FINANCIAL SECTOR (SHAREHOLDINGS) ACT 1998 NO. 55, 1998

Commonwealth Numbered Acts

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FINANCIAL SECTOR (SHAREHOLDINGS) ACT 1998 NO. 55, 1998 - SCHEDULE 1--Ownership

definitions

SECT 1 Object The object of this Schedule is to define terms used in Part 2 (which deals with restrictions on shareholdings).

SECT 2 Definitions In Part 2 and this Schedule, unless the contrary intention appears:

acquisition includes an agreement to acquire, but does not include:

(b) an acquisition by way of enforcement of a loan security.

arrangement has a meaning affected by clause 3.

associate has the meaning given by clause 4.

constituent document , in relation to a company, means:

(b) any rules or other documents constituting the company or governing its activities.

direct control interest has the meaning given by clause 11.

director includes any person occupying the position of director of a company, by whatever name called.

discretionary trust means a trust where:

(b) the exercise of the power or discretion, or the failure to exercise the power or discretion, has the effect of determining, to any extent, either or both of the following:

(ii) how beneficiaries are to benefit, as between themselves, under the trust.

increase , in relation to a stake in a company, includes an increase from a starting point of nil.

interest in a share has the meaning given by clause 7.

lender , in relation to a loan security, means the person who is entitled to enforce the security.

lending money includes providing non-equity finance where the provision of the finance may reasonably be regarded as equivalent to lending money.

loan security means a security held solely for the purposes of a moneylending agreement.

management employee , in relation to a company, means an employee of the company who is concerned in, or takes part in, the management of the company.

moneylending agreement means an agreement entered into in good faith in the ordinary course of carrying on a business of lending money, but does not include an agreement dealing with any matter unrelated to the carrying on of that business.

officer , in relation to a company, means:

(b) a receiver and manager of any part of the undertaking of the company appointed under a power contained in any instrument; or

ownership provisions means Part 2 and this Schedule.

power to appoint a director of a company has a meaning affected by clause 5.

practical control , in relation to a financial sector company, has the meaning given by section 23.

relative , in relation to a person, means:

(b) another person who, although not legally married to the person, lives with the person on a bona fide domestic basis as the husband or wife of the person; or

(d) a son, daughter or remoter issue of the person; or

(e) a brother or sister of the person.

share , in relation to a company, means a share in the share capital of the company, and includes:

(b) an interest in such a share or in such stock.

stake , in relation to a company, has the meaning given by clause 10.

voting power has the meaning given by clause 9.

SECT 3 Entering into an agreement or arrangement (1) For the purposes of the ownership provisions, a person is taken to have proposed to enter into an agreement or arrangement if the person takes part in, or proposes to take part in, negotiations with a view to entering into the agreement or arrangement.

(2) A reference in the ownership provisions to entering into an agreement or arrangement includes a reference to altering or varying an agreement or arrangement.

(3) A reference in the ownership provisions to entering into an arrangement is a reference to entering into any formal or informal scheme, arrangement or understanding, whether expressly or by implication and, without limiting the generality of the foregoing, includes a reference to:

(b) creating a trust, whether express or implied; or

and a reference in the ownership provisions to an arrangement is to be construed accordingly.

(4) A reference in the ownership provisions to an arrangement does not include a reference to a moneylending agreement.

SECT 4 Associates (1) For the purposes of the ownership provisions, the following persons are associates of a person:

(b) a partner of the person;

(d) if the person is a company--an officer of the company;

(e) an officer of a company of which the person is an officer;

(f) an employee of an individual of whom the person is an employee;

(g) the trustee of a discretionary trust where the person or another person who is an associate of the person by virtue of another paragraph of this subclause benefits, or is capable (whether by the exercise of a power of appointment or otherwise) of benefiting, under the trust, either directly or through any interposed companies, partnerships or trusts;

(h) a company whose directors are accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of the person;

(i) a company where the person is accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of the company;

(j) a company in which the person has, apart from this paragraph, a stake of not less than 15%;

(k) if the person is a company--a person who holds, apart from this paragraph, a stake in the company of not less than 15%;

(l) a person who is, because of this subclause, an associate of any other person who is an associate of the person (including a person who is an associate of the person by any other application or applications of this paragraph).

(2) If a person (the first person ) enters, or proposes to enter, into an arrangement with another person (the second person ) that relates to any of the following matters:

(b) the power of the first person and the second person, by acting together, to appoint or remove a director of a company;

(c) the situation where one or more of the directors of a company are accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of the first person and the second person acting together;

then, the second person is taken to be an associate of the first person for the purposes of the application of a provision of the ownership provisions in relation to the matter concerned.

SECT 5 Power to appoint director (1) A reference in the ownership provisions to a power to appoint a director includes a reference to such a power whether exercisable with or without the consent or concurrence of any other person.

(2) For the purposes of the ownership provisions, a person is taken to have the power to appoint a director if:

(b) a person's appointment as a director of the company follows necessarily from that person being a director or other officer of the first-mentioned person.

SECT 6 Meaning of entitled to acquire For the purposes of the ownership provisions, a person is entitled to acquire anything if the person is absolutely or contingently entitled to acquire it, whether because of any constituent document of a company, the exercise of any right or option or for any other reason.

SECT 7 Meaning of interest in a share (1) Subject to this clause, a person holds an interest in a share if the person has any legal or equitable interest in the share.

(2) A person is taken to hold an interest in a share if:

(b) the person has a right (otherwise than because of having an interest under a trust) to have the share transferred to the person or to the person's order (whether the right is exercisable presently or in the future and whether or not on the fulfilment of a condition); or

(c) the person has a right to acquire the share, or an interest in the share, under an option (whether the right is exercisable presently or in the future and whether or not on the fulfilment of a condition); or

(d) the person is otherwise entitled to acquire the share or an interest in the share; or

(e) the person is entitled (otherwise than because of having been appointed as a proxy or representative to vote at a meeting of members of the company or of a class of its members) to exercise or control the exercise of a right attached to the share.

(3) Subclause (2) does not, by implication, limit subclause (1).

(4) A person is taken to hold an interest in a share even if the person holds the interest in the share jointly with another person.

(5) For the purpose of determining whether a person holds an interest in a share, it is immaterial that the interest cannot be related to a particular share.

(6) An interest in a share is not to be disregarded only because of:

(b) the manner in which it arose; or

(c) the fact that the exercise of a right conferred by the interest is, or is capable of being made, subject to restraint or restriction.

SECT 8 Certain interests in shares to be disregarded (1) For the purposes of the ownership provisions, the following interests must be disregarded:

(b) an interest in a share held by a person, being an interest held by the person because the person holds a prescribed office;

(2) For the purposes of the ownership provisions, if:

(b) the ordinary business of the person includes the lending of money; and

(d) as a result of the enforcement of the loan security, the person becomes the holder of the share; and

(e) the person holds the share for a continuous period (the holding period ) beginning at the time when the security was enforced;

the person's interest in the share must be disregarded at all times during so much of the holding period as occurs during whichever of the following periods is applicable:

(g) if the Treasurer, by written notice given to the person, allows a longer period--the end of that longer period.

SECT 9 Voting power (1) A reference in the ownership provisions to the voting power in a company is a reference to the total rights of shareholders to vote, or participate in any decision-making, concerning any of the following:

(b) the constituent document of the company;

(d) any appointment of a director of the company.

(2) A reference in the ownership provisions to control of the voting power in a company is a reference to control that is direct or indirect, including control that is exercisable as a result of or by means of arrangements or practices:

(b) whether or not based on legal or equitable rights.

(3) If the percentage of total rights to vote or participate in decision-making differs as between different types of voting or decision-making, the highest of those percentages applies for the purposes of this clause.

(4) If a company:

(b) does not have a share capital;

this clause has effect as if the members or policy holders of the company were shareholders in the company.

SECT 10 Stake in a company (1) The stake that a person holds in a company at a particular time is the aggregate of:

(b) the direct control interests in the company held at that time by associates of the person.

(2) In calculating the stake that a person holds in a company, a direct control interest held because of subclause 11(2) is not to be counted under paragraph (1)(a) to the extent to which it is calculated by reference to a direct control interest in the company that is taken into account under paragraph (1)(b).

SECT 11 Direct control interests in a company (1) A person holds a direct control interest in a company at a particular time equal to the percentage of the voting power in the company that the person is in a position to control at that time.

(2) If:

first level company

(b) the first level company holds a direct control interest in another company (the second level company );

the person is taken to hold a direct control interest in the second level company equal to the percentage worked out using the formula:

where:

first level percentage means the percentage of the direct control interest held by the person in the first level company.

second level percentage means the percentage of the direct control interest held by the first level company in the second level company.

[ Minister's second reading speech made in--

House of Representatives on 26 March 1998

Senate on 13 May 1998 ]

(31/98)

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