up when the application is made.

54 Prudential Rules may deal with transitional matters

Prudential Rules may deal with matters of a transitional, saving or application nature relating to the transition:

(a): from Division 3 of Part 4 of this Act, as in force before the date that is the transfer date for the purposes of the Financial Sector Reform (Amendments and Transitional Provisions) Act (No. 1) 1999 , to this Division; and
(b): from the Friendly Societies Codes (as defined in item 1 of Schedule 8 to the Financial Sector Reform (Amendments and Transitional Provisions) Act (No. 1) 1999 ), as in force before the date that is the transfer date for the purposes of that Act, to this Division.

23 Division 4 of Part 4 (heading)

Repeal the heading, substitute:

Division 4—Additional requirements for transfer of policies between statutory funds by endorsement
24 Paragraph 55(2)(b)

Before "either", insert "because of an endorsement as mentioned in subsection 35(4),".

Note: The heading to section 55 is replaced by the heading "Additional requirements for transfer of policies between statutory funds by endorsement".

25 Subsection 55(3)

After "If", insert ", because of an endorsement as mentioned in subsection 35(4)".

26 Part 5 (heading)

Repeal the heading, substitute:

Part 5—Solvency and capital standards
27 After subsection 70(1)

Insert:

(1A): The capital adequacy standard may be so expressed as to set different standards of capital adequacy:

(a): for statutory funds of different companies; or
(b): for different classes of statutory funds; or
(c): to have effect in relation to a statutory fund in circumstances specified in the capital adequacy standard.

(1B): Without limiting subsections (1) and (1A), the capital adequacy standard may provide that, in specified circumstances, a life company is taken to comply with the capital adequacy standard in respect of a statutory fund if it complies with the solvency standard under Division 1 in respect of the statutory fund.

28 Subsection 73(1)

After "owners", insert "and prospective owners".

29 At the end of Part 5

Add:

Division 3—Management capital standard
73A Purpose of Division

The purpose of this Division is to make provision for the setting of a management capital standard with which life companies must comply in order to ensure that they are adequately capitalised outside their statutory funds.

73B Management capital standard

(1): The management capital standard consists of provision made by an actuarial standard for the purposes of this Division.
(2): The management capital standard may be so expressed as to set different standards of management capital:

(a): for different classes of companies; or
(b): to have effect in relation to a company in circumstances specified in the management capital standard.

(3): The Board may only make an actuarial standard referred to in subsection
(1): with the agreement of APRA.

73C Purpose of management capital standard

The purpose of the management capital standard is to ensure, as far as practicable, that:

(a): the financial position of a life company reflects an appropriate capital commitment, outside the statutory funds of the company, to the life insurance business of the company; and
(b): a life company will be able to meet its obligations in respect of any business it carries on that is not life insurance business as those obligations fall due.

73D Modified application of management capital standard for particular companies

(1): The Treasurer may make a written declaration that the management capital standard is to have effect, in relation to a particular life company, with the modifications specified in the declaration. The declaration has effect accordingly.
(2): The Treasurer may only make a declaration under subsection (1) if he or she is satisfied that:

(a): in the particular circumstances of the company, compliance with some or all of the management capital standard is unnecessary or is likely to affect adversely the company's ability to carry on its business in accordance with the best interests of owners of policies issued by the company or of shareholders of the company; and
(b): the making of the declaration is not likely to have an adverse effect on the interests of owners of policies issued by the company.

73E Obligation to comply with standard

Every life company must, at all times, comply with the management capital standard.

73F APRA's power to give management capital directions to particular life companies

(1): If, having regard to such matters as APRA considers relevant, APRA is satisfied that there are reasonable grounds for believing that the financial position of a life company does not reflect an appropriate capital commitment, outside the statutory funds of the company, to the life insurance business of the company, APRA may, with the Treasurer's agreement, give the company written directions under this subsection.
(2): If, having regard to:

(a): the nature of the obligations of a life company relating to any business it carries on that is not life insurance business; or
(b): the nature and extent of the risks undertaken in respect of any business of a life company that is not life insurance business; or
(c): the nature or value of the assets of a life company that are not assets of a statutory fund of the life company; or
(d): any other matter that APRA considers relevant;

APRA is satisfied that there are reasonable grounds for believing that the life company may not be able to meets its obligations in respect of any business it carries on that is not life insurance business as those obligations fall due, APRA may, with the Treasurer's agreement, give the company written directions under this subsection.

(3): APRA may give a direction to a company under subsection (1) or (2) even if, when the direction is given, the company meets the requirements of the management capital standard and there are reasonable grounds for believing that the company will meet those requirements at all times while the direction is in force.
(4): A life company must comply with a direction given to it under subsection
(1): or (2).
(5): Subject to subsections (6), (7) and (8), a direction remains in force for 12 months commencing on the day on which the direction is given. However, nothing prevents APRA from giving a further direction to the company to take effect immediately after the expiry of a previous direction.
(6): If APRA thinks that a particular direction is no longer required or that it should be varied, APRA must, by written notice given to the company, revoke or, with the Treasurer's agreement, vary the direction.
(7): If a company to which a direction has been given asks APRA, in writing, to revoke or vary the direction, APRA must:

(a): if APRA thinks, and the Treasurer agrees, that the direction is no longer necessary or should be varied—revoke or vary the direction; or
(b): in any other case—refuse to revoke or vary the direction.

(8): APRA must give the company written notice of a decision made under subsection (7).
(9): A direction to a company ceases to have effect if an order is made for the winding-up of the company.
(10): In this section:

"direction" includes a direction as varied.

30 At the end of subsection 84(1)

Add:

Note: For whether an individual is an approved auditor in relation to a particular life company, see the definition of approved auditor in the Schedule.

31 Subsection 85(1)

Repeal the subsection, substitute:

(1): APRA may, in writing, approve a person as an auditor of life companies of either or both of the following kinds:

(a): life companies other than friendly societies;
(b): friendly societies.

32 Subsection 85(2)

After "approve a person", insert "as an auditor of life companies of a kind referred to in subsection (1)".

33 Paragraph 85(2)(b)

Omit "a life company", substitute "life companies of that kind".

34 At the end of Part 6

Add:

Division 8—APRA's power to make exemption orders
125A APRA's power to make specific exemption orders

(1): In this section:

"provision to which this section applies" means:

(a): section 76;
(b): section 82;
(c): section 83;
(d): section 93;
(e): section 113;
(f): any other provision of this Part prescribed by the regulations for the purposes of this definition.

(2): On an application made in accordance with subsection (5) in relation to a life company, APRA may make an order in writing relieving any of the following from a provision to which this section applies:

(a): the directors of the life company;
(b): the life company;
(c): the approved auditor of the life company;
(d): the appointed actuary of the life company.

(3): APRA must not make the order unless it considers it is appropriate to do so, having regard to any criteria specified in Prudential Rules for the purposes of this subsection.
(4): The order may:

(a): be expressed to be subject to conditions; and
(b): be indefinite or limited to a specified period.

(5): The application must be:

(a): authorised by a resolution of the directors of the life company; and
(b): in writing and signed by a director; and
(c): lodged with APRA.

(6): APRA must give the applicant written notice of:

(a): the making, revocation or suspension of the order; or
(b): its refusal to make the order.

(7): APRA must give ASIC notice of the making, revocation or suspension of the order.

125B APRA's power to make class exemption orders

(1): In this section:

"provision to which this section applies" means:

(a): section 76;
(b): section 82;
(c): section 83;
(d): section 93;
(e): section 113;
(f): any other provision of this Part prescribed by the regulations for the purposes of this definition.

(2): APRA may make an order in writing in respect of a specified class of life companies relieving any of the following from a provision to which this section applies:

(a): directors of life companies of that class;
(b): life companies of that class;
(c): approved auditors of life companies of that class;
(d): appointed actuaries of life companies of that class.

(3): APRA must not make the order unless it considers it is appropriate to do so, having regard to any criteria specified in Prudential Rules for the purposes of this subsection.
(4): The order may:

(a): be expressed to be subject to conditions; and
(b): be indefinite or limited to a specified period.

(5): Notice of the making, revocation or suspension of the order must be published in the Gazette .
(6): APRA must give ASIC notice of the making, revocation or suspension of the order.

35 Section 180

Omit "A life company", substitute "Subject to subsection (2), a life company".

36 At the end of section 180

Add:

(2): A life company may be wound up voluntarily if:

(a): the company is a friendly society; and
(b): each person with an interest in a benefit fund of the society is a member of the society; and
(c): each member of the society has only one vote on a special resolution to wind up the society (whether the resolution is decided on a show of hands or on a poll).

For this purpose, a member of the society is a person who is a member of the society for the purposes of the Corporations Law.

(3): If a special resolution to wind up a friendly society is passed, the society must lodge a copy of the special resolution with APRA.

Note: Under the Corporations Law, a copy of the resolution must also be lodged with ASIC.

(4): A friendly society is guilty of an offence if it does not comply with subsection (3) within 7 days after the day on which the special resolution was passed.

Maximum penalty for contravention of this subsection: 30 penalty units.

Note: If a body corporate is convicted of an offence against this subsection, subsection 4B(3) of the Crimes Act 1914 allows a court to impose a fine of up to 5 times the penalty stated above.

37 After section 183

Insert:

183A Application by liquidator for directions—voluntary winding up of friendly society

A liquidator may apply to the Court for directions regarding any matter arising under the voluntary winding-up of a friendly society.

Note: The liquidator must give APRA written notice under section 183 that the liquidator intends to make the application.

38 Subsection 186(2)

Omit "the directions", substitute "any directions".

39 After subsection 186(2)

Insert:

(2A): If the company is a friendly society, the liquidator must take account of the approved benefit fund rules of the society in making determinations under subsection (1), to the extent that those rules are consistent with any directions of the Court.

40 Paragraph 188(1)(c)

Repeal the paragraph, substitute:

(c): either:

(i): the Court orders that the company be wound up; or
(ii): for a company that is a friendly society referred to in subsection 180(2)—the members of the society have passed a special resolution that the society be wound up;

41 At the end of section 190

Add:

(5): Subsection (1) does not require that a transfer of life insurance business be made under a scheme approved by the Court if the transfer is a transfer of business made under the Financial Sector (Transfers of Business) Act 1999 .

42 Paragraph 199(1)(a)

Repeal the paragraph, substitute:

(a): enter into a policy (including a life policy on his or her own life or on another life); or

43 Paragraph 199(1)(b) and subsection 199(2)

Omit "life policy", substitute "policy".

44 Subsections 200(1), (6) and (8)

Omit "life policy", substitute "policy".

Note: The heading to section 200 is altered by omitting "life".

45 Section 206

Omit "life policies" (wherever occurring), substitute "policies".

46 Subsections 210(1) and (5)

Omit "life policy", substitute "policy".

47 Subsections 211(1) and (5)

Omit "life policy", substitute "policy".

48 Subsection 212(1)

Omit "life policies", substitute "policies".

49 Subsection 212(5)

Omit "life policy", substitute "policy".

50 After subsection 216(14)

Insert:

(14A): It is the intention of the Parliament that a law of a State or Territory has no effect to the extent to which it requires a life company to:

(a): pay unclaimed money to, or to an authority of, a State or Territory; or
(b): lodge a return relating to unclaimed money with, or with an authority of, a State or Territory.

51 Subsection 216(15) (paragraph (c) of the definition of unclaimed money)

Omit "life policy", substitute "policy".

52 Subsection 218(1) (definitions of child's advancement policy and full age)

Omit "life policy" (wherever occurring), substitute "policy".

53 Subsection 218(1) (definition of vesting age)

Omit "whose life is insured by a life policy", substitute "and a policy".

54 Subsection 226(1)

Omit "life policies", substitute "policies".

55 Subsections 227(1), (2) and (3)

Omit "life policy", substitute "policy".

Note: The heading to section 227 is altered by omitting "life".

56 Section 230

Omit "life policy", substitute "policy".

57 After Part 10

Insert:

Part 10A—Prudential standards and directions
Division 1—Prudential standards
230A APRA may make prudential standards for life companies

(1): APRA may, in writing, determine standards in relation to prudential matters to be complied with by:

(a): all life companies; or
(b): a specified class of life companies; or
(c): one or more specified life companies;

in order to protect the interests of policy owners or prospective policy owners of the life companies concerned.

Note: A failure to comply with a standard is not an offence, but it may lead to a direction being given under section 230B.

(2): A standard may impose different requirements to be complied with in different situations or in respect of different activities.
(3): A standard is of no effect to the extent that it conflicts with this Act.
(4): A standard:

(a): comes into force:

(i): unless subparagraph (ii) applies—on the day on which the determination of the standard is made; or
(ii): if that determination specifies a later day as the day on which the standard comes into force—on the day so specified; and

(b): continues in force until it is revoked.

(5): APRA may, in writing, vary or revoke a standard.
(6): Subject to subsection (11), if APRA determines or varies a standard referred to in paragraph (1)(a) or (b) it must, as soon as practicable, cause a notice advising of the determination of the standard, or of the variation of the standard, and summarising the purpose and effect of the standard or variation, to be published:

(a): in the Gazette ; and
(b): in a daily newspaper or daily newspapers circulating generally in each State or Territory.

(7): If APRA determines or varies a standard referred to in paragraph (1)(c) it must, as soon as practicable, give a copy of the standard, or of the variation, to the life company, or to each life company, to which the standard applies.
(8): If APRA revokes a standard referred to in paragraph (1)(a) or (b) it must, as soon as practicable, cause a notice of the revocation to be published:

(a): in the Gazette ; and
(b): in a daily newspaper or daily newspapers circulating generally in each State or Territory.

(9): If APRA revokes a standard referred to in paragraph (1)(c) it must, as soon as practicable, give notice of the revocation to the life company, or to each life company, to which the standard applied.
(10): Subject to subsection (11), APRA must ensure that copies of the current text of the standards are available for inspection and purchase.
(11): If APRA considers that a standard, or a variation of a standard, contains commercially sensitive information:

(a): APRA is not required to include that information in a notice published under subsection (6) or in the version of the standard that is available under subsection (10); but
(b): APRA may include some or all of that information in either or both of those things if APRA considers it appropriate to do so.

(12): A failure to comply with subsection (6), (7), (8), (9) or (10) does not affect the validity of the action concerned.
(13): In this section:

"Territory" means an internal Territory, or an external Territory to which this Act extends.

Division 2—Directions
230B APRA may give directions in certain circumstances

(1): APRA may give a life company a direction of a kind specified in subsection
(2): if APRA considers that:

(a): the company has contravened this Act or a condition referred to in subsection 22(1) or paragraph 125A(4)(a) or 125B(4)(a); or
(b): the direction is necessary in the interests of policy owners or prospective policy owners of the company.

The direction is to be by notice in writing given to the company.

(2): The kinds of direction the life company may be given are as follows:

(a): a direction to comply with the whole or a part of this Act or with a condition referred to in paragraph (1)(a);
(b): a direction to order an audit of the affairs of the company, at the expense of the company, by an auditor chosen by APRA;
(c): a direction to order an actuarial investigation of the affairs of the company, at the expense of the company, by an actuary chosen by APRA;
(d): a direction to do all or any of the following:

(i): remove a director, secretary, executive officer or employee of the company from office;
(ii): ensure a director, secretary, executive officer or employee of the company does not take part in the management or conduct of the business of the company except as permitted by APRA;
(iii): appoint a person or persons as a director, secretary, executive officer or employee of the company for such term as APRA directs;

(e): a direction to remove any auditor of the company from office and appoint another auditor to hold office for such term as APRA directs;
(f): a direction to terminate the appointment of the appointed actuary of the company and to appoint another actuary to hold office for such term as APRA directs;
(g): a direction not to give any financial accommodation to any person;
(h): a direction not to issue any policy or collect any premium;
(i): a direction not to borrow any amount;
(j): a direction not to accept any payment on account of share capital, except payments in respect of calls that fell due before the direction was given;
(k): a direction not to repay any amount paid on shares;
(l): a direction not to pay a dividend on any shares;
(m): a direction not to discharge any policy or other liability;
(n): a direction not to transfer any asset of a statutory fund;
(o): a direction not to pay or transfer any amount to any person, or create an obligation (contingent or otherwise) to do so;
(p): a direction not to undertake any financial obligation (contingent or otherwise) on behalf of any other person;
(q): any other direction as to the way in which the affairs of the company are to be conducted or not conducted.

A direction under paragraph (o) not to pay any amount does not apply to the payment or transfer of money pursuant to an order of a court or a process of execution.

(3): Without limiting the generality of subsection (2), a direction referred to in a paragraph of that subsection may:

(a): deal with some only of the matters referred to in the paragraph; or
(b): deal with a particular class or particular classes of those matters; or
(c): make different provision with respect to different matters or different classes of matters.

(4): The direction may deal with the time by which, or period during which, it is to be complied with.
(5): The life company has power to comply with the direction despite anything in its constitution or any contract or arrangement to which it is a party.
(6): APRA may, by notice in writing to the life company, vary the direction if, at the time of the variation, it considers that the variation is necessary or appropriate.
(7): APRA may, by notice in writing to the life company, revoke the direction if, at the time of the revocation, it considers that the direction is no longer necessary or appropriate.
(8): The direction ceases to have effect if:

(a): APRA revokes it under subsection (7); or
(b): the Court orders that the company be wound up; or
(c): for a company that is a friendly society referred to in subsection 180(2)—the members of the society have passed a special resolution that the society be wound up.

(9): APRA must not give a direction under this section in relation to any part of the business of a life company if:

(a): that part of that business is under the control of a judicial manager; or
(b): the Court has ordered that the company be wound up; or
(c): for a company that is a friendly society referred to in subsection 180(2)—the members of the society have passed a special resolution that the society be wound up.

230C Direction not grounds for denial of obligations

(1): Subject to subsections (2) and (3), the fact that a life company is subject to a direction by APRA under section 230B is not a ground for any other party to a contract to which the company is a party to deny any obligations under that contract, accelerate any debt under that contract or close out any transaction relating to that contract.
(2): If a life company is prevented from fulfilling its obligations under a contract because of a direction under section 230B, other than a direction under paragraph 230B(2)(m), the other party or parties to the contract are, subject to any orders made under subsection (3), relieved from obligations owed to the company under the contract.
(3): A party to a contract to which subsection (2) applies may apply to the Court for an order relating to the effect on the contract of a direction under section 230B. The order may deal with matters including (but not limited to):

(a): requiring a party to the contract to fulfil an obligation under the contract despite subsection (2);
(b): obliging a party to the contract to take some other action (for example, paying money or transferring property) in view of obligations that were fulfilled under the contract before the direction was made.

The order must not require a person to take action that would contravene the direction, or any other direction under section 230B.

230D Supply of information about issue and revocation of directions

Power to publish notice of directions in Gazette

(1): APRA may publish in the Gazette notice of any direction made under section 230B. The notice must include the name of the life company given the direction and a summary of the direction.

Requirement to publish notice of revocation of certain directions in Gazette

(2): If APRA publishes notice of a direction made under section 230B and then later revokes the direction, APRA must publish in the Gazette notice of that revocation as soon as practicable after the revocation. Failure to publish notice of the revocation does not affect the validity of the revocation.

Requirement to provide information about direction to Treasurer

(3): If the Treasurer requests APRA to provide information about:

(a): any directions under section 230B in respect of a particular life company; or
(b): any directions made during a specified period under section 230B in respect of any life companies;

APRA must comply with the request.

Power to inform Treasurer of direction

(4): APRA may provide any information that it considers appropriate to the Treasurer about any directions, or revocations of directions, made under section 230B, in respect of any life company, at any time.

Requirement to inform Treasurer of revocation of direction if informed of making of direction

(5): If APRA provides the Treasurer with information about a direction and then later revokes the direction, APRA must notify the Treasurer of the revocation of the direction as soon as practicable after the revocation. Failure to notify the Treasurer does not affect the validity of the revocation.

230E Secrecy requirements

Information relating to directions and revocations of directions is subject to the secrecy requirements in Part 6 of the Australian Prudential Regulation Authority Act 1998 , unless the information has been published in the Gazette under section 230D of this Act.

230F Non-compliance with a direction

(1): A life company is guilty of an offence if:

(a): it does, or fails to do, an act; and
(b): doing, or failing to do, the act results in a contravention of a direction given to it under section 230B.

Maximum penalty: 50 penalty units.

Note: If a body corporate is convicted of an offence against this subsection, subsection 4B(3) of the Crimes Act 1914 allows a court to impose a fine of up to 5 times the penalty stated above.

(2): If a life company does or fails to do an act in circumstances that give rise to the company committing an offence against subsection (1), the company is guilty of an offence against that subsection in respect of:

(a): the first day on which the offence is committed; and
(b): each subsequent day (if any) on which the circumstances that gave rise to the company committing the offence continue (including the day of conviction for any such offence or any later day).

Note: This subsection is not intended to imply that section 4K of the Crimes Act 1914 does not apply to offences against this Act or the regulations.

(3): An officer of a life company is guilty of an offence if:

(a): the officer fails to take reasonable steps to ensure that the company complies with a direction given to it under section 230B; and
(b): the officer's duties include ensuring that the company complies with the direction, or with a class of directions that includes the direction.

Maximum penalty: 50 penalty units.

Note: If a body corporate is convicted of an offence against this subsection, subsection 4B(3) of the Crimes Act 1914 allows a court to impose a fine of up to 5 times the penalty stated above.

(4): If an officer of a life company fails to take reasonable steps to ensure that the company complies with a direction given to it under section 230B in circumstances that give rise to the officer committing an offence against subsection (3), the officer is guilty of an offence against that subsection in respect of:

(a): the first day on which the offence is committed; and
(b): each subsequent day (if any) on which the circumstances that gave rise to the officer committing the offence continue (including the day of conviction for any such offence or any later day).

Note: This subsection is not intended to imply that section 4K of the Crimes Act 1914 does not apply to offences against this Act or the regulations.

(5): In this section, officer has the meaning given by section 9 of the Corporations Law.

58 Subsection 236(1) (after paragraph (a) of the definition of reviewable decision)

Insert:

(aa): a declaration under subsection 12A(1) or 12B(2);

59 Subsection 236(1) (after paragraph (c) of the definition of reviewable decision)

Insert:

(ca): a decision under section 16E;
(cb): a refusal to give an approval under subsection 16L(3), 16Q(3) or 16U(3);

60 Subsection 236(1) (paragraph (k) of the definition of reviewable decision)

Omit "subsection 52(4)", substitute "Prudential Rules referred to in section 52".

61 Subsection 236(1) (paragraph (l) of the definition of reviewable decision)

Omit "subsection 53(4)", substitute "Prudential Rules referred to in section 53".

62 Subsection 236(1) (after paragraph (s) of the definition of reviewable decision)

Insert:

(sa): a direction under subsection 73F(1) or (2);
(sb): a decision to vary a direction under subsection 73F(6) or (7);
(sc): a refusal to revoke or vary a direction under subsection 73F(6) or (7);

63 Subsection 236(1) (after paragraph (zg) of the definition of reviewable decision)

Insert:

(zga): a decision under subsection 125A(2) or 125B(2);

64 After paragraph 236(1A)(j)

Insert:

(ja): a direction under subsection 73F(1) or (2);
(jb): a decision to vary a direction under subsection 73F(6) or (7);
(jc): a refusal to revoke or vary a direction under subsection 73F(6) or (7);

65 After section 250

Insert:

251 Compensation for acquisition of property

(1): If:

(a): apart from this section, the operation of this Act would result in the acquisition of property from a person otherwise than on just terms; and
(b): the acquisition would be invalid because of paragraph 51(xxxi) of the Constitution;

the Commonwealth is liable to pay to the person compensation of a reasonable amount as agreed on between the Commonwealth and the person. If the Commonwealth and the person do not agree on the amount of the compensation, the person may institute proceedings in the Court for the recovery from the Commonwealth of such reasonable amount of compensation as the Court determines.

(2): Any damages or compensation recovered or other remedy given in a proceeding that is commenced otherwise than under this section is to be taken into account in assessing compensation payable in a proceeding that is commenced under this section and that arises out of the same event or transaction.
(3): In this section:

acquisition of property and just terms have the same respective meanings as in paragraph 51(xxxi) of the Constitution.

66 Paragraph 254(7)(a)

Repeal the paragraph.

67 Subsection 254(9)

Repeal the subsection.

68 Section 255

Repeal the section.

69 Dictionary in the Schedule

Insert:

"actuarial standards" means standards made under Division 4 of Part 6.

70 Dictionary in the Schedule (definition of approved auditor)

Repeal the definition, substitute:

"approved auditor" means:

(a): in relation to a life company other than a friendly society—a person in respect of whom an approval under subsection 85(1) is in force, being an approval in relation to life companies other than friendly societies; and
(b): in relation to a life company that is a friendly society—a person in respect of whom an approval under subsection 85(1) is in force, being an approval in relation to life companies that are friendly societies.

71 Dictionary in the Schedule (definition of eligible assets)

Repeal the definition.

72 Dictionary in the Schedule (definition of friendly society)

Repeal the definition, substitute:

"friendly society "has the meaning given by section 16C.

Note: Other expressions relevant to friendly societies are defined in section 16B.

73 Dictionary in the Schedule

Insert:

"health insurance business" has the same meaning as in section 67 of the National Health Act 1953 .

74 Dictionary in the Schedule (definition of policy)

Omit "or a sinking fund policy", substitute ", a sinking fund policy or a section 12A or 12B policy".

75 Dictionary in the Schedule (definition of policy document)

Omit "or a sinking fund policy", substitute ", a sinking fund policy or a section 12A or 12B policy".

76 Dictionary in the Schedule

Insert:

"prudential standards" means standards made under Division 1 of Part 10A.

77 Dictionary in the Schedule

Insert:

section 12A or 12B policy means a policy, other than a life policy or a sinking fund policy, issued, or taken to be issued, in the course of carrying on business covered by a declaration under section 12A or 12B.

78 Dictionary in the Schedule (definition of this Act)

Repeal the definition, substitute:

"this Act" includes:

(a): the regulations, actuarial standards, prudential standards and Prudential Rules; and
(b): the Life Insurance Act 1995 , and the instruments made under that Act referred to in paragraph (a), as they have effect because of Part 2A of that Act.

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