Banking Act 1959

Part I - Preliminary  

SECTION 1   1   Short title  
This Act may be cited as the Banking Act 1959.

SECTION 2   2   Commencement  
Except as otherwise provided by this Act, this Act shall come into operation on the day on which the Reserve Bank Act 1959 comes into operation.

SECTION 2A   Main objects of this Act  

(1)  
The main objects of this Act are:

(a) to protect the interests of depositors in ADIs in ways that are consistent with the continued development of a viable, competitive and innovative banking industry; and

(b) to promote financial system stability in Australia.

(2)  
This Act, and the prudential standards and non-ADI lender rules determined by APRA under this Act, achieve this mainly by:

(a) restricting who can carry on banking business in Australia; and

(b) providing for the prudential supervision of ADIs by APRA, by APRA determining prudential standards or taking other action to ensure prudent management of ADIs; and

(c) providing for APRA to manage or respond to circumstances in which the ability of an ADI to meet its obligations may be threatened; and

(d) providing for certain account-holders to be paid amounts where the financial claims scheme has been declared to apply in relation to an ADI; and

(e) providing for heightened accountability for banking directors and senior executives through the Banking Executive Accountability Regime; and

(f) for the purposes of paragraph (1)(b) - providing rules in relation to the provision of certain kinds of finance by non-ADI lenders.

(3)  
It is intended that APRA, in taking actions to address risks to financial system stability in Australia, may consider specific sources of systemic risks, whether geographic, sectoral or otherwise.

(4)  
This section does not apply to the following:

(a) Divisions 4 (Mobilization of foreign currency) and 5 (Advances) of Part II;

(b) Parts III (Foreign exchange, foreign investment etc.), IV (Gold) and V (Interest rates);

(c) any other provision of this Act, to the extent that it relates to any of the provisions mentioned in paragraph (a) or (b).

SECTION 4   4   Repeal  
The following Acts are repealed:

Banking Act 1945;

Banking Act 1953.

SECTION 5   Interpretation   Definitions

(1)  

In this Act, unless the contrary intention appears:

accountable person
has the meaning given by sections 37BA and 37BB.

account-holder
means an entity (as defined in section 960-100 of the Income Tax Assessment Act 1997) that holds in its name, or keeps in its name, (either alone or jointly with another entity) an account or covered financial product with an ADI.

action that is likely to have a detrimental effect on financial system stability in New Zealand
includes an action that prevents or interferes with an outsourcing arrangement.

ADI
is short for authorised deposit-taking institution.

ADI statutory manager
(Repealed by No 10 of 2018)

administrator
, of a body corporate's business, means an administrator appointed under subsection 13A(1) to take control of the body corporate's business.

administrator of an ADI's business
(Repealed by No 10 of 2018)

advance
includes loan.

appointed auditor
means an auditor appointed in accordance with the prudential standards.

approved form
means a form approved, in writing, by APRA.

APRA
means the Australian Prudential Regulation Authority.

APRA board member
means a member of APRA's board of management, including APRA's Chair and Chief Executive Officer.

APRA Special Account
has the same meaning as in the Australian Prudential Regulation Authority Act 1998.

APRA staff member
has the same meaning as in the Australian Prudential Regulation Authority Act 1998.

ASIC
means the Australian Securities and Investments Commission.

Australia
includes the Territories.

Australian business assets and liabilities
, of a foreign ADI, has the meaning given by subsection 11E(3).

authorised deposit-taking institution
means a body corporate in relation to which an authority under subsection 9(3) is in force.

authorised NOHC
means a body corporate:

(a) in relation to which an authority under subsection 11AA(2) is in force; and

(b) that is a NOHC of an ADI or ADIs.

Banking Act statutory manager
has the meaning given by subsection 13A(2).

banking business
means:

(a) a business that consists of banking within the meaning of paragraph 51(xiii) of the Constitution; or

(b) a business that is carried on by a corporation to which paragraph 51(xx) of the Constitution applies and that consists, to any extent, of:

(i) both taking money on deposit (otherwise than as part-payment for identified goods or services) and making advances of money; or

(ii) other financial activities prescribed by the regulations for the purposes of this definition.

business day
means a day that is not a Saturday, a Sunday or a public holiday or bank holiday in the place concerned.

civil penalty provision
: a subsection of this Act (or a section of this Act that is not divided into subsections) is a civil penalty provision if:

(a) the words "civil penalty" and one or more amounts in penalty units are set out at the foot of the subsection (or section); or

(b) another provision of this Act specifies that the subsection (or section) is a civil penalty provision.

Note:

Schedule 2 deals with contraventions of civil penalty provisions, and treats people who are involved in various ways in such a contravention as if they had contravened the provision concerned.

covered bond
has the meaning given by subsection 26(1).

covered bond liabilities
has the meaning given by subsections 26(4) and (5).

covered bond special purpose vehicle
has the meaning given by subsection 26(1).

covered financial product
has the meaning given by subsection (8).

cover pool
has the meaning given by subsection 26(3).

declaration time
for an ADI means the time the ADI becomes a declared ADI.

declared ADI
means an ADI specified in a declaration under section 16AD as an ADI in relation to which Subdivision C of Division 2AA of Part II applies.

direction under this Act
means a direction under any of the following provisions:

(a) section 11CA;

(b) section 11CC;

(c) section 13E;

(d) section 17;

(e) section 23;

(f) section 29;

(g) section 31F;

(h) section 37DB.

external administrator
means any of the following:

(a) a liquidator;

(b) a receiver, manager, managing controller, receiver and manager or other controller (other than a Banking Act statutory manager);

(c) a voluntary administrator or administrator of a deed of a company arrangement or a scheme manager.

(d) (Repealed by No 127 of 2021)

Expressions used in this definition have the same meanings as they have in the Corporations Act 2001.

Finance Minister
means the Minister who administers the Public Governance, Performance and Accountability Act 2013.

financial market
has the meaning given by section 761A of the Corporations Act 2001.

Financial Claims Scheme Special Account
has the same meaning as in the Australian Prudential Regulation Authority Act 1998.

Financial System Stability Special Account
means the Financial System Stability Special Account established by section 70E.

foreign ADI
means a body corporate that:

(a) is a foreign corporation within the meaning of paragraph 51(xx) of the Constitution; and

(b) is authorised to carry on banking business in a foreign country; and

(c) has been granted an authority under section 9 to carry on banking business in Australia.

holding company
, of a body corporate, means another body corporate of which the first body corporate is a subsidiary.

industry support contract
means a contract under which emergency financial support is to be provided by parties to the contract to any ADI that is a party to the contract if a specified event occurs. The contract may also deal with matters associated with the provision of the financial support.

insolvent
, in relation to a body corporate, means that the body corporate is not able to pay all its debts as and when they become due and payable.

investigator
means a person APRA appoints under subsection 13(4), 13A(1) or 61(1).

issuing ADI
has the meaning given by subsection 26(6).

large ADI
means an ADI of a kind determined under paragraph 37G(3)(a).

lawyer
means a duly qualified legal practitioner and, in relation to a person, means such a practitioner acting for the person.

liquidator
includes a provisional liquidator.

listing rules
has the meaning given by section 761A of the Corporations Act 2001.

medium ADI
means an ADI of a kind determined under paragraph 37G(3)(b).

net credit balance
:

(a) the net credit balance , at a time, of an account means the excess of the balance of the account in credit in favour of the account-holder at that time over the amount (if any) of fees, charges and duties that are identified under the agreement under which the account is kept and are payable by the account-holder to the ADI at that time; and

(b) the net credit balance , at a time, of a covered financial produce that is not an account means the amount owed to the account-holder at that time under the terms of the agreement under which the covered financial product is kept.

New Zealand registered bank
means a registered bank, as defined in section 2 of the Reserve Bank of New Zealand Act 1989 of New Zealand, that carries on a business in New Zealand.

NOHC
is short for non-operating holding company.

NOHC authority
means an authority under subsection 11AA(2).

NOHC/NOHC subsidiary
has the meaning given by subsection 13D(5).

non-ADI holding company
, of another body corporate, means a body corporate (other than an ADI) of which the other body corporate is a subsidiary.

non-ADI lender
has the meaning given by section 38B.

non-ADI lender rule
means a rule under section 38C.

non-operating holding company
means, in relation to a body corporate, a body corporate:

(a) of which the first body corporate is a subsidiary; and (b) that does not carry on a business (other than a business consisting of the ownership or control of other bodies corporate); and

(c) that is incorporated in Australia.

outsourcing arrangement
means an arrangement for the business of a New Zealand registered bank, or functions relating to such business, to be carried on by an entity other than the bank.

Part IIB provision of finance
has the meaning given by section 38B.

penalty unit
(Repealed by No 31 of 2014)

personal information
has the same meaning as in the Privacy Act 1988.

prescribed New Zealand authority
means the following:

(a) the Reserve Bank of New Zealand;

(b) an authority of the government of New Zealand that:

(i) has statutory responsibilities relating to prudential regulation or financial system stability; and

(ii) is prescribed by the regulations for the purposes of this definition.

protected account
has the meaning given by subsections (4), (5), (6) and (7).

prudential matters
means matters relating to:

(a) the conduct of any part of the affairs of, or the structuring or organising of, an ADI, an authorised NOHC, a relevant group of bodies corporate, or a particular member or members of such a group, in such a way as:

(i) to keep the ADI, NOHC, group or member or members of the group in a sound financial position; or

(ii) to facilitate resolution of the ADI, NOHC, group or member or members of the group; or

(iii) to protect the interests of depositors of any ADI; or

(iv) not to cause or promote instability in the Australian financial system; or

(v) not to cause or promote instability in the New Zealand financial system; or

(b) the conduct of any part of the affairs of an ADI, an authorised NOHC, a relevant group of bodies corporate, or a particular member or members of such a group, with integrity, prudence and professional skill.

prudential regulation
(Repealed by No 147 of 2006)

prudential requirement regulation
means a regulation under section 11A.

prudential standard
means a standard under section 11AF.

recapitalisation direction
means a direction given by APRA under subsection 13E(1) or (1B).

related body corporate
, in relation to a body corporate, means a body corporate that is related to the first-mentioned body, as determined in accordance with subsection 5(2A).

relevant group of bodies corporate
has the meaning given by subsection 5(3).

remuneration
, of an accountable person, includes the meaning given by subsection 37E(3).

resolution
means the process by which APRA or other relevant persons manage or respond to an entity:

(a) being unable to meet its obligations; or

(b) being considered likely to be unable, or being considered likely to become unable, to meet its obligations; or

(c) suspending payment, or being considered likely to suspend payment;

including through the exercise of powers and functions under this Act or another law.

section 9 authority
means an authority under subsection 9(3).

senior manager
of an ADI or an authorised NOHC or the Australian operations of a foreign ADI means a person who has or exercises any of the senior management responsibilities (within the meaning of the prudential standards) for the ADI or NOHC or for the Australian operations of the foreign ADI, as the case may be.

small ADI
means an ADI of a kind determined under paragraph 37G(3)(c).

subsidiary
has the meaning given by subsection (2).

the Reserve Bank
means the Reserve Bank of Australia.

transferred liabilities determination
means a determination under subsection 16AIA(1).

ultimate termination of control
has the meaning given by subsection 13C(1).

variable remuneration
has the meaning given by section 37EA.

Subsidiary

(2)  

For the purposes of this Act, the question whether a body corporate is a subsidiary of another body corporate is to be determined in the same way as that question is determined for the purposes of the Corporations Act 2001. Related bodies corporate

(2A)  

For the purposes of this Act, the question whether a body corporate is related to another body corporate is to be determined in the same way as that question is determined for the purposes of the Corporations Act 2001. Relevant group of bodies corporate

(3)  

For the purposes of this Act:

(a) an ADI and its subsidiaries together constitute a relevant group of bodies corporate ; and

(b) an authorised NOHC and its subsidiaries together also constitute a relevant group of bodies corporate .

Protected account

(4)  

Subject to subsections (5), (6) and (7), a protected account is an account or covered financial product that is kept by an account-holder (whether alone or jointly with one or more other account-holders) with an ADI and either:

(a) is an account that is prescribed by the regulations for the purposes of this paragraph; or

(b) is an account, or covered financial product, that is kept under an agreement between the account-holder and the ADI requiring the ADI to pay the account-holder, on demand by the account-holder or at a time agreed by them, the net credit balance of the account or covered financial product at the time of demand or the agreed time (as appropriate).

Note:

Paragraph (a) - the regulations may prescribe the account by reference to a class of accounts: see subsection 13(3) of the Legislation Act 2003.

(5)  

An account is not a protected account on and after 12 October 2011 unless:

(a) it is recorded in Australian currency; or

(b) it is kept with an ADI that is a declared ADI on 12 October 2011.

(6)  

A covered financial product that is kept with an ADI and is not an account is not a protected account if APRA applies under section 16AAA for an order that the ADI be wound up.

(7)  

An account or covered financial product is not a protected account if the account or covered financial product is prescribed by the regulations for the purposes of this subsection.

Note:

The regulations may prescribe the account or covered financial product by reference to a class of accounts or financial products: see subsection 13(3) of the Legislation Act 2003.

Covered financial product

(8)  

The Minister may declare that a specified financial product is a covered financial product .

Note:

The declaration may specify the product by reference to a class of financial products: see subsection 13(3) of the Legislation Act 2003.

(9)  

A declaration made under subsection (8), or an amendment of the declaration, is a legislative instrument, but section 42 (disallowance) of the Legislation Act 2003 does not apply to the declaration or amendment.

Note:

Part 4 of Chapter 3 (sunsetting) of the Legislation Act 2003 does not apply to the declaration or amendment: see regulations made for the purposes of paragraph 54(2)(b) of that Act.

(10)  

Despite subsection 12(1) of the Legislation Act 2003, the declaration or amendment commences from the time it is made.

(11)  

Subsection 12(2) (retrospective application of legislative instruments) of the Legislation Act 2003 does not apply to the declaration or amendment.

SECTION 6   Application of Act  

(1)  
Nothing in Part II or V, or in sections 61 to 69 (inclusive), applies with respect to State banking.

(2)  
Subject to section 6A, this Act extends to all the Territories.

SECTION 6A   6A   Cessation of application of Act to Territory  

The Treasurer may, by legislative instrument, declare that, on a date specified in the instrument, this Act shall cease to extend to an external Territory specified in the instrument, and, on and after the date specified in such an instrument, this Act does not extend to the Territory so specified and a reference in this Act, other than this section, to a Territory does not include a reference to the Territory so specified.

(2)  
(Repealed by No 46 of 2011)

SECTION 6B   6B   Application of Criminal Code  
The Criminal Code applies to all offences against this Act.

Part II - Provisions relating to the carrying on of banking business  

Division 1 - Authority to carry on banking business  

SECTION 7   Person other than a body corporate must not carry on banking business  

(1)  

A person commits an offence if:

(a) the person carries on any banking business in Australia; and

(b) the person is not a body corporate; and

(c) there is no determination in force under section 11 that this subsection does not apply to the person.

Penalty: 200 penalty units.

Note:

Chapter 2 of the Criminal Code sets out the general principles of criminal responsibility.

(2)  
An offence against subsection (1) is an indictable offence.

(3)  

If a person carries on banking business in circumstances that give rise to the person committing an offence against subsection (1), the person commits 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 person 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.

SECTION 8   Only the Reserve Bank and bodies corporate that are ADIs may carry on banking business  

(1)  

A body corporate commits an offence if:

(a) the body corporate carries on any banking business in Australia; and

(b) the body corporate is not the Reserve Bank; and

(c) the body corporate is not an ADI; and

(d) there is no determination in force under section 11 that this subsection does not apply to the body corporate.

Penalty: 200 penalty units.

Note 1:

Chapter 2 of the Criminal Code sets out the general principles of criminal responsibility.

Note 2:

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)  
An offence against subsection (1) is an indictable offence.

(3)  

If a body corporate carries on banking business in circumstances that give rise to the body corporate committing an offence against subsection (1), the body corporate commits 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.

SECTION 9   Authority to carry on banking business  

(2)  
A body corporate which desires authority to carry on banking business in Australia may apply in writing to APRA for authority accordingly.

Note:

The body corporate may also need to consider the implications of the Foreign Acquisitions and Takeovers Act 1975 and the Financial Sector (Shareholdings) Act 1998.

(2A)  

APRA may, by legislative instrument, set criteria for the granting of an authority to carry on banking business in Australia.

(3)  
If an application has been made, APRA may grant the body corporate an authority to carry on banking business in Australia. The authority must be in writing, and APRA must give the body corporate written notice of the granting of the authority.

Note:

For APRA's power to revoke an authority, see section 9A.

(3A)  

Without limiting the circumstances in which APRA may refuse an application by a body corporate for authority to carry on banking business in Australia, APRA may refuse such an application if the body corporate is a subsidiary of another body corporate that does not hold a NOHC authority.

(4)  

If APRA grants an authority under subsection (3), APRA must cause notice of that authority to be published in the Gazette. APRA may also cause notice of that authority to be published in any other way it considers appropriate.

(4A)  
(Repealed by No 10 of 2018)

(5)  

A failure to comply with subsection (4) does not affect the validity of the authority.

(5A)  
(Repealed by No 10 of 2018)

(6)  

Part VI applies to a decision to refuse an application under this section.

(6A)  
(Repealed by No 10 of 2018)

(6B)  
(Repealed by No 10 of 2018)

(7)  
(Repealed by No 10 of 2018)

(8)  
(Repealed by No 10 of 2018)

(9)  
(Repealed by No 10 of 2018)

SECTION 9AA   Conditions on an authority  

(1)  
APRA may, at any time, by giving written notice to a body corporate:

(a) impose conditions, or additional conditions, on the body corporate's section 9 authority; or

(b) vary or revoke conditions imposed on the body corporate's section 9 authority.

The conditions must relate to prudential matters.

(2)  
A condition may be expressed to have effect despite anything in the prudential standards or the regulations.

(3)  
Without limiting the conditions that APRA may impose on an authority, APRA may make the authority conditional on another body corporate, of which the body corporate is a subsidiary, being an authorised NOHC.

(4)  
If APRA imposes, varies or revokes the conditions on a body corporate's section 9 authority, APRA must:

(a) give written notice to the body corporate; and

(b) ensure that notice that the action has been taken is published in the Gazette.

(5)  
The taking of an action is not invalid merely because of a failure to comply with subsection (4).

(6)  
Part VI applies to the following decisions made under this section:

(a) a decision to impose conditions, or additional conditions, on a body corporate's section 9 authority;

(b) a decision to vary conditions imposed on a body corporate's section 9 authority.

SECTION 9AB   Breach of authority conditions  

(1)  
A body corporate commits an offence if:

(a) the body corporate does an act or fails to do an act; and

(b) doing the act or failing to do the act results in a contravention of a condition of the body corporate's section 9 authority; and

(c) there is no determination in force under section 11 that this subsection does not apply to the body corporate.

Penalty: 300 penalty units.

(2)  
If an individual:

(a) commits an offence against subsection (1) because of Part 2.4 of the Criminal Code; or

(b) commits an offence under Part 2.4 of the Criminal Code in relation to an offence against subsection (1);

he or she is punishable, on conviction, by a fine not exceeding 60 penalty units.

(3)  
An offence against this section is an offence of strict liability.

Note:

For strict liability, see section 6.1 of the Criminal Code.

SECTION 9A   Revocation of authority etc.  

(1)  
APRA must revoke a body corporate's section 9 authority if:

(a) the body corporate, by notice in writing to APRA, requests the revocation of the authority; and

(b) APRA is satisfied that the revocation of the authority:

(i) would not be contrary to the national interest; and

(ii) would not be contrary to the interests of depositors of the body corporate.

(2)  

APRA may revoke a body corporate's section 9 authority if APRA is satisfied that:

(a) the body corporate has, whether before or after the commencement of this paragraph, provided, in connection with its application for the authority, information that was false or misleading in a material particular; or

(b) the body corporate has failed to comply with any of the following:

(i) a requirement of this Act;

(ii) a requirement of the Financial Sector (Collection of Data) Act 2001;

(iii) a requirement of the regulations or any other instrument made under this Act;

(iv) a requirement of a provision of another law of the Commonwealth, if the provision is specified in the regulations;

(v) a direction under this Act;

(vi) a condition of its section 9 authority; or

(c) it would be contrary to the national interest for the authority to remain in force; or

(d) it would be contrary to financial system stability in Australia for the authority to remain in force; or

(e) it would be contrary to the interests of depositors of the body corporate for the authority to remain in force; or

(f) the body corporate has failed to pay:

(i) an amount of levy or late penalty to which the Financial Institutions Supervisory Levies Collection Act 1998 applies; or

(ii) an amount of charge fixed under section 51 of the Australian Prudential Regulation Authority Act 1998; or

(g) the body corporate is insolvent and is unlikely to return to solvency within a reasonable period of time; or

(h) the body corporate has ceased to carry on banking business in Australia; or

(j) the body corporate is a foreign corporation within the meaning of paragraph 51(xx) of the Constitution, and:

(i) the body corporate is unlikely to be able to meet its liabilities in Australia and is unlikely to be able to do so within a reasonable period of time; or

(ii) an authority (however described) for the body corporate to carry on banking business in a foreign country has been revoked or otherwise withdrawn in that foreign country;

(k) if the section 9 authority is to cease to have effect on a day specified in the authority - it is unlikely to be appropriate, at or before that day, to grant the body corporate a section 9 authority that is not subject to a time limit.

The procedures to be undergone before a revocation under this subsection are set out in subsection (3). Those procedures apply unless APRA determines under subsection (4) that they are not to apply.

(3)  
Subject to subsection (4), APRA must not, under subsection (2), revoke a body corporate's section 9 authority unless:

(a) APRA has given the body corporate a notice in writing advising the body corporate:

(i) that APRA is considering revoking the authority for the reasons specified in the notice; and

(ii) that the body corporate may make submissions to APRA, in accordance with the notice, about the possible revocation; and

(iii) of the date by which any submissions must be made; and

(b) APRA has considered any submissions that were made by the body corporate by the specified date.

(3A)  

The date mentioned in subparagraph (3)(a)(iii) must be:

(a) at least 90 days after the notice under paragraph (3)(a) of this section was given; or

(b) if the section 9 authority is to cease to have effect on a day specified in the authority - at least 21 days after the notice under paragraph (3)(a) of this section was given.

(4)  
APRA may determine that the procedures in subsection (3) do not apply if APRA is satisfied that following those procedures could result in a delay in revocation that would be:

(a) contrary to the national interest; or

(b) contrary to the interests of depositors with the body corporate.

(5)  
A revocation of a body corporate's section 9 authority under subsection (1) or (2) must be in writing, and APRA must give the body corporate written notice of the revocation of the authority.

(5A)  

The notice of revocation of the authority may state that the authority continues in effect in relation to a specified matter or specified period, as though the revocation had not happened, for the purposes of:

(a) a specified provision of this Act or the regulations; or

(b) a specified provision of another law of the Commonwealth that is administered by APRA; or

(c) a specified provision of the prudential standards;

and the statement has effect accordingly.

(6)  
If APRA revokes a body corporate's section 9 authority under subsection (1) or (2), APRA must cause notice of the revocation to be published in the Gazette. APRAmay also cause notice of the revocation to be published in any other way it considers appropriate.

(7)  
A failure to comply with subsection (5) (so far as it requires a body corporate to be given written notice of a revocation) or with subsection (6) does not affect the validity of a revocation.

(8)  

Part VI applies to the following decisions under this section:

(a) a decision to refuse to revoke a body corporate's section 9 authority;

(b) a decision to revoke a body corporate's section 9 authority, unless:

(i) APRA has determined, under subsection (4), that the procedures in subsection (3) do not apply; or

(ii) the section 9 authority is an authority that is to cease to have effect on a day specified in the authority.

SECTION 9B   Bodies that cease to exist or change their names  

(1)  
If APRA is satisfied that a body corporate that has been granted a section 9 authority:

(a) has ceased to exist; or

(b) has changed its name;

APRA must cause notice of that fact to be published in the Gazette. APRA may also cause notice of that fact to be published in any other way it thinks appropriate.

(2)  
If the body corporate has ceased to exist, its section 9 authority is taken to be revoked on publication of the notice in the Gazette.

(3)  
If the body corporate has changed its name, its section 9 authority has effect after the publication of the notice in the Gazette as if it had been granted to the body under its changed name.

SECTION 9C   9C   Publication of list of ADIs  
APRA may, from time to time, publish a list of ADIs:

(a) in the Gazette; or

(b) in such other manner as APRA determines.

SECTION 9D   Authority to carry on banking business for a limited time  

(1)  
An application under subsection 9(2) may state that the application is for an authority to carry on banking business in Australia for a limited time.

(2)  
If APRA grants an authority under subsection 9(3) as a result of an application made in accordance with subsection (1) of this section:

(a) the authority must state that it ceases to have effect on a day specified in the authority; and

(b) the authority ceases to haveeffect at the start of that day (except to the extent, if any, that it is continued in effect under subsection 9A(5A) or section 9F, or extended under section 9E), unless it is revoked earlier.

(3)  
The day specified in the authority under paragraph (2)(a) must be:

(a) 2 years after the day APRA grants the authority; or

(b) if APRA considers that another day is appropriate - that other day.

(4)  
Despite subsection 9(6), Part VI does not apply to a decision to refuse an application made in accordance with subsection (1) of this section, or to a decision to specify a particular day in the authority under paragraph (2)(a) of this section. Application for authority not subject to time limit

(5)  
A section 9 authority granted to a body corporate as a result of an application made in accordance with subsection (1) does not prevent the body corporate making, under section 9, a further application for an authority that is not subject to a time limit.

(6)  
If APRA decides to grant such an application, APRA may do so by varying the section 9 authority to remove the time limit that applies to the authority under subsection (2).

SECTION 9E   Authority to carry on banking business in Australia for a limited time - extension  

(1)  
This section applies to a body corporate's section 9 authority if the authority is to cease to have effect on a day (the expiry day ) specified in the authority.

(2)  
APRA may, at any time before the expiry day, vary the authority to change the expiry day to a later day.

(3)  
If APRA does so, APRA must:

(a) give written notice to the body corporate; and

(b) ensure that notice that the variation has been made is published in the Gazette.

(4)  
A failure to comply with subsection (3) does not affect the validity of the variation.

SECTION 9F   Authority to carry on banking business in Australia for a limited time - continuation after expiry  

(1)  
This section applies to a body corporate's section 9 authority if the authority is to cease to have effect on a day (the expiry day ) specified in the authority.

(2)  
APRA may, at any time before the expiry day, give the body corporate a written notice stating that the authority continues in effect, on and after the expiry day, in relation to a specified matter or specified period for the purposes of:

(a) a specified provision of this Act or the regulations; or

(b) a specified provision of another law of the Commonwealth that is administered by APRA; or

(c) a specified provision of the prudential standards;

and the statement has effect accordingly.

SECTION 10   APRA to be supplied with certain documents  

(1)  
An application under this Part by a body corporate shall be accompanied by a copy of the Act, charter, deed of settlement, memorandum of association and articles of association of the body corporate, or other document by which the body corporate is constituted.

(2)  
Every copy of an Act, charter, deed of settlement, memorandum of association, articles of association or other document furnished to APRA under subsection (1) shall be verified by a statutory declaration made by a senior officer of the body corporate concerned.

(3)  

An ADI commits an offence if:

(a) an alteration is made to the Act, charter, deed of settlement, memorandum of association, articles of association, constitution or other document by which the ADI was constituted as a body corporate; and

(b) the ADI does not, within 3 months of the making of the alteration, give to APRA a written statement:

(i) that sets out particulars of the alteration; and

(ii) that is verified by a statutory declaration made by a senior officer of the ADI; and

(c) there is no determination in force under section 11 that this subsection does not apply to the ADI.

Penalty: 50 penalty units.

Note 1:

Chapter 2 of the Criminal Code sets out the general principles of criminal responsibility.

Note 2:

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.

SECTION 11   APRA may determine that provisions of this Act do not apply  

(1)  

APRA may,in writing, determine that any or all of the following provisions of this Act do not apply to a person while the determination is in force:

(a) a provision of Division 1, 1AA or 1A of Part II (other than section 11A, 11B or 11C);

(b) section 66;

(c) section 66A;

(d) section 67;

(e) section 69.

(2)  

The determination:

(a) may be expressed to apply to a particular person or to a class of persons; and

(b) may specify the period during which the determination is in force; and

(c) may be made subject to specified conditions.

(2A)  

If APRA makes a determination that applies to a particular person, APRA must also give the person written notice of the determination.

(3)  

A person commits an offence if:

(a) the person does, or fails to do, an act; and

(b) doing, or failing to do, the act results in a contravention of a condition to which a determination under this section is subject (being a determination that is in force and that applies to the person).

Penalty: 200 penalty units.

Note 1:

Chapter 2 of the Criminal Code sets out the general principles of criminal responsibility.

Note 2:

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.

(3A)  
An offence against subsection (3) is an indictable offence.

(3B)  

If a person does or fails to do an act in circumstances that give rise to the person committing an offence against subsection (3), the person commits 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 person 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.

(4)  

APRA may, in writing, vary or revoke a determination under this section.

(5)  

The following instruments made under this section are not legislative instruments:

(a) a determination that applies to a particular person;

(b) an instrument varying or revoking a determination that applies to a particular person.

(6)  

Otherwise, an instrument made under this section is a legislative instrument.

(7)  

Part VI applies to the following decisions under this section:

(a) a refusal to determine that one or more provisions of this Act do not apply to a particular person;

(b) a variation or revocation of an order under this section that applies to a particular person.

Division 1AA - Authority to be a NOHC of an ADI  

SECTION 11AA   Authority to be a NOHC  

(1)  
A body corporate may apply in writing to APRA for an authority under this section. The authority operates as an authority in relation to the body corporate and any ADIs that are subsidiaries of the body corporate from time to time.

Note 1:

The body corporate may want the authority:

(a) because APRA refuses or may refuse to grant a subsidiary of the body corporate a section 9 authority unless the body corporate holds a NOHC authority (see subsection 9(3A)); or

(b) for a purpose connected with the Financial Sector (Shareholdings) Act 1998.

Note 2:

The body corporate may also need to consider the implications of the Foreign Acquisitions and Takeovers Act 1975 and the Financial Sector (Shareholdings) Act 1998.

(1A)  

APRA may, by legislative instrument, set criteria for the granting of an authority under this section.

(2)  
APRA may grant the authority if it considers it is appropriate to do so.

Note:

For APRA's power to revoke the authority, see section 11AB.

(3)  

If APRA grants an authority under subsection (2), APRA must cause notice of that authority to be published in the Gazette. APRA may also cause notice of that authority to be published in any other way it considers appropriate.

(4)  

A failure to comply with subsection (3) does not affect the validity of the authority.

(5)  

Part VI applies to a decision to refuse an application under this section.

(5A)  
(Repealed by No 10 of 2018)

(5B)  
(Repealed by No 10 of 2018)

(6)  
(Repealed by No 10 of 2018)

(7)  
(Repealed by No 10 of 2018)

(8)  
(Repealed by No 10 of 2018)

SECTION 11AAA   Conditions on an authority  

(1)  
APRA may, at any time, by giving written notice to a body corporate:

(a) impose conditions, or additional conditions, on the body corporate's NOHC authority; or

(b) vary or revoke conditions imposed on the body corporate's NOHC authority.

The conditions must relate to prudential matters.

(2)  
A condition may be expressed to have effect despite anything in the prudential standards or the regulations.

(3)  
If APRA imposes, varies or revokes the conditions on a body corporate's NOHC authority, APRA must:

(a) give written notice to the body corporate; and

(b) ensure that notice that the action has been taken is published in the Gazette.

(4)  
The taking of an action is not invalid merely because of a failure to comply with subsection (3).

(5)  
Part VI applies to the following decisions made under this section:

(a) a decision to impose conditions, or additional conditions, on a body corporate's NOHC authority;

(b) a decision to vary conditions imposed on a body corporate's NOHC authority.

SECTION 11AAB   Breach of authority conditions  

(1)  
A body corporate commits an offence if:

(a) the body corporate does an act or fails to do an act; and

(b) doing the act or failing to do the act results in a contravention of a condition of the body corporate's NOHC authority; and

(c) there is no determination in force under section 11 that this subsection does not apply to the body corporate.

Penalty: 300 penalty units.

(2)  
If an individual:

(a) commits an offence against subsection (1) because of Part 2.4 of the Criminal Code; or

(b) commits an offence under Part 2.4 of the Criminal Code in relation to an offence against subsection (1);

he or she is punishable, on conviction, by a fine not exceeding 60 penalty units.

(3)  
An offence against this section is an offence of strict liability.

Note:

For strict liability, see section 6.1 of the Criminal Code.

SECTION 11AB   Revocation of authority etc.  

(1)  
APRA must revoke a NOHC authority granted to a body corporate if:

(a) the body corporate, by notice in writing to APRA, requests the revocation of the authority; and

(b) APRA is satisfied that revocation of the authority:

(i) would not be contrary to the national interest; and

(ii) would not be contrary to the interests of depositors of any ADI that is a subsidiary of the body corporate.

(2)  
APRA may revoke a NOHC authority granted to a body corporate if APRA is satisfied that:

(aa) the body corporate has, whether before or after the commencement of this paragraph, provided, in connection with its application for the authority, information that was false or misleading in a material particular; or

(a) the body corporate has failed to comply with any of the following:

(i) a requirement of this Act;

(ii) a requirement of the Financial Sector (Collection of Data) Act 2001;

(iii) a requirement of the regulations or any other instrument made under this Act;

(iv) a requirement of a provision of another law of the Commonwealth, if the provision is specified in the regulations;

(v) a direction under this Act;

(vi) a condition of its NOHC authority; or

(b) the body corporate has ceased to be a NOHC of any ADI or ADIs; or

(c) it would be contrary to the national interest for the authority to remain in force; or

(ca) it would be contrary to financial system stability in Australia for the authority to remain in force; or

(d) it would be contrary to the interests of depositors of any ADI that is a subsidiary of the body corporate for the authority to remain in force; or

(e) the body corporate has failed to pay:

(i) an amount of levy or late penalty to which the Financial Institutions Supervisory Levies Collection Act 1998 applies; or

(ii) an amount of charge fixed under section 51 of the Australian Prudential Regulation Authority Act 1998.

The procedures to be undergone before a revocation under this subsection are set out in subsection (3). Those procedures apply unless APRA determines under subsection (4) that they are not to apply.

(3)  
Subject to subsection (4), APRA must not, under subsection (2), revoke a body corporate's NOHC authority unless:

(a) APRA has given the body corporate a notice in writing advising the body corporate:

(i) that APRA is considering revoking the authority for the reasons specified in the notice; and

(ii) that the body corporate may make submissions to APRA, in accordance with the notice, about the possible revocation; and

(iii) of the date by which any submissions must be made (being a date at least 90 days after the giving of the notice); and

(b) APRA has considered any submissions that were made by the body corporate by the specified date.

(4)  
APRA may determine that the procedures in subsection (3) do not apply if APRA is satisfied that following those procedures could result in a delay in revocation that would be:

(a) contrary to the national interest; or

(b) contrary to the interests of depositors of any ADI that is a subsidiary of the body corporate.

(5)  
A revocation of a body corporate's NOHC authority under subsection (1) or (2) must be in writing, and APRA must give the body corporate written notice of the revocation of the authority.

(5A)  

The notice of the revocation of the authority may state that the authority continues in effect in relation to a specified matter or specified period, as though the revocation had not happened, for the purposes of:

(a) a specified provision of this Act or the regulations; or

(b) a specified provision of another law of the Commonwealth that is administered by APRA; or

(c) a specified provision of the prudential standards;

and the statement has effect accordingly.

(6)  
If APRA revokes a body corporate's NOHC authority under subsection (1) or (2), APRA must cause notice of the revocation to be published in the Gazette. APRA may also cause notice of the revocation to be published in any other way it considers appropriate.

(7)  
A failure to comply with subsection (5) (so far as it requires a body corporate to be given written notice of a revocation) or with subsection (6) does not affect the validity of a revocation.

(8)  

Part VI applies to the following decisions under this section:

(a) a decision to refuse to revoke a NOHC authority granted to a body corporate;

(b) a decision to revoke a NOHC authority granted to a body corporate, unless APRA has determined, under subsection (4), that the procedures in subsection (3) do not apply.

SECTION 11AC   Bodies that cease to exist or change their names  

(1)  
If APRA is satisfied that a body corporate that has been granted a NOHC authority:

(a) has ceased to exist; or

(b) has changed its name;

APRA must cause notice of that fact to be published in the Gazette. APRA may also cause notice of that fact to be published in any other way it thinks appropriate.

(2)  
If the body corporate has ceased to exist, any NOHC authority granted to the body corporate that is still in force is taken to be revoked on publication of the notice in the Gazette.

(3)  
If the body corporate has changed its name, any NOHC authority granted to the body corporate that is still in force has effect after the publication of the notice in the Gazette as if it had been granted to the body under its changed name.

SECTION 11AD   11AD   Publication of list of NOHCs  
APRA may, from time to time, publish a list of authorised NOHCs:

(a) in the Gazette; or

(b) in such other manner as APRA determines.

SECTION 11AE   APRA may give notice to ensure that ADI has an authorised NOHC  

(1)  
This section applies if:

(a) a body corporate is a holding company of an ADI; and

(b) the ADI is not a subsidiary of an authorised NOHC.

(2)  
APRA may, by notice in writing to the body corporate, require it to ensure, in accordance with the conditions (if any) specified in the notice, that either of the following occurs:

(a) the body corporate becomes an authorised NOHC of the ADI;

(b) a subsidiary of the body corporate becomes an authorised NOHC of the ADI.

Note:

See Part 4A of the Financial Sector (Transfer and Restructure) Act 1999 for other provisions that deal with a restructure arrangement to make an operating body a subsidiary of a NOHC.

(3)  
The notice may deal with the time by which, or period during which, it is to be complied with.

(4)  
The body corporate has power to comply with the notice despite anything in its constitution or any contract or arrangement to which it is a party.

(5)  
APRA may, by notice in writing to the body corporate, vary the notice mentioned in subsection (2) if, at the time of the variation, it considers that the variation is necessary and appropriate.

(6)  
The notice mentioned in subsection (2) has effect until APRA revokes it by notice in writing to the body corporate. APRA may revoke the notice mentioned in subsection (2) if, at the time of revocation, it considers that the notice is no longer necessary or appropriate.

(7)  
Part VI applies to a decision to give a notice under subsection (2).

(8)  
Section 11CG applies in relation to a notice to a body corporate under subsection (2) in the same way in which it applies to a direction to an ADI under Subdivision B of Division 1BA.

(9)  
However, section 11CG does not apply to a contravention by a body corporate of a requirement in a notice under subsection (2) if:

(a) the contravention happens merely because APRA refuses to grant the body corporate (or its subsidiary) an authority under subsection 11AA(2); and

(b) APRA's reasons for that refusal do not include the reason that one or more conditions specified in the notice are not satisfied.

Division 1A - Prudential supervision and monitoring of ADIs and authorised NOHCs  

Subdivision A - Prudential supervision and monitoring of ADIs and authorised NOHCs generally  

SECTION 11AF   APRA may make prudential standards for ADIs and authorised NOHCs  

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

(a) all ADIs; or

(b) all authorised NOHCs; or

(c) the subsidiaries of ADIs or authorised NOHCs; or

(d) a specified class of ADIs, authorised NOHCs or subsidiaries of ADIs or authorised NOHCs; or

(e) one or more specified ADIs, authorised NOHCs or subsidiaries of ADIs or authorised NOHCs.

(1A)  

A standard may impose different requirements to be complied with:

(a) in different situations; or

(b) in respect of different activities;

including requirements to be complied with by different classes of ADIs, authorised NOHCs or subsidiaries of ADIs or authorised NOHCs.

(1AA)  

Without limiting the prudential matters in relation to which APRA may determine a standard, a standard may require:

(a) each ADI or authorised NOHC; or

(b) each ADI or authorised NOHC included in a specified class of ADIs or authorised NOHCs; or

(ba) each subsidiary of an ADI or of an authorised NOHC; or

(bb) each subsidiary of an ADI or of an authorised NOHC, included in a specified class of subsidiaries; or

(c) a specified ADI or authorised NOHC; or

(d) each of 2 or more specified ADIs or authorised NOHCs; or

(e) a specified subsidiary of an ADI or of an authorised NOHC; or

(f) each of 2 or more specified subsidiaries of ADIs or of authorised NOHCs;

to ensure that its subsidiaries (or particular subsidiaries), or it and its subsidiaries (or particular subsidiaries), collectively satisfy particular requirements in relation to prudential matters.

(1AB)  

Without limiting the prudential matters in relation to which APRA may determine a standard, a standard may provide for matters relating to:

(a) the appointment of auditors; or

(b) the conduct of audits.

(1AC)  

Without limiting the prudential matters in relation to which APRA may determine a standard, a standard may provide for matters relating to Part IIAA (the Banking Executive Accountability Regime).

(2)  

A standard may provide for APRA to exercise powers and discretions under the standard, including (but not limited to) discretions to approve, impose, adjust or exclude specific prudential requirements in relation to one or more specified ADIs or authorised NOHCs, or one or more specified subsidiaries of ADIs or authorised NOHCs.

(3)  
APRA may, in writing, vary or revoke a standard.

(3A)  

A standard referred to in paragraph (1)(d), or an instrument varying or revoking such a standard, has effect:

(a) from the day on which the standard, variation or revocation is made; or

(b) if the standard, variation or revocation specifies a later day - from that later day.

(4)  
(Repealed by No 154 of 2007)

(4A)  

If APRA determines or varies a standard referred to in paragraph (1)(e) it must, as soon as practicable:

(a) give a copy of the standard, or of the variation, to the ADI, authorised NOHC or subsidiary, or to each ADI, authorised NOHC or subsidiary, to which the standard applies; and

(b) give a copy of the standard, or of the variation, to the Treasurer.

(5)  
(Repealed by No 154 of 2007)

(5A)  

If APRA revokes a standard referred to in paragraph (1)(e) it must, as soon as practicable:

(a) give notice of the revocation to the ADI, authorised NOHC or subsidiary, or to each ADI, authorised NOHC or subsidiary, to which the standard applied; and

(b) give a copy of the revocation to the Treasurer.

(6)  
(Repealed by No 154 of 2007)

(6A)  
(Repealed by No 154 of 2007)

(7)  

A failure to comply with subsection (4A) or (5A) does not affect the validity of the action concerned.

(7A)  

The following instruments made under this section are not legislative instruments:

(a) a standard referred to in paragraph (1)(e);

(b) an instrument varying or revoking a standard referred to in paragraph (1)(e).

(7B)  

Otherwise, an instrument made under this section is a legislative instrument.

(7BA)  

A standard may provide for a matter by applying, adopting or incorporating, with or without modification, any matter contained in an instrument or other writing as in force or existing from time to time, despite:

(a) section 46AA of the Acts Interpretation Act 1901; and

(b) section 14 of the Legislation Act 2003.

(7C)  

Part VI applies to the following decisions under this section:

(a) a decision to determine a standard referred to in paragraph (1)(e);

(b) a decision to vary such a standard.

(8)  
In this section:

Territory
means a territory to which this Act extends.

SECTION 11AG   11AG   Obligation to comply with the prudential standards  

An ADI, authorised NOHC or a subsidiary of an ADI or authorised NOHC to which a prudential standard applies must comply with the standard.

SECTION 11A   11A   Prudential requirements may also be prescribed by the regulations  

The regulations may make provision for and in relation to requiring ADIs, authorised NOHCs, subsidiaries of ADIs and subsidiaries of authorised NOHCs to observe such requirements in relation to prudential matters as are specified in, or ascertained in accordance with, the regulations.

SECTION 11B   11B   APRA to monitor prudential matters  
The functions of APRA include:

(a) the collection and analysis of information in respect of prudential matters relating to ADIs and authorised NOHCs;

(b) the encouragement and promotion of the carrying out by ADIs and authorised NOHCs of sound practices in relation to prudential matters; and

(c) the evaluation of the effectiveness and carrying out of those practices.

SECTION 11C   11C   Division not to limit operation of other provisions  
Nothing in this Division is intended to limit the operation of any other provision of this Act or of the Reserve Bank Act 1959.

Subdivision B - Conversion and write-off provisions  

SECTION 11CAA   11CAA   Definitions  

In this Subdivision:

clearing and settlement facility
has the meaning given by Division 6 of Part 7.1 of the Corporations Act 2001.

conversion and write-off provisions
means the provisions of the prudential standards that relate to the conversion or writing off of:

(a) Additional Tier 1 and Tier 2 capital; or

(b) any other instrument.

conversion entity
: an entity (the first entity ) is a conversion entity for an instrument if:

(a) the instrument is issued by another entity, or another entity is a party to the instrument; and

(b) the instrument converts, in accordance with the terms of the instrument, into one or more ordinary shares or mutual equity interests of the first entity.

converts
: an instrument converts into one or more ordinary shares or mutual equity interests of an entity including by redeeming or cancelling the instrument or rights under the instrument, and replacing the instrument or rights with ordinary shares or mutual equity interests (as the case requires).

mutual equity interests
has the same meaning as in the prudential standards.

operating rules
has the meaning given by section 761A of the Corporations Act 2001.

related subsidiary of an ADI
means a subsidiary of a holding company of the ADI.

specified law
means any of the following:

(a) the Financial Sector (Shareholdings) Act 1998;

(b) the Foreign Acquisitions and Takeovers Act 1975;

(c) Chapter 6 of the Corporations Act 2001 (takeovers);

(d) any other Australian law, or law of a foreign country or part of a foreign country, prescribed by the regulations for the purposes of this paragraph.

SECTION 11CAB   Conversion and write-off provisions  

Application

(1)  
This section applies in relation to an instrument that contains terms that are for the purposes of the conversion and write-off provisions and that is issued by, or to which any of the following is a party:

(a) an ADI;

(b) a holding company of an ADI;

(c) a subsidiary or related subsidiary of an ADI;

(d) an entity of a kind prescribed by the regulations for the purposes of this paragraph. Conversion of instrument despite other laws etc.

(2)  
The instrument may be converted in accordance with the terms of the instrument despite:

(a) any Australian law or any law of a foreign country or a part of a foreign country, other than a specified law; and

(b) the constitution of any of the following entities (the relevant entity ):

(i) the entity issuing the instrument;

(ii) any entity that is a party to the instrument;

(iii) any conversion entity for the instrument; and

(c) any contract or arrangement to which a relevant entity is a party; and

(d) any listing rules or operating rules of a financial market in whose official list a relevant entity is included; and

(e) any operating rules of a clearing and settlement facility through which the instrument is traded. Write-off of instrument despite other laws etc.

(3)  
The instrument may be written off in accordance with the terms of the instrument despite:

(a) any Australian law or any law of a foreign country or a part of a foreign country; and

(b) the constitution of either of the following entities (therelevant entity ):

(i) the entity issuing the instrument;

(ii) any entity that is a party to the instrument; and

(c) any contract or arrangement to which a relevant entity is a party; and

(d) any listing rules or operating rules of a financial market in whose official list a relevant entity is included; and

(e) any operating rules of a clearing and settlement facility through which the instrument is traded.

SECTION 11CAC   Conversion or write-off etc. not grounds for denial of obligations  

(1)  
This section applies if an entity (the first entity ) is party to a contract, whether the proper law of the contract is:

(a) Australian law (including the law of a State or Territory); or

(b) law of a foreign country (including the law of part of a foreign country).

(2)  
None of the matters mentioned in subsection (3) allows the contract, or a party to the contract (other than the first entity), to do any of the following:

(a) deny any obligation under the contract;

(b) accelerate any debt under the contract;

(c) close out any transaction relating to the contract;

(d) enforce any security under the contract.

(3)  
The matters are as follows:

(a) a relevant instrument being converted in accordance with the terms of the instrument;

(b) a relevant instrument being written off in accordance with the terms of the instrument;

(c) the making of a determination (however described) by APRA that results in a relevant instrument being required to be converted or written off in accordance with the terms of the instrument.

(4)  
In this section:

relevant instrument
means:

(a) an instrument to which section 11CAB applies:

(i) that is issued by the first entity; or

(ii) to which the first entity is a party; or

(iii) for which the first entity is a conversion entity; or

(b) if the first entity is a body corporate that is a member of a relevant group of bodies corporate - an instrument to which section 11CAB applies:

(i) that is issued by another member of the group; or

(ii) to which another member of the group is a party; or

(iii) for which another member of the group is a conversion entity.

Division 1BA - APRA's power to issue directions  

Subdivision A - Directions other than to enforce certified industry support contracts  

SECTION 11CA   APRA may give directions in certain circumstances  

(1)  

APRA may give a body corporate that is an ADI or an authorised NOHC a direction of a kind specified in subsection (2) if APRA has reason to believe that:

(a) the body corporate has contravened a provision of:

(i) this Act; or

(ii) the Financial Sector (Collection of Data) Act 2001; or

(iii) (Repealed by No 70 of 2015)

(b) the body corporate has contravened a prudential requirement regulation or a prudential standard; or

(c) the body corporate is likely to contravene this Act, a prudential requirement regulation, a prudential standard or the Financial Sector (Collection of Data) Act 2001, and the direction is reasonably necessary for one or more prudential matters relating to the body corporate; or

(d) the body corporate has contravened a condition or direction under this Act or the Financial Sector (Collection of Data) Act 2001; or

(e) the direction is necessary in the interests of:

(i) if the body corporate is an ADI - depositors of the ADI; or

(ii) if the body corporate is an authorised NOHC - depositors of any ADI that is a subsidiary of the NOHC; or

(f) the body corporate is, or is about to become, unable to meet its liabilities; or

(g) there is, or there might be, a material risk to the security of the body corporate's assets; or

(h) there has been, or there might be, a material deterioration in the body corporate's financial condition; or

(i) the body corporate is conducting its affairs in an improper or financially unsound way; or

(j) the failure to issue a direction would materially prejudice the interests of:

(i) if the body corporate is an ADI - depositors of the ADI; or

(ii) if the body corporate is an authorised NOHC - depositors of any ADI that is a subsidiary of the NOHC; or

(k) the body corporate is conducting its affairs in a way that may cause or promote instability in the Australian financial system.

(1AA)  

APRA may give a body corporate that is an ADI or is an authorised NOHC a direction of a kind specified in subsection (2) if APRA has reason to believe that:

(a) a subsidiary of the body corporate has contravened a provision of:

(i) this Act; or

(ii) the Financial Sector (Collection of Data) Act 2001; or

(b) a subsidiary of the body corporate has contravened a prudential requirement regulation or a prudential standard; or

(c) a subsidiary of the body corporate is likely to contravene this Act, a prudential requirement regulation, a prudential standard or the Financial Sector (Collection of Data) Act 2001; or

(d) the direction is in respect of a subsidiary of the body corporate and is necessary in the interests of:

(i) if the body corporate is an ADI - depositors of the ADI; or

(ii) if the body corporate is an authorised NOHC - depositors of any ADI that is a subsidiary of the NOHC; or

(e) a subsidiary of the body corporate is, or is about to become, unable to meet the subsidiary's liabilities; or

(f) there is, or there might be, a material risk to the security of the assets of a subsidiary of the body corporate; or

(g) there has been, or there might be, a material deterioration in the financial condition of a subsidiary of the body corporate; or

(h) a subsidiary of the body corporate is conducting the subsidiary's affairs in an improper or financially unsound way; or

(j) a subsidiary of the body corporate is conducting the subsidiary's affairs in a way that may cause or promote instability in the Australian financial system; or

(k) a subsidiary of the body corporate is conducting the subsidiary's affairs in a way that may cause it to be unable to continue to supply services to:

(i) if the body corporate is an ADI - the ADI; or

(ii) if the body corporate is an authorised NOHC - any ADI that is a subsidiary of the NOHC; or

(l) the direction is in respect of a subsidiary of the body corporate and the failure to issue a direction would materially prejudice the interests of:

(i) if the body corporate is an ADI - depositors of the ADI; or

(ii) if the body corporate is an authorised NOHC - depositors of any ADI that is a subsidiary of the NOHC.

(1AB)  

However, APRA can only make a direction as a result of a ground referred to in paragraph (1AA)(a), (b), (c), (e), (f), (g), (h) or (k) if APRA considers that the direction is reasonably necessary for one or more prudential matters relating to the body corporate.

(1AC)  

APRA may give a body corporate that is a subsidiary of an ADI or of an authorised NOHC a direction of a kind specified in subsection (2) if:

(a) APRA has given the ADI or authorised NOHC a direction under subsection (1AA) because one or more of the grounds referred to in that subsection have been satisfied in respect of the subsidiary; or

(b) APRA may give the ADI or authorised NOHC a direction under subsection (1AA) because one or more of the grounds referred to in that subsection have been satisfied in respect of the subsidiary.

(1AD)  

APRA cannot give a direction under subsection (1AC) to a body corporate of a kind specified in regulations (if any) made for the purposes of this subsection.

(1AE)  

Subsections (1), (1AA) and (1AC) do not limit each other.

(1A)  
The direction must:

(a) be given by notice in writing to the body corporate; and

(b) specify:

(i) in the case of a direction under subsection (1AC) - the ground referred to in subsection (1AA) as a result of which the direction is given; or

(ii) otherwise - the ground referred to in subsection (1) or (1AA) as a result of which the direction is given.

(1B)  

In deciding whether to give a direction under subsection (1), (1AA) or (1AC) to a body corporate, APRA may disregard any external support for the body corporate.

(1C)  

The regulations may specify that a particular form of support is not external support for the purposes of subsection (1B).

(2)  

The kinds of direction that the body corporate may be given are directions to do, or to cause a body corporate that is its subsidiary to do, any one or more of the following:

(aa) to comply with the whole or a part of:

(i) this Act; or

(ii) the Financial Sector (Collection of Data) Act 2001;

(iii) (Repealed by No 70 of 2015)

(ab) to comply with the whole or a part of a condition or direction referred to in paragraph (1)(d).

(a) to comply with the whole or a part of a prudential requirement regulation or a prudential standard;

(b) to order an audit of the affairs of the body corporate, at the expense of the body corporate, by an auditor chosen by APRA;

(c) to remove a director or senior manager of the body corporate from office;

(d) to ensure a director or senior manager of the body corporate does not take part in the management or conduct of the business of the body corporate except as permitted by APRA;

(e) to appoint a person or persons as a director or senior manager of the body corporate for such term as APRA directs;

(f) to remove any auditor of the body corporate from office and appoint another auditor to hold office for such term as APRA directs;

(g) not to give any financial accommodation to any person;

(h) not to accept the deposit of any amount;

(i) not to borrow any amount;

(j) 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) not to repay any amount paid on shares;

(l) not to pay a dividend on any shares;

(m) not to repay any money on deposit or advance;

(n) not to pay or transfer any amount or asset to any person, or create an obligation (contingent or otherwise) to do so;

(o) not to undertake any financial obligation (contingent or otherwise) on behalf of any other person;

(p) to make changes to the body corporate's systems, business practices or operations;

(q) to reconstruct, amalgamate or otherwise alter all or part of any of the following:

(i) the business, structure or organisation of the body corporate;

(ii) the business, structure or organisation of the group constituted by the body corporate and its subsidiaries;

(r) to do, or to refrain from doing, anything else in relation to the affairs of the body corporate.

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

(2AA)  

However, APRA must not direct, or give a direction that would cause or require, a covered bond special purpose vehicle to:

(a) deal, or not deal, with an asset to the extent that the asset secures covered bond liabilities of an ADI; or

(b) make a payment, or not make a payment, in relation to a covered bond liability of an ADI.

Note:

Covered bond special purpose vehicles hold assets that secure liabilities in relation to covered bonds: see Division 3A of Part II.

(2A)  
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 that 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.

(2AAA)  

The kinds of direction that may be given as mentioned in subsection (2) are not limited by any other provision in this Part (apart from subsection (2AA)).

(2AAB)  

The kinds of direction that may be given as mentioned in a particular paragraph of subsection (2) are not limited by any other paragraph of that subsection.

(2B)  

Without limiting the generality of paragraph (2)(r), a direction under that paragraph to a foreign ADI may be any one or more of the following:

(a) a direction that the ADI act in a way so as to ensure that:

(i) a particular asset, or a particular class of assets, of the ADI is returned to the control (however described) of the part of the ADI's banking business that is carried on in Australia; or

(ii) a particular liability, or a particular class of liabilities, of the ADI ceases to be the responsibility (however described) ofthe part of the ADI's banking business that is carried on in Australia;

(b) a direction that the ADI not act in a way that has the result that:

(i) a particular asset, or a particular class of assets, of the ADI ceases to be under the control (however described) of the part of the ADI's banking business that is carried on in Australia; or

(ii) a particular liability, or a particular class of liabilities, of the ADI becomes the responsibility (however described) of the part of the ADI's banking business that is carried on in Australia.

(3)  
The direction may deal with the time by which, or period during which, it is to be complied with.

(4)  
The body corporate has power to comply with the direction despite anything in its constitution or any contract or arrangement to which it is a party.

(4A)  

If the direction requires the body corporate to cause a subsidiary to do, or to refrain from doing, an act or thing:

(a) the body corporate has power to cause the subsidiary to do, or to refrain from doing, the act or thing; and

(b) the subsidiary has power to do, or to refrain from doing, the act or thing;

despite anything in the subsidiary's constitution or any contract or arrangement to which the subsidiary is a party.

(4B)  

APRA may, by notice in writing to the body corporate, vary the direction if, at the time of the variation, it considers that the variation is necessary and appropriate.

(5)  
The direction has effect until APRA revokes it by notice in writing to the body corporate. APRA may revoke the direction if, at the time of revocation, it considers that the direction is no longer necessary or appropriate.

(5A)  

Part VI applies to a decision to give a direction:

(a) under subsection (1) as a result of the ground referred to in paragraph (1)(a), (b), (c), (d) or (e); or

(b) under subsection (1AA) as a result of the ground referred to in paragraph (1AA)(a), (b), (c) or (d); or

(c) under subsection (1AC) as a result of the ground referred to in paragraph (1AC)(a) or (b), to the extent that the paragraph relates to a ground referred to in paragraph (1AA)(a), (b), (c) or (d).

(6)  

In this section, director has the same meaning as it has in the Corporations Act 2001, and the affairs of a body corporate include those set out in section 53 of that Act.

Note 1:

Senior manager is defined in section 5 of this Act.

Note 2:

For further information about directions, see Subdivision C.

Subdivision B - Directions to enforce certified industry support contracts  

SECTION 11CB   APRA may certify an industry support contract  

(1)  
APRA may certify an industry support contract if all of the parties to the contract make a written request to APRA that the contract be certified and APRA considers it appropriate to certify the contract. The certification must be by notice in writing to the parties to the contract.

(2)  

Part VI applies to a refusal under this section to certify an industry support contract.

SECTION 11CC   APRA may direct parties to an industry support contract to comply with the contract  

(1)  
APRA may direct any ADI that is a party to an industry support contract that is certified under section 11CB to carry out, or cease to carry out, specified acts if APRA considers:

(a) that carrying out, or ceasing to carry out, those acts, is necessary in order for the terms of the contract to be fulfilled; and

(b) that the direction is in the interests of the depositors of one or more of the ADIs that are parties to the contract.

The direction must be by notice in writing to the ADI.

(2)  
The direction may deal with the time by which, or period during which, it is to be complied with.

(3)  
The ADI has power to comply with the direction despite anything in its constitution or any contract or arrangement to which it is a party.

(3A)  

APRA may vary the direction if, at the time of the variation, it considers that the variation is necessary and appropriate.

(4)  
The direction has effect until:

(a) APRA revokes the direction by notice in writing to the ADI (see subsection (5)); or

(b) APRA revokes the certification of the industry support contract by notice in writing to the ADIs that are parties to it (see subsection (6)).

(5)  
APRA may revoke the direction if, at the time of the revocation, it considers that the direction is no longer necessary or appropriate.

(6)  
APRA may revoke the certification of the industry support contract if it considers that it is appropriate to do so for any reason.

(7)  

Part VI applies to the following decisions made under this section:

(a) a decision to give a direction;

(b) a decision to vary a direction;

(c) a revocation of the certification of an industry support contract.

Subdivision C - General provisions relating to all directions  

SECTION 11CD   Direction not grounds for denial of obligations  

(1)  

This section applies if a body corporate is party to a contract, whether the proper law of the contract is:

(a) Australian law (including the law of a State or Territory); or

(b) law of a foreign country (including the law of part of a foreign country).

(1A)  

None of the matters mentioned in subsection (1B) allows the contract, or a party to the contract (other than the body corporate), to do any of the following:

(a) deny any obligations under the contract;

(b) accelerate any debt under the contract;

(c) close out any transaction relating to the contract;

(d) enforce any security under the contract.

This subsection has effect subject to subsections (2) and (3) of this section and section 31B.

(1B)  

The matters are as follows:

(a) the body corporate being given a direction by APRA under Subdivision A or B or section 29;

(b) if the body corporate is a member of a relevant group of bodies corporate - another member of the group being given a direction by APRA under Subdivision A or B or section 29.

(2)  

If the body corporate is prevented from fulfilling its obligations under the contract because of a direction under Subdivision A, other than a direction under paragraph 11CA(2)(m), or because of a direction under section 29, the other party or parties to the contract are, subject to any orders made under subsection (3), relieved from obligations owed to the body corporate under the contract.

(3)  

A party to a contract to which subsection (2) applies may apply to the Federal Court of Australia for an order relating to the effect on the contract of a direction under Subdivision A or section 29. 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 Subdivision A or section 29.

SECTION 11CE   Supply of information about issue and revocation of directions  

(1)   Power to publish notice of directions in Gazette  

APRA may publish in the Gazette notice of any direction made under Subdivision A or B or section 29. The notice must include the name of the ADI, authorised NOHC or other body corporate given the direction and a summary of the direction.

(2)   Requirement to publish notice of revocation of certain directions in Gazette  

If APRA publishes notice of a direction made under Subdivision A or B or section 29 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.

(3)   Requirement to provide information about direction to Treasurer and Reserve Bank  

If the Treasurer or the Reserve Bank requests APRA to provide information about:

(a) any directions under Subdivision A or B or section 29 in respect of a particular ADI, authorised NOHC or other body corporate; or

(b) any directions made during a specified period under Subdivision A or B or section 29 in respect of any ADIs, authorised NOHCs or other bodies corporate;

APRA must comply with the request.

(4)   Power to inform Treasurer and Reserve Bank of direction  

APRA may provide any information that it considers appropriate to the Treasurer or the Reserve Bank about any directions, or revocations of directions, made under Subdivision A or B or section 29, in respect of any ADI, authorised NOHC or other body corporate, at any time.

(5)   Requirement to inform Treasurer and Reserve Bank of revocation of direction if informed of making of direction  

If APRA provides the Treasurer or the Reserve Bank with information about a direction and then later revokes the direction, APRA must notify that person of the revocation of the direction as soon as practicable after the revocation. Failure to notify the person does not affect the validity of the revocation.

SECTION 11CF   11CF   Secrecy requirements  
(Repealed by No 10 of 2018)

SECTION 11CG   Non-compliance with a direction  

(1)  

An ADI, authorised NOHC or other body corporate commits 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 Subdivision A or B or section 17, 23, 29 or 37DB.

(c) (Repealed by No 154 of 2007)

Penalty: 50 penalty units.

Note 1:

Chapter 2 of the Criminal Code sets out the general principles of criminal responsibility.

Note 2:

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.

(1A)  

If an ADI, authorised NOHC or other body corporate does or fails to do an act in circumstances that give rise to the ADI, NOHC or other body corporate committing an offence against subsection (1), the ADI, NOHC or other body corporate commits 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 ADI, NOHC or other 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.

(2)  

An officer of an ADI, authorised NOHC or other body corporate commits an offence if:

(a) the officer fails to take reasonable steps to ensure that the ADI, NOHC or other body corporate complies with a direction given to it under Subdivision A or B or section 17, 23, 29 or 37DB; and

(b) the officer's duties include ensuring that the ADI, NOHC or other body corporate complies with the direction, or with a class of directions that includes the direction.

(c) (Repealed by No 154 of 2007)

Penalty: 50 penalty units.

Note 1:

Chapter 2 of the Criminal Code sets out the general principles of criminal responsibility.

Note 2:

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.

(2A)  

If an officer of an ADI, authorised NOHC or other body corporate fails to take reasonable steps to ensure that the ADI, NOHC or other body corporate complies with a direction given to it under Subdivision A or B or section 17, 23, 29 or 37DB in circumstances that give rise to the officer committing an offence against subsection (2), the officer commits 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.

(3)  

In this section, officer has the meaning given by section 9 of the Corporations Act 2001.

Subdivision D - Secrecy and disclosure provisions relating to all directions  

SECTION 11CH   APRA may determine that a direction is covered by secrecy provision  

(1)  
This section applies if APRA has given an entity (the directed entity ) a direction under this Act.

(2)  
APRA may determine, in writing, that the direction is covered under this subsection if APRA considers that the determination is necessary to protect the depositors of any ADI or to promote financial system stability in Australia.

Note:

For repeal of a determination, see subsection 33(3) of the Acts Interpretation Act 1901.

(3)  
APRA must give the directed entity a copy of the determination as soon as practicable after making it.

(4)  
An instrument under subsection (2) is not a legislative instrument.

(5)  
If APRA makes a determination under subsection (2), APRA must consider whether it is appropriate in the circumstances to also make a determination under either or both of subsections 11CK(2) and 11CK(5).

SECTION 11CI   Secrecy relating to directions  

(1)  
A person commits an offence if:

(a) APRA has given an entity (the directed entity ) a direction under this Act; and

(b) the direction is covered by a determination under subsection 11CH(2); and

(c) the person is, or has been, covered by subsection (2) of this section in relation to the direction; and

(d) the person discloses information; and

(e) the information reveals the fact that the direction was made.

Penalty: Imprisonment for 2 years.

(2)  
A person is covered by this subsection in relation to the direction if the person is:

(a) the directed entity; or

(b) an officer, employee or contractor of the directed entity at a time on or after APRA gave the directed entity the direction; or

(c) any other person who, because of his or her employment, or in the course of that employment, has acquired information that reveals the fact that the direction was made. Exception

(3)  
Subsection (1) does not apply if:

(a) the disclosure is authorised by section 11CJ, 11CK, 11CL, 11CM, 11CN or 11CO; or

(b) the disclosure is required by an order or direction of a court or tribunal.

Note:

A defendant bears an evidential burden in relation to a matter in subsection (2) (see subsection 13.3(3) of the Criminal Code).

SECTION 11CJ   11CJ   Disclosure of publicly available information  

A person covered by subsection 11CI(2) in relation to a direction may disclose information that reveals the fact that the direction was made, to the extent that the information has already been lawfully made available to the public.

SECTION 11CK   Disclosure allowed by APRA  

(1)  
A person covered by subsection 11CI(2) in relation to a direction may disclose information that reveals the fact that the direction was made if:

(a) a determination under subsection (2) or (5) allows the disclosure by the person; and

(b) if APRA has included conditions in the determination - those conditions are satisfied. Determinations relating to specified person

(2)  
APRA may, in writing, make a determination allowing:

(a) a specified person covered by subsection 11CI(2) in relation to a specified direction; or

(b) a specified person covered by subsection 11CI(2) in relation to a direction that is in a specified class of directions;

to disclose specified information in relation to the direction.

(3)  
An instrument under subsection (2) is not a legislative instrument.

(4)  
APRA must give a copy of the determination as soon as practicable after making it to:

(a) the directed entity; and

(b) the person specified, or each person specified, in the determination. Determinations relating to specified class of persons

(5)  
APRA may, by legislative instrument, make a determination allowing a specified class of persons covered by subsection 11CI(2) in relation to a direction that is in a specified class of directions to disclose:

(a) specified kinds of information in relation to the direction; or

(b) any kind of information in relation to the direction. Conditions in determinations

(6)  
APRA may include conditions in a determination under subsection (2) or (5) that relate to any of the following:

(a) the kind of entities to which the disclosure may be made;

(b) the way in which the disclosure is to be made;

(c) any other matter that APRA considers appropriate.

SECTION 11CL   11CL   Disclosure to legal representative for purpose of seeking legal advice  

A person covered by subsection 11CI(2) in relation to a direction may disclose information that reveals the fact that the direction was made if:

(a) the disclosure is to the person's legal representative; and

(b) the purpose of the person making the disclosure is for the legal representative to provide legal advice, or another legal service, in relation to the direction.

SECTION 11CM   Disclosure allowed by APRA Act secrecy provision  

(1)  
A person covered by subsection 11CI(2) in relation to a direction may disclose information that reveals the fact that the direction was made if:

(a)  

the person is:

(i) an APRA member (within the meaning of subsection 56(1) of the Australian Prudential Regulation Authority Act 1998); or

(ii) an APRA staff member (within the meaning of that subsection); or

(iia) a Financial Regulator Assessment Authority official (within the meaning of that subsection); or

(iii) a Commonwealth officer (within the meaning of the Crimes Act 1914) who is covered by paragraph (c) of the definition of officer in subsection 56(1) of the Australian Prudential Regulation Authority Act 1998; and

(b)  the information is protected information (within the meaning of subsection 56(1) of that Act), or is contained in a protected document (within the meaning of that subsection); and

(c)  

the disclosure is in accordance with a provision mentioned in paragraph 56(2)(c) of that Act. Relationship to APRA Act secrecy provision

(2)  
Disclosure of information in relation to a direction is not an offence under section 56 of the Australian Prudential Regulation Authority Act 1998 if the disclosure is authorised by section 11CJ, 11CK, 11CL, 11CN or 11CO.

SECTION 11CN   11CN   Disclosure in circumstances set out in the regulations  

A person covered by subsection 11CI(2) in relation to a direction may disclose information that reveals the fact that the direction was made, if the disclosure is made in circumstances (if any) set out in the regulations.