Exemption for an interest in a foreign holding company of a foreign bank
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Some banking businesses are structured so that shares in the licensed bank are held by a holding company. Members of the public invest in the bank by acquiring publicly listed shares in the holding company.
To allow for this, the exemption for certain shares in a publicly listed foreign bank is extended to an interest that an Australian resident holds in a holding company with a wholly owned subsidiary that is a foreign bank. [section 504]
A company will qualify for the exemption from the FIF measures as a holding company of a bank if the following requirements are satisfied.
You hold shares in the holding company of a class listed on any stock market of a stock exchange approved in regulation 152N, Schedule 12 of the Regulations. See Appendix 1: Approved stock exchanges for more information.
The holding company is included in a class of companies designated as a bank or engaged in banking on either:
- an approved stock exchange, or
- an approved international sectoral classification system.
See Appendix 3: Approved international sectoral classification systems for more information.
The class of shares you have in the holding company must be widely held and actively traded on a regular basis on a stock market of an approved stock exchange during the period in which the exemption applies.
If the holding company has only one subsidiary, that subsidiary must be wholly owned and have been principally engaged in the active carrying on of a banking business.
If the holding company has more than one subsidiary, the principal activities of the wholly owned subsidiaries in the group, taken together as an economic unit, must be the active carrying on of a banking business.
In each case at least one of the wholly owned subsidiaries must be authorised under the law of its place of residence to carry on banking business.
Last modified: 27 May 2005QC 17512