FINANCIAL SECTOR LEGISLATION AMENDMENT (CRISIS RESOLUTION POWERS AND OTHER MEASURES) BILL 2017

2016-2017

The Parliament of the

Commonwealth of Australia

HOUSE OF REPRESENTATIVES

Presented and read a first time

Financial Sector Legislation Amendment

(Crisis Resolution Powers and Other

Measures) Bill 2017

No. , 2017

(Treasury)

A Bill for an Act to amend the law in relation to the

financial sector, and for related purposes

No. , 2017

Financial Sector Legislation Amendment (Crisis Resolution Powers

and Other Measures) Bill 2017

Contents

Short title ........................................................................................... 1

Commencement ................................................................................. 1

Schedules ........................................................................................... 2

Schedule 1--Amendment of the Banking Act 1959

Part 1--Main amendments

Banking Act 1959

Part 2--Application provisions

Schedule 2--Amendment of the Insurance Act 1973

Part 1--Main amendments

Insurance Act 1973

Part 2--Application provisions

169

Schedule 3--Amendment of the Life Insurance Act 1995

171

Part 1--Main amendments

171

Life Insurance Act 1995

171

Part 2--Application provisions

256

Schedule 4--Amendment of the Financial Sector (Business

Transfer and Group Restructure) Act 1999

259

Financial Sector (Business Transfer and Group Restructure) Act 1999

259

Schedule 5--Amendment of the Payment Systems and Netting

Act 1998

285

Part 1--Main amendments

285

Payment Systems and Netting Act 1998

285

Part 2--Application provisions

298

Schedule 6--Amendment of the Australian Prudential

Regulation Authority Act 1998

299

Australian Prudential Regulation Authority Act 1998

299

Schedule 7--Amendments of other Acts

301

No. , 2017

Financial Sector Legislation Amendment (Crisis Resolution Powers

and Other Measures) Bill 2017

A Bill for an Act to amend the law in relation to the

financial sector, and for related purposes

The Parliament of Australia enacts:

1 Short title

This Act is the Financial Sector Legislation Amendment (Crisis

Resolution Powers and Other Measures) Act 2017.

2 Commencement

(1) Each provision of this Act specified in column 1 of the table

commences, or is taken to have commenced, in accordance with

column 2 of the table. Any other statement in column 2 has effect

according to its terms.

Financial Sector Legislation Amendment (Crisis Resolution Powers

and Other Measures) Bill 2017

No. , 2017

Commencement information

Column 1

Column 2

Column 3

Provisions

Commencement

Date/Details

1. Sections 1 to 3

and anything in

this Act not

elsewhere covered

by this table

The day this Act receives the Royal Assent.

2. Schedules 1 to

The day this Act receives the Royal Assent.

Note:

This table relates only to the provisions of this Act as originally

enacted. It will not be amended to deal with any later amendments of

this Act.

(2) Any information in column 3 of the table is not part of this Act.

Information may be inserted in this column, or information in it

may be edited, in any published version of this Act.

3 Schedules

Legislation that is specified in a Schedule to this Act is amended or

repealed as set out in the applicable items in the Schedule

concerned, and any other item in a Schedule to this Act has effect

according to its terms.

Amendment of the Banking Act 1959 Schedule 1

Main amendments Part 1

No. , 2017

Financial Sector Legislation Amendment (Crisis Resolution Powers

and Other Measures) Bill 2017

Schedule 1--Amendment of the Banking Act

1959

Part 1--Main amendments

Banking Act 1959

1 Subsection 5(1) (definition of ADI statutory manager)

Repeal the definition.

2 Subsection 5(1)

Insert:

administrator, of a body corporate's business, means an

administrator appointed under subsection 13A(1) to take control of

the body corporate's business.

3 Subsection 5(1) (definition of

administrator of an ADI's

business)

Repeal the definition.

4 Subsection 5(1)

Insert:

Australian business assets and liabilities, of a foreign ADI, has

the meaning given by subsection 11E(3).

Banking Act statutory manager has the meaning given by

subsection 13A(2).

direction under this Act means a direction under any of the

following provisions:

(a) section 11CA;

(b) section 11CC;

(d) section 17;

(e) section 23;

(f) section 29;

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(g) section 31F.

5 Subsection 5(1) (paragraph (a) of the definition of external

administrator)

Omit "or provisional liquidator".

6 Subsection 5(1) (paragraph (b) of the definition of external

administrator)

Omit "an ADI statutory manager", substitute "a Banking Act statutory

manager".

7 Subsection 5(1)

Insert:

financial market has the meaning given by section 761A of the

Corporations Act 2001.

holding company, of a body corporate, means another body

corporate of which the first body corporate is a subsidiary.

liquidator includes a provisional liquidator.

listing rules has the meaning given by section 761A of the

Corporations Act 2001.

NOHC/NOHC subsidiary has the meaning given by

subsection 13D(5).

8 Subsection 5(1) (definition of prudential matters)

Repeal the definition, substitute:

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

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Financial Sector Legislation Amendment (Crisis Resolution Powers

and Other Measures) Bill 2017

(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.

9 Subsection 5(1) (definition of recapitalisation direction)

Omit "subsection 13E(1)", substitute "subsection 13E(1) or (1B)".

10 Subsection 5(1)

Insert:

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).

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

payment;

including through the exercise of powers and functions under this

Act or another law.

transferred liabilities determination means a determination under

subsection 16AIA(1).

11 After subsection 5(2)

Insert:

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

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and Other Measures) Bill 2017

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way as that question is determined for the purposes of the

Corporations Act 2001.

12 Subsection 5(6)

Omit "under section 14F on or after 12 October 2011", substitute

"under section 16AAA".

13 Subsections 9(4) to (9)

Repeal the subsections, substitute:

(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.

(5) A failure to comply with subsection (4) does not affect the validity

of the authority.

(6) Part VI applies to a decision to refuse an application under this

section.

14 After section 9

Insert:

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.

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(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.

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

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.

15 Section 9A (heading)

Repeal the heading, substitute:

Schedule 1 Amendment of the Banking Act 1959

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Financial Sector Legislation Amendment (Crisis Resolution Powers

and Other Measures) Bill 2017

No. , 2017

9A Revocation of authority etc.

16 Subsection 9A(2)

Repeal the subsection, substitute:

(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

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

Amendment of the Banking Act 1959 Schedule 1

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Financial Sector Legislation Amendment (Crisis Resolution Powers

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(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.

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.

17 Subsections 11AA(3) to (8)

Repeal the subsections, substitute:

(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.

18 After section 11AA

Insert:

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

Schedule 1 Amendment of the Banking Act 1959

Part 1 Main amendments

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and Other Measures) Bill 2017

No. , 2017

(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.

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

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.

Amendment of the Banking Act 1959 Schedule 1

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Financial Sector Legislation Amendment (Crisis Resolution Powers

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

Note:

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

19 Section 11AB (heading)

Repeal the heading, substitute:

11AB Revocation of authority etc.

20 Paragraph 11AB(2)(a)

Repeal the paragraph, substitute:

(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

21 At the end of Division 1AA of Part II

Add:

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;

Schedule 1 Amendment of the Banking Act 1959

Part 1 Main amendments

Financial Sector Legislation Amendment (Crisis Resolution Powers

and Other Measures) Bill 2017

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(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.

22 Before section 11AF

Insert:

Amendment of the Banking Act 1959 Schedule 1

Main amendments Part 1

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Financial Sector Legislation Amendment (Crisis Resolution Powers

and Other Measures) Bill 2017

Subdivision A--Prudential supervision and monitoring of ADIs

and authorised NOHCs generally

23 Paragraphs 11AF(1)(c) and (d)

Repeal the paragraphs, substitute:

(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.

24 Subsection 11AF(1A)

Repeal the subsection, substitute:

(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.

25 After paragraph 11AF(1AA)(b)

Insert:

(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

26 After paragraph 11AF(1AA)(d)

Insert:

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

(f) each of 2 or more specified subsidiaries of ADIs or of

authorised NOHCs;

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Part 1 Main amendments

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and Other Measures) Bill 2017

No. , 2017

27 Subsection 11AF(2)

Omit "one or more specified ADIs or authorised NOHCs", substitute

"one or more specified ADIs or authorised NOHCs, or one or more

specified subsidiaries of ADIs or authorised NOHCs".

28 Subsections 11AF(4A) and (5A)

Repeal the subsections, substitute:

(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.

(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.

29 After section 11AF

Insert:

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.

30 Section 11A

Omit "ADIs and authorised NOHCs", substitute, "ADIs, authorised

NOHCs, subsidiaries of ADIs and subsidiaries of authorised NOHCs".

31 At the end of Division 1A of Part II

Add:

Amendment of the Banking Act 1959 Schedule 1

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Financial Sector Legislation Amendment (Crisis Resolution Powers

and Other Measures) Bill 2017

Subdivision B--Conversion and write-off provisions

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;

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(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.

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;

(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

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:

Amendment of the Banking Act 1959 Schedule 1

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(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 (the

relevant entity):

(i) the entity issuing the instrument;

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

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.

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;

(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;

that results in a relevant instrument being required to be

converted or written off in accordance with the terms of the

instrument.

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(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.

32 Subsection 11CA(1)

Omit "Without limiting subsection (1AA), APRA may", substitute

"APRA may".

33 Paragraph 11CA(1)(c)

Omit "and such a contravention is likely to give rise to a prudential

risk", substitute "and the direction is reasonably necessary for one or

more prudential matters relating to the body corporate".

34 Subsection 11CA(1AA)

Repeal the subsection, substitute:

(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

Act, a prudential requirement regulation, a prudential

Amendment of the Banking Act 1959 Schedule 1

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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;

(ii) if the body corporate is an authorised NOHC--

depositors of any ADI that is a subsidiary of the NOHC;

(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;

(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;

(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

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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.

35 Paragraph 11CA(1A)(b)

Repeal the paragraph, substitute:

(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.

36 Subsection 11CA(1B)

Repeal the subsection, substitute:

(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.

37 Paragraph 11CA(2)(p)

Repeal the paragraph, substitute:

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(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.

38 After subsection 11CA(2A)

Insert:

(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.

39 Subsection 11CA(2B)

Omit "paragraph (2)(p)", substitute "paragraph (2)(r)".

40 Paragraph 11CA(2B)(a)

Omit "in a way that", substitute "in a way so as to ensure that".

41 Paragraph 11CA(2B)(b)

Omit "in a way that", substitute "in a way that has the result that".

42 Subsection 11CA(5A)

Repeal the subsection, substitute:

(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

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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).

43 Subsections 11CD(1), (1A) and (2)

Repeal the subsections, substitute:

(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;

(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.

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44 Subsection 11CE(1)

Omit "ADI or authorised NOHC", substitute "ADI, authorised NOHC

or other body corporate".

45 Paragraph 11CE(3)(a)

Omit "a particular ADI or authorised NOHC", substitute "a particular

ADI, authorised NOHC or other body corporate".

46 Paragraph 11CE(3)(b)

Omit "any ADIs or authorised NOHCs", substitute "any ADIs,

authorised NOHCs or other bodies corporate".

47 Subsection 11CE(4)

Omit "any ADI or authorised NOHC", substitute "any ADI, authorised

NOHC or other body corporate".

48 Section 11CF

Repeal the section.

49 Subsection 11CG(1)

Omit "An ADI or an authorised NOHC", substitute "An ADI,

authorised NOHC or other body corporate".

50 Subsection 11CG(1A)

Omit "an ADI or an authorised NOHC", substitute "an ADI, authorised

NOHC or other body corporate".

51 Subsection 11CG(1A)

Omit "ADI or NOHC" (wherever occurring), substitute "ADI, NOHC

or other body corporate".

52 Subsection 11CG(2)

Omit "an ADI or an authorised NOHC", substitute "an ADI, authorised

NOHC or other body corporate".

53 Subsection 11CG(2)

Omit "ADI or NOHC" (wherever occurring), substitute "ADI, NOHC

or other body corporate".

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54 Subsection 11CG(2A)

Omit "an ADI or an authorised NOHC", substitute "an ADI, authorised

NOHC or other body corporate".

55 Subsection 11CG(2A)

Omit "ADI or NOHC", substitute "ADI, NOHC or other body

corporate".

56 At the end of Division 1BA of Part II

Add:

Subdivision D--Secrecy and disclosure provisions relating to all

directions

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).

11CI Secrecy relating to directions

(1) A person commits an offence if:

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(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

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;

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).

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.

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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;

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

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.

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

(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

(5AA), (6), (6A), (7), (7A), (7B) or (7C) 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

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Authority Act 1998 if the disclosure is authorised by section 11CJ,

11CK, 11CL, 11CN or 11CO.

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.

11CO Disclosure for purpose

A person covered by subsection 11CI(2) (the relevant person) in

relation to a direction may disclose information that reveals the fact

that the direction was made if:

(a) another person covered by subsection 11CI(2) in relation to

the direction disclosed that information to the relevant person

for a particular purpose in accordance with section 11CK,

11CL, 11CM or 11CN, or in accordance with a previous

operation of this section; and

(b) the disclosure by the relevant person is for the same purpose.

11CP Exceptions operate independently

Sections 11CJ, 11CK, 11CL, 11CM, 11CN and 11CO do not limit

each other.

57 Section 11E (Heading)

Repeal the heading, substitute:

11E Limited application of Division 2 etc. to foreign ADIs

58 Subsection 11E(1)

Repeal the subsection, substitute:

(1) The provisions listed in subsection (1A) do not apply in relation to:

(a) business of a foreign ADI (other than Australian business

assets and liabilities); or

(b) the management of a foreign ADI, to the extent that the

management relates to such business of the foreign ADI.

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(1A) The provisions are as follows:

(a) sections 12, 13BA and 13C, and Subdivision B of Division 2

(statutory management);

(b) subsections 13A(1) to (2), to the extent that those subsections

relate to statutory management;

(1B) The following provisions do not apply in relation to a foreign ADI:

(a) Division 2 (apart from the provisions in that Division listed

in subsection (1A));

(b) Division 2AA.

59 At the end of section 11E

Add:

(3) In this section:

asset has the same meaning as in the Financial Sector (Transfer

and Restructure) Act 1999.

Australian business assets and liabilities, of a foreign ADI, means

the following:

(a) the assets and liabilities of the foreign ADI in Australia;

(b) any other assets and liabilities of the foreign ADI that:

(i) are related to its operations in Australia; and

(ii) if regulations are made for the purposes of this

subparagraph--are of a kind specified in those

regulations.

liability has the same meaning as in the Financial Sector (Transfer

and Restructure) Act 1999.

60 After section 11E

Insert:

11EA APRA's power to apply for foreign ADI to be wound up

(1) APRA may apply to the Federal Court of Australia for an order

that a foreign ADI be wound up if APRA considers that any of the

following requirements are satisfied:

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(a) the foreign ADI is unable to meet its liabilities in Australia,

or in one or more foreign countries, as and when they

become due and payable;

(b) an application for the appointment of an external

administrator of the foreign ADI, or for a similar procedure

in respect of the foreign ADI, has been made in a foreign

country;

ADI, or a similar appointment has been made in respect of

the foreign ADI, in a foreign country.

(2) To avoid doubt, subsection (1) applies whether or not an ADI

statutory manager is in control of the Australian business assets

and liabilities of the foreign ADI.

(3) The winding up of the foreign ADI is to be conducted in

accordance with the Corporations Act 2001.

Note:

See Part 5.7 of the Corporations Act 2001.

(4) If APRA makes an application under subsection (1), APRA must

inform the Minister of the application as soon as possible.

61 Section 11F

Before "If", insert "(1)".

62 At the end of section 11F

Add:

(2) Subsection (1) does not constrain:

(a) the exercise of powers or the performance of functions under

this Act of a Banking Act statutory manager of a foreign

ADI; or

(b) an entity acting at the direction or request of a Banking Act

statutory manager of a foreign ADI exercising powers or

performing functions under this Act.

63 Section 13A (heading)

Repeal the heading, substitute:

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13A Consequences of inability or failure of ADI etc. to meet certain

requirements

64 After paragraph 13A(1)(c)

Insert:

; or (d) an external administrator has been appointed to a holding

company of the ADI (or a similar appointment has been

made in a foreign country in respect of such a holding

company), and APRA considers that the appointment poses a

significant threat to:

(i) the operation or soundness of the ADI; or

(ii) the interests of depositors of the ADI; or

(iii) the stability of the financial system in Australia; or

(e) if the ADI is a foreign ADI:

(i) an application for the appointment of an external

administrator of the foreign ADI, or for a similar

procedure in respect of the foreign ADI, has been made

in a foreign country; or

(ii) an external administrator has been appointed to the

foreign ADI, or a similar appointment has been made in

respect of the foreign ADI, in a foreign country.

65 Subsection 13A(2)

Repeal the subsection, substitute:

(1B) APRA may take any of the actions mentioned in subsection (1C) in

relation to a body corporate (the target body corporate) if:

(a) the target body corporate is any of the following:

(i) an authorised NOHC of an ADI (the relevant ADI);

(ii) a subsidiary of an authorised NOHC of an ADI (also the

relevant ADI);

(iii) a subsidiary of an ADI (also the relevant ADI); and

(b) the condition in subsection (1D), (1E) or (1F) is satisfied; and

(d) the target body corporate is not a body corporate of a kind

specified in regulations (if any) made for the purposes of this

paragraph.

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(1C) The actions are as follows:

(a) taking control of the business of the target body corporate;

(b) appointing an administrator to take control of the business of

the target body corporate.

Note:

For information about another circumstance in which APRA may take

control of the business of the target body corporate, see section 65.

(1D) The condition in this subsection is satisfied if:

(a) either:

(i) a Banking Act statutory manager has taken control of

the relevant ADI; or

(ii) the conditions in any or all of paragraphs (1)(a), (b), (c),

(d) or (e) are satisfied in relation to the relevant ADI,

and APRA intends that a Banking Act statutory

manager will take control of the relevant ADI; and

(b) APRA considers that the target body corporate provides

services that are, or conducts business that is, essential to the

capacity of the relevant ADI to maintain its operations.

(1E) The condition in this subsection is satisfied if:

(a) either:

(i) a Banking Act statutory manager has taken control of

the relevant ADI; or

(ii) the conditions in any or all of paragraphs (1)(a), (b), (c),

(d) or (e) are satisfied in relation to the relevant ADI,

and APRA intends that a Banking Act statutory

manager will take control of the relevant ADI; and

(b) APRA considers that it is necessary for a Banking Act

statutory manager to take control of the target body

corporate, in order to facilitate the resolution of any of the

following:

(i) the relevant ADI;

(ii) an authorised NOHC of the relevant ADI;

(iii) a relevant group of bodies corporate of which the

relevant ADI is a member;

(iv) a particular member or particular members of such a

group.

(1F) The condition in this subsection is satisfied if:

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(a) there is an external administrator of the target body

corporate, or APRA considers that, in the absence of external

support:

(i) the target body corporate may become unable to meet its

obligations; or

(ii) the target body corporate may suspend payment; and

(b) APRA considers that it is necessary to take an action

mentioned in subsection (1C) in respect of the target body

corporate in order to enable the relevant ADI to maintain its

operations, or in order to facilitate the resolution of any of the

following:

(i) the relevant ADI;

(ii) an authorised NOHC of the relevant ADI;

(iii) a relevant group of bodies corporate of which the

relevant ADI is a member;

(iv) a particular member or particular members of such a

group.

(2) If:

(a) APRA is in control of a body corporate's business under this

Subdivision--APRA is the Banking Act statutory manager

of the body corporate; or

(b) an administrator appointed by APRA is in control of a body

corporate's business under this Subdivision--the

administrator is the Banking Act statutory manager of the

body corporate.

Note:

This section and other provisions relating to statutory management do

not apply to the aspects described in subsection 11E(1) of the business

and management of a foreign ADI.

(2A) If APRA appoints 2 or more Banking Act statutory managers of a

body corporate, or appoints one or more additional Banking Act

statutory managers of a body corporate:

(a) the functions and powers under this Act of a Banking Act

statutory manager of the body corporate may be performed or

exercised by:

(i) all of the Banking Act statutory managers of the body

corporate acting jointly; or

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(ii) each of the Banking Act statutory managers of the body

corporate acting individually (except to the extent (if

any) specified in a notice given by APRA under

paragraph (b)); and

(b) at the time of appointment, APRA may give all of the

Banking Act statutory managers of the body corporate a

notice in writing for the purposes of subparagraph (a)(ii),

specifying limits or conditions on their ability to perform

functions and exercise powers individually; and

manager as being a reference to whichever one or more of

those Banking Act statutory managers the case requires.

66 Paragraph 13A(3)(a)

Omit "section 16AI", substitute "section 16AI or 16AIC".

67 Subsection 13A(3) (note)

Repeal the note.

68 After subsection 13A(3)

Insert:

(3AA) Subsection (3) does not constrain:

(a) the exercise of powers or the performance of functions under

this Act of a Banking Act statutory manager of an ADI; or

(b) an entity acting at the direction or request of a Banking Act

statutory manager of an ADI exercising powers or

performing functions under this Act.

69 Subsection 13A(7)

Omit "an ADI", substitute "a body corporate".

70 Subsection 13A(7)

Omit "other ADI", substitute "other body corporate".

71 Section 13BA (heading)

Repeal the heading, substitute:

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13BA Start of control of body corporate's business by Banking Act

statutory manager

72 Subsection 13BA(1)

Omit "an ADI statutory manager", substitute "a Banking Act statutory

manager".

73 Subsection 13BA(1)

Omit "an ADI's business", substitute "a body corporate's business".

74 Subsection 13BA(1)

Omit "give the ADI", substitute "give the body corporate".

75 Subsection 13BA(1)

Omit "the ADI statutory manager", substitute "the Banking Act

statutory manager".

76 Subsection 13BA(2)

Omit "An ADI statutory manager takes control of an ADI's business",

substitute "A Banking Act statutory manager takes control of a body

corporate's business".

77 Section 13BA(2)

Omit "the ADI statutory manager" (wherever occurring), substitute "the

Banking Act statutory manager".

78 Section 13C (heading)

Repeal the heading, substitute:

13C Banking Act statutory managers--termination of control

79 Subsection 13C(1)

Repeal the subsection, substitute:

Conditions necessary for termination of control

(1) If APRA assumes control of a body corporate's business or

appoints an administrator of a body corporate's business, APRA

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must ensure that either it or an administrator of the body

corporate's business has control of the body corporate's business

until:

(a) APRA considers that it is no longer necessary for it or an

administrator to remain in control of the body corporate's

business; or

(b) APRA has applied for the body corporate to be wound up.

A termination of control that is permitted under this section is

called an ultimate termination of control.

Note:

This provision does not prevent a change, or changes, between control

of a body corporate's business by APRA and an administrator or

between administrators.

80 Subsection 13C(2)

Omit "an ADI statutory manager of an ADI's business", substitute "a

Banking Act statutory manager of a body corporate's business".

81 Paragraph 13C(2)(a)

Omit "of the ADI", substitute "of the body corporate".

82 Paragraph 13C(2)(a)

Omit "the ADI's" (wherever occurring), substitute "the body

corporate's".

83 Paragraph 13C(2)(a)

Omit "ADI statutory manager", substitute "Banking Act statutory

manager".

84 Paragraphs 13C(2)(b) and (c)

Omit "the ADI", substitute "the body corporate".

85 Subsection 13C(3)

Omit "an ADI's business by an ADI statutory manager", substitute "a

body corporate's business by a Banking Act statutory manager".

86 Subsection 13C(4)

Omit "the ADI statutory manager", substitute "the Banking Act

statutory manager".

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87 Subsection 13C(5)

Omit "the ADI statutory manager's", substitute "the Banking Act

statutory manager's".

88 Subsection 13C(5)

Omit "the ADI's" (wherever occurring), substitute "the body

corporate's".

89 Subsection 13C(5) (note)

Omit "an ADI statutory manager is in control of an ADI's business",

substitute "a Banking Act statutory manager is in control of a body

corporate's business".

90 Section 13D

Repeal the section, substitute:

13D Who this Subdivision applies to

(1) This Subdivision applies to an ADI that:

(a) is a company that:

(i) is registered under the Corporations Act 2001; and

(ii) has a share capital; and

(b) does not have a Banking Act statutory manager.

(2) Subsections (3) and (4) apply if:

(a) APRA has given a recapitalisation direction to an ADI under

subsection 13E(1) (the primary recapitalisation direction);

and

(b) the ADI is a subsidiary of a NOHC/NOHC subsidiary; and

(i) is registered under the Corporations Act 2001; and

(ii) has a share capital; and

(d) the NOHC/NOHC subsidiary does not have a Banking Act

statutory manager.

(3) This Subdivision applies to the NOHC/NOHC subsidiary in the

same way that it does to an ADI.

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(4) However, disregard the following provisions in applying this

Subdivision to the NOHC/NOHC subsidiary:

(a) subsection 13E(1);

(b) subsection 13F(1).

(5) In this section:

NOHC/NOHC subsidiary means a body corporate that is any of

the following:

(a) an authorised NOHC;

(b) a subsidiary of an authorised NOHC.

91 After subsection 13E(1)

Insert:

(1A) Subsection (1B) applies if subsections 13D(3) and (4) apply to a

NOHC/NOHC subsidiary because of a primary recapitalisation

direction given to an ADI (as mentioned in subsection 13D(2)).

(1B) For the purposes of facilitating compliance with the primary

recapitalisation direction, APRA may give the NOHC/NOHC

subsidiary a direction (also a recapitalisation direction) that

requires the NOHC/NOHC subsidiary to do anything that is

specified in the direction.

92 At the end of section 13E

Add:

(5) A recapitalisation direction may deal with the time by which, or

period during which, it is to be complied with.

(6) APRA may, by notice in writing to the ADI, vary the

recapitalisation direction if, at the time of the variation, it considers

that the variation is necessary and appropriate.

(7) The direction has effect until APRA revokes it by notice in writing

to the ADI. APRA may revoke the direction if, at the time of

revocation, it considers that the direction is no longer necessary or

appropriate.

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93 After subsection 13F(1)

Insert:

(1A) If the recapitalisation direction is a direction to a NOHC/NOHC

subsidiary under subsection 13E(1B), the direction may direct the

NOHC/NOHC subsidiary to do any of the following:

(a) issue:

(i) shares, or rights to acquire shares, in the NOHC/NOHC

subsidiary; or

(ii) other capital instruments in the NOHC/NOHC

subsidiary of a kind specified in the direction;

(b) acquire:

(i) shares, or rights to acquire shares, in the ADI mentioned

in subsection 13E(1A); or

(ii) other capital instruments in the ADI mentioned in

subsection 13E(1A) of a kind specified in the direction;

(i) shares, or rights to acquire shares, in a specified body

corporate covered by subsection (1B); or

(ii) other capital instruments in a specified body corporate

covered by subsection (1B), of a kind specified in the

direction.

(1B) This subsection covers a body corporate if:

(a) the body corporate is a subsidiary of the NOHC/NOHC

subsidiary; and

(b) the ADI is a subsidiary of the body corporate.

(1C) Without limiting the generality of subsections (1), (1A) and (2), but

subject to subsection (3), a direction referred to in those

subsections may:

(a) deal with some only of the matters referred to in those

subsections; or

(b) deal with a particular class or particular classes of those

matters; or

different classes of matters.

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94 Subsection 13F(2)

Omit "paragraph (1)(a)", substitute "paragraph (1)(a) or

subparagraph (1A)(a)(i), (1A)(b)(i) or (1A)(c)(i)".

95 Subsection 13F(3)

Omit "paragraph (1)(b)", substitute "paragraph (1)(b) or

subparagraph (1A)(a)(ii), (1A)(b)(ii) or (1A)(c)(ii)".

96 Subsection 13G(3) (heading)

Repeal the heading, substitute:

Issue or acquisition of shares etc. despite other laws etc.

97 Subsection 13G(3)

After "issue", insert "or acquire".

98 Paragraph 13G(3)(a)

After "the Corporations Act 2001", insert "(without limiting the scope

of section 70B of this Act)".

99 Paragraph 13G(3)(d)

Omit "(as defined in section 761A of the Corporations Act 2001) of a

financial market (as defined in that section)", substitute "of a financial

market".

100 After subsection 13H(1)

Insert:

(1A) If the recapitalisation direction is a direction to a NOHC/NOHC

subsidiary under subsection 13E(1B), treat the reference in

paragraph (1)(a) to "the depositors with the ADI" as being a

reference to "the depositors with the ADI mentioned in

subsection 13E(1A)".

101 At the end of section 13H

Add:

(4) If the recapitalisation direction is a direction to a NOHC/NOHC

subsidiary under subsection 13E(1B), treat the references in

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paragraph (3)(c) to "the ADI" as being a reference to "the

NOHC/NOHC subsidiary mentioned in subsection 13E(1B)".

102 Section 13N

Repeal the section, substitute:

13N Recapitalisation 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).

(2) None of the matters mentioned in subsection (3) allows the

contract, or a party to the contract (other than the body corporate),

to do any of the following:

(a) deny any obligation under the contract;

(b) accelerate any debt under the contract;

(d) enforce any security under the contract.

(3) The matters are as follows:

(a) the body corporate being subject to a recapitalisation

direction;

(b) if the body corporate is a member of a relevant group of

bodies corporate--another member of the group being

subject to a recapitalisation direction.

103 Subsection 13P(9)

Repeal the subsection.

104 Subdivision B of Division 2 of Part II (heading)

Repeal the heading, substitute:

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Subdivision B--Provisions dealing with control of a body

corporate's business by a Banking Act statutory

manager

105 Section 14A (heading)

Repeal the heading, substitute:

14A Banking Act statutory manager's powers and functions

106 Subsection 14A(1) (heading)

Repeal the heading, substitute:

Banking Act statutory manager's powers and functions include

powers and functions of board

107 Subsection 14A(1)

Omit "An ADI statutory manager has the powers and functions of the

members of the board of directors of the ADI", substitute "A Banking

Act statutory manager of a body corporate has the powers and functions

of the members of the board of directors of the body corporate".

108 Subsection 14A(1) (note)

Omit "an ADI statutory manager", substitute "a Banking Act statutory

manager".

109 Subsection 14A(1) (note)

Omit "an ADI,", substitute "a body corporate,".

110 Subsection 14A(1) (note)

Omit "the ADI", substitute "the body corporate".

111 Subsection 14A(2) (heading)

Repeal the heading, substitute:

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Banking Act statutory manager's power to obtain information

112 Subsection 14A(2)

Omit "An ADI statutory manager may, for the purposes of this

Division, require a person who has, at any time, been an officer of the

ADI to give the ADI statutory manager any information relating to the

business of the ADI that the ADI statutory manager requires.",

substitute "A Banking Act statutory manager of a body corporate may,

for the purposes of this Division, require a person who has, at any time,

been an officer of the body corporate to give the statutory manager any

information relating to the business of the body corporate that the

statutory manager requires.".

113 Subsection 14A(2A)

Omit "officer of an ADI", substitute "officer of a body corporate".

114 Paragraph 14A(2A)(a)

Omit "an ADI statutory manager in relation to the ADI", substitute "a

Banking Act statutory manager of the body corporate".

115 Paragraph 14A(2A)(b)

Omit "ADI statutory manager", substitute "Banking Act statutory

manager".

116 Subsection 14A(5) (heading)

Repeal the heading, substitute:

Banking Act statutory manager's power to sell whole or part of

body corporate's business

117 Subsection 14A(5)

Omit "An ADI statutory manager", substitute "A Banking Act statutory

manager".

118 Subsection 14A(5)

Omit "the ADI's business", substitute "the body corporate's business".

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119 Subsection 14A(5)

Omit "the ADI statutory manager", substitute "the Banking Act

statutory manager".

120 Subsection 14A(5A) (heading)

Repeal the heading, substitute:

Banking Act statutory manager to alter body corporate's

constitution etc.

121 Subsection 14A(5A)

Omit "An ADI statutory manager may, if the ADI concerned",

substitute "A Banking Act statutory manager may, if the body corporate

concerned".

122 Subsection 14A(5A)

Omit "the ADI's constitution", substitute "the body corporate's

constitution".

123 Paragraph 14A(5A)(a)

Omit "the ADI statutory manager's functions and duties, or the exercise

of the ADI statutory manager's other powers, under this Division in

relation to the ADI", substitute "the Banking Act statutory manager's

functions and duties, or the exercise of the Banking Act statutory

manager's other powers, under this Division in relation to the body

corporate".

124 Subparagraph 14A(5A)(b)(i)

Omit "the ADI", substitute "the relevant ADI mentioned in

subsection 13A(1B)".

125 Subsection 14A(5B)

Omit "An ADI statutory manager", substitute "A Banking Act statutory

manager".

126 Subsection 14A(5B)

Omit "subsection (5A)", substitute "subsection (5) or (5A)".

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127 Paragraph 14A(5B)(a)

After "the Corporations Act 2001", insert "(without limiting the scope

of section 70B of this Act)".

128 Paragraph 14A(5B)(b)

Omit "the ADI's", substitute "the body corporate's".

129 Paragraphs 14A(5B)(c) and (d)

Omit "the ADI", substitute "the body corporate".

130 Paragraph 14A(5B)(d)

Omit "(as defined in section 761A of the Corporations Act 2001) of a

financial market (as defined in that section)", substitute "of a financial

market".

131 After section 14A

Insert:

14AAA Safeguards on exercise of Banking Act statutory manager's

powers and functions

(1) Despite anything else in this Subdivision, a Banking Act statutory

manager of a body corporate (the body corporate under

management) may not perform a function or exercise a power

under section 14A if:

(a) either or both of subsections (2) and (3) apply; and

(b) the performance of the function or the exercise of the power

is not for the purposes of:

(i) an act of the Banking Act statutory manager under

subsection 14AA(1); or

(ii) Part 3 or 4 of the Financial Sector (Transfer and

Restructure) Act 1999.

(2) This subsection applies if:

(a) the body corporate under management is not an ADI; and

(b) the performance or the exercise would result in:

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(i) the provision of services by the body corporate under

management to a related body corporate of the body

corporate under management; or

(ii) the provision of services by a related body corporate of

the body corporate under management to the body

corporate under management; or

(iii) subject to subsection (4), the transfer of assets between

the body corporate under management and another body

corporate (otherwise than in the ordinary course of

business); and

by a binding arrangement that was in existence immediately

before the Banking Act statutory manager started to be in

control of the business of the body corporate under

management; and

(d) the provision or transfer is not for fair value.

(3) This subsection applies if:

(a) the body corporate under management is an authorised

NOHC of an ADI; and

(b) the performance or the exercise requires using funds of the

body corporate or a subsidiary of the body corporate to

increase the level of capital of the ADI to a specified level;

and

ordinary resolution, to that use of the funds.

(4) Treat the requirement in subparagraph (2)(b)(iii) as not being met

if:

(a) the body corporate under management is an authorised

NOHC of an ADI; and

(b) the transfer of assets mentioned in that subparagraph is a

transfer of funds to increase the level of capital of the ADI to

a specified level; and

ordinary resolution, to that use of the funds.

132 Section 14AA (heading)

Repeal the heading, substitute:

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14AA Banking Act statutory manager's additional powers to

facilitate recapitalisation

133 Subsection 14AA(1)

Omit "An ADI statutory manager of an ADI", substitute "A Banking

Act statutory manager of a body corporate".

134 Subsection 14AA(1)

Omit "the ADI statutory manager", substitute "the Banking Act

statutory manager".

135 Subsection 14AA(1) (note)

Omit "the ADI statutory manager", substitute "the Banking Act

statutory manager".

136 Subsection 14AA(2)

Omit "the ADI statutory manager", substitute "the Banking Act

statutory manager".

137 Subsection 14AA(4)

Omit "An ADI statutory manager", substitute "A Banking Act statutory

manager".

138 Paragraph 14AA(4)(a)

After "the Corporations Act 2001", insert "(without limiting the scope

of section 70B of this Act)".

139 Paragraph 14AA(4)(d)

Omit "(as defined in section 761A of the Corporations Act 2001) of a

financial market (as defined in that section)", substitute "of a financial

market".

140 Section 14AB

Omit "the ADI statutory manager" (wherever occurring), substitute "the

Banking Act statutory manager".

141 Subparagraphs 14AB(2)(c)(iii) and (iv)

Repeal the subparagraphs, substitute:

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(iii) the body corporate;

(iv) a person who is an associate of the body corporate under

Division 2 of Part 1.2 of the Corporations Act 2001;

142 Subsection 14AB(8)

Repeal the subsection, substitute:

Exemption from subsection (1)

(8) APRA may determine in writing that subsection (1) does not apply

in relation to an act relating to shares or rights if APRA is satisfied

that delaying the act to enable compliance with that subsection in

relation to the act would detrimentally affect:

(a) depositors with:

(i) if the company is an ADI--the ADI; or

(ii) if the company is not an ADI--the relevant ADI

mentioned in subsection 13A(1B); and

(b) financial system stability in Australia.

143 Section 14AC

Repeal the section, substitute:

14AC Act under section 14AA not ground 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).

(2) None of the matters mentioned in subsection (3) allows the

contract, or a party to the contract (other than the body corporate),

to do any of the following:

(a) deny any obligation under the contract;

(b) accelerate any debt under the contract;

(d) enforce any security under the contract.

(3) The matters are as follows:

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(a) a Banking Act statutory manager of the body corporate doing

an act under subsection 14AA(1) relating to the body

corporate;

(b) if the body corporate is a member of a relevant group of

bodies corporate--a Banking Act statutory manager of

another member of the group doing an act under

subsection 14AA(1) relating to that other member.

144 Subsection 14AD(1)

Omit "the business of an ADI that has an ADI statutory manager",

substitute "the business of a body corporate that has a Banking Act

statutory manager".

145 Paragraphs 14AD(1)(a) and (b)

Omit "the ADI statutory manager" (wherever occurring), substitute "the

Banking Act statutory manager".

146 Subsection 14B(1)

Repeal the subsection, substitute:

Types of recommendation

(1) An administrator of a body corporate's business may make any of

the following recommendations to APRA, by instrument in writing

given to APRA:

(a) that APRA make a particular direction under Division 1BA,

subsection 14D(3) or section 29 in respect of the body

corporate;

(b) that APRA apply for the body corporate to be wound up;

ADI's section 9 authority;

(d) if the body corporate is an authorised NOHC--that APRA

revoke the authorised NOHC's authority under

subsection 11AA(2).

147 Subsection 14B(2)

Omit "an ADI's business", substitute "a body corporate's business".

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148 Section 14C (heading)

Repeal the heading, substitute:

14C Banking Act statutory manager's liabilities and duties

149 Subsections 14C(1), (2), (3) and (4)

Repeal the subsections, substitute:

Immunity

(1) A Banking Act statutory manager, or a person acting on behalf of a

Banking Act statutory manager, is not subject to any liability

(whether civil or criminal) in respect of anything done, or omitted

to be done, in the exercise or performance, or the purported

exercise or performance, of powers, functions or duties conferred

or imposed on the Banking Act statutory manager by or under this

Act.

(2) Subsection (1) does not apply to an act or omission in bad faith.

(3) To avoid doubt, a Banking Act statutory manager is not liable

under section 588G of the Corporations Act 2001 in respect of

anything done, or omitted to be done, in the exercise or

performance, or the purported exercise or performance, of powers,

functions or duties conferred or imposed on the Banking Act

statutory manager by or under this Act. This subsection does not

limit the scope of subsection (1).

150 Subsection 14C(5)

Omit "ADI statutory managers", substitute "Banking Act statutory

managers".

151 After section 14C

Insert:

14CA Transaction by Banking Act statutory manager not voidable

under section 588FE of the Corporations Act 2001

A transaction of a body corporate is not voidable under

section 588FE of the Corporations Act 2001 merely because:

Amendment of the Banking Act 1959 Schedule 1

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Financial Sector Legislation Amendment (Crisis Resolution Powers

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(a) the transaction was entered into at a time when a Banking

Act statutory manager was in control of the body corporate's

business; and

(b) the transaction is:

(i) an uncommercial transaction (within the meaning of

that Act) of the body corporate; or

(ii) an unfair preference (within the meaning of that Act)

given by the body corporate to a creditor of the

company; or

(iii) an insolvent transaction (within the meaning of that Act)

of the body corporate.

152 Subsection 14D(1)

Omit "an ADI's business", substitute "a body corporate's business".

153 Subsection 14D(1)

Omit "the ADI's business", substitute "the body corporate's business".

154 Subsection 14D(2)

Omit "an ADI's business", substitute "a body corporate's business".

155 Subsection 14D(2)

Omit "the ADI's business", substitute "the body corporate's business".

156 Subsection 14D(3)

Omit "an ADI's business", substitute "a body corporate's business".

157 Subsection 14D(3)

Omit "the ADI's business" (wherever occurring), substitute "the body

corporate's business".

158 Subsection 14D(4)

Omit "an ADI's business", substitute "a body corporate's business".

159 Subsection 14DAA(1)

Omit "an ADI's business", substitute "a body corporate's business".

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160 Subsection 14DA(1)

Omit "an ADI's business", substitute "a body corporate's business".

161 Subsection 14DA(7)

Omit "an ADI's business", substitute "a body corporate's business".

162 Subsections 14E(1) and (2)

Repeal the subsections, substitute:

(1) APRA may terminate the appointment of an administrator of a

body corporate's business and either appoint another person as

administrator of the body corporate's business or itself take control

of the body corporate's business if:

(a) the administrator contravenes a requirement of this Division;

(b) APRA considers such action necessary to:

(i) facilitate the resolution of the body corporate, a relevant

group of bodies corporate of which the body corporate

is a member, or another member of such a group; or

(ii) if the body corporate is an ADI--protect the interests of

depositors of the ADI; or

(iii) promote financial system stability in Australia.

(2) The terms and conditions of an administrator's appointment may

provide for termination in circumstances in addition to those

mentioned in subsection (1).

(2A) If:

(a) APRA is the statutory manager of a body corporate; and

(b) the requirement in paragraph (1)(b) is satisfied;

it may cease to be the statutory manager of the body corporate and

appoint a person as administrator of the body corporate's business.

163 Section 14F

Repeal the section.

164 Section 15 (heading)

Repeal the heading, substitute:

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15 Effect on directors of Banking Act statutory manager taking

control of a body corporate's business

165 Subsection 15(1)

Omit "an ADI cease", substitute "a body corporate cease".

166 Subsection 15(1)

Omit "an ADI statutory manager", substitute "a Banking Act statutory

manager".

167 Subsection 15(1)

Omit "the ADI's business", substitute "the body corporate's business".

168 Subsection 15(2)

Omit "an ADI must not", substitute "a body corporate must not".

169 Subsection 15(2)

Omit "an ADI statutory manager", substitute "a Banking Act statutory

manager".

170 Subsection 15(2)

Omit "the ADI's business", substitute "the body corporate's business".

171 Subsection 15(3)

Omit "the ADI appointed", substitute "the body corporate appointed".

172 Subsection 15(3)

Omit "the ADI's business" (wherever occurring), substitute "the body

corporate's business".

173 Subsection 15(3)

Omit "an ADI statutory manager", substitute "a Banking Act statutory

manager".

174 After subsection 15(3)

Insert:

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(3A) Subsections (1), (2) and (3) do not apply in relation to a body

corporate that is a foreign ADI.

(3B) Subsection (3C) applies if:

(a) subsections (1), (2) and (3) do not apply in relation to a body

corporate because of subsection (3A); and

(b) a Banking Act statutory manager takes control of the body

corporate's business; and

relation to the body corporate's business while the Banking

Act statutory manager has control of the body corporate's

business.

(3C) Those acts are invalid and of no effect to the extent that they relate

to:

(a) the Australian business assets and liabilities of the body

corporate; or

(b) the management of the body corporate, to the extent that the

management relates to the Australian business assets and

liabilities of the body corporate.

175 Section 15A (heading)

Repeal the heading, substitute:

15A Effect on external administrator of Banking Act statutory

manager taking control of a body corporate's business

176 Subsection 15A(1)

Omit "an ADI is", substitute "a body corporate is".

177 Subsection 15A(1)

Omit "an ADI statutory manager", substitute "a Banking Act statutory

manager".

178 Subsection 15A(1)

Omit "the ADI's business", substitute "the body corporate's business".

179 Subsection 15A(1) (note)

Repeal the note.

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180 Subsection 15A(2)

Omit "an ADI must", substitute "a body corporate must".

181 Subsection 15A(2)

Omit "an ADI statutory manager", substitute "a Banking Act statutory

manager".

182 Subsection 15A(2)

Omit "the ADI's business", substitute "the body corporate's business".

183 Subsection 15A(3)

Omit "an ADI under", substitute "a body corporate under".

184 Subsection 15A(3)

Omit "the ADI appointed", substitute "the body corporate appointed".

185 Subsection 15A(3)

Omit "the ADI's business" (wherever occurring), substitute "the body

corporate's business".

186 Subsection 15A(3)

Omit "an ADI statutory manager", substitute "a Banking Act statutory

manager".

187 Subsection 15A(4)

Omit "an ADI that", substitute "a body corporate that".

188 Subsection 15A(4)

Omit "an ADI statutory manager" (wherever occurring), substitute "a

Banking Act statutory manager".

189 Subsection 15A(4)

Omit "the ADI's business" (wherever occurring), substitute "the body

corporate's business".

190 Section 15B

Repeal the section, substitute:

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15B Moratorium--effect of Banking Act statutory management on

court and tribunal proceedings

(1) A person cannot begin or continue a proceeding in a court or

tribunal covered by subsection (8) in respect of a body corporate if

a Banking Act statutory manager is in control of the body

corporate's business.

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

(a) the court or tribunal grants leave for the proceedings to be

begun or continued on the ground that the person would be

caused hardship if leave were not granted; and

(b) the beginning or continuing of the proceedings is in

accordance with such terms (if any) as the court or tribunal

imposes.

(3) A person intending to apply for leave of the court or tribunal under

paragraph (2)(a) must give APRA at least 10 days notice of the

intention to apply (or a shorter period, if the court or tribunal

considers that exceptional circumstances make this necessary).

(4) APRA may apply to the court or tribunal to be joined as a party to

the proceedings for leave. If APRA is joined as a party, the court or

tribunal must have regard to APRA's views in deciding:

(a) whether to grant leave under paragraph (2)(a); and

(b) if the court or tribunal decides to grant the leave--whether to

impose terms as mentioned in paragraph (2)(b); and

nature of those terms.

(5) Subsection (1) also does not apply if:

(a) APRA consents in writing to the proceedings beginning or

continuing; or

(b) the Banking Act statutory manager, after considering

APRA's views, consents to the proceedings beginning or

continuing.

(6) APRA (or the Banking Act statutory manager) cannot revoke a

consent given for the purposes of subsection (5).

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Financial Sector Legislation Amendment (Crisis Resolution Powers

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(7) Neither APRA nor the Banking Act statutory manager is liable to

an action or other proceedings for damages in respect of a refusal

to give consent under subsection (5).

(8) A proceeding in a court or tribunal is covered by this subsection in

respect of a body corporate if it is any of the following:

(a) a proceeding against the body corporate (including a

cross-claim or third party claim against the body corporate);

(b) a proceeding in relation to property of the body corporate;

charge) granted by the body corporate, or by a related body

corporate of the body corporate, over any property that the

body corporate owns, uses, possesses, occupies or in which

the body corporate otherwise has an interest.

(9) Subsection (8) does not cover a proceeding in respect of an offence

or a contravention of a provision of a law for which a pecuniary

penalty (however described) may be imposed.

(10) In this section, a reference to a tribunal includes a reference to the

following:

(a) an industrial tribunal;

(b) an arbitral tribunal.

15BA Moratorium--effect of Banking Act statutory management on

enforcement process regarding property

(1) No enforcement process in relation to property of a body corporate

can be begun or proceeded with if a Banking Act statutory

manager is in control of the body corporate's business.

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

(a) the Federal Court of Australia grants leave for the process to

be begun or continued on the ground that the person would

be caused hardship if leave were not granted; or

(b) the beginning or continuing of the process is in accordance

with such terms (if any) as the Federal Court imposes.

(3) A person intending to apply for leave of the Federal Court of

Australia under paragraph (2)(a) must give APRA at least 10 days

notice of the intention to apply (or a shorter period, if the Federal

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Court considers that exceptional circumstances make this

necessary).

(4) APRA may apply to the Federal Court of Australia to be joined as

a party to the proceedings for leave. If APRA is joined as a party,

the Federal Court must have regard to APRA's views in deciding:

(a) whether to grant leave under paragraph (2)(a); and

(b) if the Federal Court decides to grant the leave--whether to

impose terms as mentioned in paragraph (2)(b); and

nature of those terms.

(5) Subsection (1) also does not apply if:

(a) APRA consents to the process beginning or continuing; or

(b) the Banking Act statutory manager consents to the process

beginning or continuing.

(6) APRA (or the Banking Act statutory manager) cannot revoke a

consent given for the purposes of subsection (5).

(7) Neither APRA nor the Banking Act statutory manager is liable to

an action or other proceedings for damages in respect of a refusal

to give consent under subsection (5).

(8) This section has effect subject to section 31B.

15BB Moratorium--effect of Banking Act statutory management on

disposal of property

(1) A person must not dispose of property if:

(a) the property is owned by another person; and

(b) the other person is a body corporate; and

corporate's business.

Note:

The Federal Court of Australia may grant an injunction under

section 65A in respect of a contravention of this subsection.

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

(a) APRA consents to the disposal; or

(b) the Banking Act statutory manager consents to the disposal.

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(3) Neither APRA nor the Banking Act statutory manager is liable to

an action or other proceedings for damages in respect of a refusal

to give consent under subsection (2).

(4) This section has effect subject to section 31B.

15BC Moratorium--restrictions on exercise of third party property

rights

(1) Section 440B of the Corporations Act 2001 applies during a period

in which a Banking Act statutory manager is in control of a body

corporate's business in the same way it applies during the

administration of a company.

(2) For the purposes of this section, treat the reference in

paragraph 440B(2)(a) of the Corporations Act 2001 to the

administrator's written consent as being a reference to:

(a) the Banking Act statutory manager's written consent; or

(b) APRA's written consent.

(3) Neither APRA nor a Banking Act statutory manager is liable to an

action or other proceedings for damages in respect of a refusal to

give consent as mentioned in subsection (2).

(4) This section applies despite sections 15B, 15BA and 15BB.

(5) This section has effect subject to section 31B.

15BD Moratorium--effect of Banking Act statutory management on

supply of essential services

(1) If:

(a) a Banking Act statutory manager is in control of a body

corporate's business; and

(b) the Banking Act statutory manager requests, or authorises

someone else to request, a person or authority (the supplier)

to supply an essential service to the body corporate in

Australia; and

of the supply of the essential service before the day on which

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the Banking Act statutory manager took control of the body

corporate's business;

the supplier must not:

(d) refuse to comply with the request for the reason only that the

amount is owing; or

(e) make it a condition of the supply of the essential service

pursuant to the request that the amount is to be paid.

Note:

The Federal Court of Australia may grant an injunction under

section 65A in respect of a contravention of this subsection.

(2) In this section:

essential service has the same meaning as in section 600F of the

Corporations Act 2001.

15BE Moratorium--effect of Banking Act statutory management on

annual general meeting

(1) This section applies to a body corporate that is required under

section 250N or section 601BR of the Corporations Act 2001 to

hold an annual general meeting within a particular period.

(2) Despite section 250N and section 601BR of that Act, if a Banking

Act statutory manager is in control of the body corporate's

business at the end of that period, the body corporate need not hold

that annual general meeting.

191 Section 15C

Repeal the section, substitute:

15C Certain circumstances 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).

(2) None of the matters mentioned in subsection (3) allow the contract,

or a party to the contract (other than the body corporate), to do any

of the following:

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(a) deny any obligations under the contract;

(b) accelerate any debt under the contract;

(d) enforce any security under the contract.

This subsection has effect subject to section 31B.

(3) The matters are as follows:

(a) a Banking Act statutory manager being in control, or being

appointed to take control, of the business of the body

corporate;

(b) if the body corporate is a member of a relevant group of

bodies corporate--a Banking Act statutory manager being in

control, or being appointed to take control, of the business of

another member of the group.

192 Section 15D

Repeal the section, substitute:

15D Application of other provisions

(1) None of the matters mentioned in subsection (2) affect:

(a) the continued operation of other provisions of this Act or the

operation of the Financial Sector (Collection of Data) Act

2001 in relation to a body corporate; or

(b) the obligation of a body corporate to comply with those other

provisions and that Act.

(2) The matters are as follows:

(a) the appointment of a Banking Act statutory manager of the

body corporate's business under this Division;

(b) the fact that a Banking Act statutory manager is in control of

the body corporate's business.

(3) The Public Governance, Performance and Accountability Act 2013

does not apply to a body corporate that has a Banking Act statutory

manager.

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193 Subsection 16(1)

Omit "an ADI's business" (wherever occurring), substitute "a body

corporate's business".

194 Subsection 16(1)

Omit "the ADI's funds", substitute "the body corporate's funds".

195 Subsection 16(2)

Omit "an ADI", substitute "a body corporate".

196 Subsection 16(2)

Omit "the ADI", substitute "the body corporate".

197 At the end of subsection 16(2)

Add:

Note:

Subsection 13A(3) applies if the body corporate is an ADI, and

provides for priorities for the application of the ADI's assets in

Australia.

198 Subsection 16A(1)

Omit "ADI statutory managers", substitute "Banking Act statutory

managers".

199 Subsection 16A(1)

Omit "specified ADIs", substitute "specified bodies corporate".

200 Subsection 16A(2)

Omit "an ADI statutory manager", substitute "a Banking Act statutory

manager".

201 Subsection 16A(2)

Omit "an ADI's business", substitute "a body corporate's business".

202 Subsection 16A(2)

Omit "ADI statutory managers", substitute "Banking Act statutory

managers".

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203 Subsection 16A(3)

Omit "an ADI's business" (wherever occurring), substitute "a body

corporate's business".

204 Paragraph 16AA(a)

Omit "an ADI under", substitute "a body corporate under".

205 Paragraph 16AA(a)

Omit "an ADI statutory manager", substitute "a Banking Act statutory

manager".

206 Paragraph 16AA(a)

Omit "the ADI's business", substitute "the body corporate's business".

207 Paragraph 16AA(b)

Omit "an ADI as a direct result", substitute "a body corporate as a direct

result".

208 Subparagraph 16AA(b)(i)

Omit "an ADI statutory manager", substitute "a Banking Act statutory

manager".

209 Subparagraph 16AA(b)(i)

Omit "the ADI's business", substitute "the body corporate's business".

210 Subparagraph 16AA(b)(ii)

Omit "an ADI statutory manager", substitute "a Banking Act statutory

manager".

211 Subparagraph 16AA(b)(ii)

Omit "the ADI's business", substitute "the body corporate's business".

212 At the end of Division 2 of Part II

Add:

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Subdivision C--APRA's powers to apply for ADI to be wound

16AAA APRA's powers to apply for ADI to be wound up

Power to apply for ADI to be wound up

(1) APRA may apply to the Federal Court of Australia for an order

that an ADI be wound up if APRA considers that the ADI is

insolvent and could not be restored to solvency within a reasonable

period.

Note:

This section does not apply in relation to a foreign ADI (see

subsection 11E(1B)).

(2) To avoid doubt, subsection (1) applies whether or not an ADI

statutory manager is in control of the ADI's business.

(3) The application is to be made under section 459P of the

Corporations Act 2001.

(4) The winding up of the ADI is to be conducted in accordance with

the Corporations Act 2001.

(5) If APRA makes an application under subsection (1), APRA must

inform the Minister of the application as soon as possible.

Note:

Once informed, the Minister may choose to apply Subdivision C of

Division 2AA in relation to the ADI so some depositors can receive

payments earlier than they would in the winding up of the ADI.

213 Paragraph 16AB(a)

Repeal the paragraph, substitute:

(a) allows the Minister to make a declaration about an ADI if:

(i) APRA has applied under section 16AAA for the ADI to

be wound up; or

(ii) a Banking Act statutory manager is in control of the

ADI's business; and

214 At the end of section 16AB

Add:

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; and (d) allows APRA to facilitate a transfer of business from the

declared ADI to a receiving body under the Financial Sector

(Transfer and Restructure) Act 1999 by entitling the

receiving body to amounts in respect of the protected

accounts.

215 Subsection 16AD(1)

Repeal the subsection, substitute:

(1) The Minister may declare that Subdivision C applies in relation to

a specified ADI if any of the following requirements are satisfied:

(a) APRA has applied under section 16AAA for the ADI to be

wound up;

(b) a Banking Act statutory manager is in control of the ADI's

business.

Note:

The Minister cannot make a declaration under this subsection in

relation to a foreign ADI (see section 11E).

216 Subsection 16AD(2)

Omit "14F", substitute "16AAA".

217 Subsection 16AHA(3)

Repeal the subsection.

218 At the end of Subdivision C of Division 2AA of Part II

Add:

16AIA APRA may make transferred liabilities determination where

transfer of business

(1) APRA may make a determination (a transferred liabilities

determination) if:

(a) an ADI is a declared ADI as a result of the Minister having

made a declaration under section 16AD; and

(b) APRA has made, or proposes to make, a determination under

section 25 (compulsory transfer determination) of the

Financial Sector (Transfer and Restructure) Act 1999 that

there is to be a total transfer or partial transfer of business

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from the declared ADI to a receiving body (within the

meaning of that Act); and

(i) the liabilities of the declared ADI in respect of every

protected account kept by an account-holder with the

ADI; or

(ii) the liabilities of the declared ADI in respect of every

protected account kept by an account-holder with the

ADI, to the extent of the amount to which each of those

account-holders is entitled under this Subdivision in

relation to those protected accounts; and

(d) APRA is satisfied that it will be able to identify those

protected accounts; and

(e) APRA has worked out:

(i) APRA's reasonable estimate of the total amount (the

FCS amount) to which account-holders of those

protected accounts will be entitled (disregarding the

determination) under section 16AF as a result of the

Minister's declaration mentioned in paragraph (a); and

(ii) APRA's reasonable estimate of the total amount (the

administration amount) of the costs that would be

incurred by APRA in relation to the exercise of its

powers and the performance of its functions under this

Division relating to the declared ADI if it did not make

the determination; and

(f) APRA has worked out a total payment amount in accordance

with section 16AIB; and

(g) APRA considers that it is reasonable in the circumstances to

make the determination.

(2) However, APRA cannot make the determination if APRA has

already issued a certificate of transfer under section 33 of the

Financial Sector (Transfer and Restructure) Act 1999 stating that

the transfer is to take effect.

(3) The determination must be in writing.

(4) The determination must specify the following:

(a) the declared ADI;

(b) the receiving body;

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accounts kept with the declared ADI;

(d) the FCS amount;

(e) the administration amount;

(f) the total payment amount;

(g) the FCS payment amount;

(h) the administration payment amount;

(i) any other information that APRA considers appropriate.

(5) A determination under subsection (1) may be varied, but not

revoked, in accordance with subsection 33(3) of the Acts

Interpretation Act 1901.

(6) A determination made under subsection (1) is not a legislative

instrument.

16AIB Payment amounts under transferred liabilities determination

(1) For the purposes of paragraph 16AIA(1)(f), APRA may work out:

(a) an amount (the FCS payment amount) that:

(i) is equal to or less than the FCS amount; and

(ii) APRA considers to be appropriate; and

(b) an amount (the administration payment amount) that:

(i) is equal to or less than the administration amount; and

(ii) APRA considers to be appropriate; and

FCS payment amount and the administration payment

amount.

(2) In working out the FCS payment amount and the administration

payment amount, APRA must have regard to the following:

(a) the total value of the assets that will be transferred from the

declared ADI to the receiving body in accordance with the

transfer of business;

(b) the total value of the liabilities that will be transferred from

the declared ADI to the receiving body in accordance with

the transfer of business;

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(3) The FCS payment amount or the administration payment amount

may be a nil amount.

16AIC Consequences of transferred liabilities determination once

certificate of transfer issued

Application of section

(1) This section applies if:

(a) APRA has made a transferred liabilities determination; and

(b) APRA has issued a certificate of transfer under section 33 of

the Financial Sector (Transfer and Restructure) Act 1999

stating that the transfer is to take effect.

Receiving body entitled to total payment amount

(2) The receiving body is entitled to be paid by APRA an amount

equal to the total payment amount specified in the determination.

Reduction of rights and entitlements of account-holder

(3) An account-holder's entitlement under this Subdivision to be paid

an amount in respect of a protected account kept with the declared

ADI is reduced to nil.

Declared ADI liable to APRA for total payment amount

(4) The declared ADI is liable to pay to APRA an amount equal to the

sum of the total payment amount specified in the determination.

(5) That liability is due and payable to APRA when the certificate of

transfer comes into force.

(6) Despite paragraph 16AI(1)(b), APRA does not have the right

mentioned in that paragraph.

219 Subsection 16AJ(9)

Repeal the subsection.

220 Paragraph 16AK(1)(c)

Omit "(including a provisional liquidator)".

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221 After paragraph 16AK(1)(c)

Insert:

or (d) any other person;

222 Subsection 16AK(1)

Omit "or liquidator", substitute ", liquidator or other person".

223 Paragraph 16AK(4)(ea)

Omit "or report".

224 Paragraph 16AK(4)(g)

Omit "(e) and (f)", substitute "(e), (ea), (eb) and (f)".

225 Subsection 16AL(5)

Omit "(including a provisional liquidator)".

226 Subsection 16AL(7)

Omit "(including a provisional liquidator)".

227 At the end of section 16AL

Add:

Requirement made of other person--civil penalty

(8) A person mentioned in paragraph 16AK(1)(d) must comply with a

requirement made of the person under subsection 16AK(1).

Civil penalty:

200 penalty units.

228 Subsection 16AV(4)

After "The ADI or authorised NOHC", insert ", or subsidiary of an ADI

or authorised NOHC,".

229 Subparagraphs 16BA(6)(a)(ii) and (iii)

After "an ADI or authorised NOHC", insert ", or a subsidiary of an ADI

or authorised NOHC,".

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230 Subsection 29(9)

Repeal the subsection.

231 Subsection 31B(2)

Repeal the subsection, substitute:

Banking Act statutory manager in control

(2) The following provisions do not prevent the exercise of a

contractual right in relation to an asset that secures liabilities to

holders of covered bonds, or their representatives, if payments

under the covered bonds to the holders or representatives are not

made:

(a) section 15BA (moratorium--effect of Banking Act statutory

management on enforcement process regarding property);

(b) section 15BB (moratorium--effect of Banking Act statutory

management on disposal of property);

party property rights);

(d) section 15C (Banking Act statutory manager being in control

not grounds for denial of obligations).

232 Section 31C (heading)

Repeal the heading, substitute:

31C Powers and obligations of Banking Act statutory manager or

external administrator

233 Section 31C

Omit "an ADI statutory manager", substitute "a Banking Act statutory

manager".

234 Subsection 31F(9)

Repeal the subsection.

235 Subsection 52A(2)

Omit "related body corporate" (wherever occurring), substitute

"whistleblower related body corporate".

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236 Subsection 52A(3)

Omit "related body corporate", substitute "whistleblower related body

corporate".

237 Paragraph 52E(1)(b)

Omit "related body corporate" (wherever occurring), substitute

"whistleblower related body corporate".

238 Paragraph 52E(1)(c)

Omit "related body corporate" (wherever occurring), substitute

"whistleblower related body corporate within the meaning of

subsection 52A(3)".

239 Section 62B (heading)

Repeal the heading, substitute:

62B Involving APRA in proposed appointment of external

administrators of ADIs and NOHCs

240 Subsection 62B(1)

Repeal the subsection, substitute:

(1) At least one week before a person other than APRA:

(a) makes an application to a court under Chapter 5 of the

Corporations Act 2001 for the appointment of an external

administrator of an ADI or of an authorised NOHC of an

ADI; or

(b) makes another kind of application (whether or not to a court)

for the appointment of an external administrator of an ADI or

of an authorised NOHC of an ADI; or

authorised NOHC of an ADI (otherwise than as the result of

an application made by another person);

the person must give APRA written notice that the person proposes

to make the application or appointment.

(1A) If there is an approved form for the notice, the person must give the

notice in the approved form.

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(1B) Subsection (1) does not apply if APRA gives the person written

notice, before the person makes the application or appointment,

that APRA consents to the person making the application or

appointment.

241 Subsection 62B(4)

Repeal the subsection, substitute:

Offence

(4) A person (other than APRA) commits an offence if:

(a) the person:

(i) makes an application to a court under Chapter 5 of the

Corporations Act 2001 for the appointment of an

external administrator of an ADI or of an authorised

NOHC of an ADI; or

(ii) makes another kind of application (whether or not to a

court) for the appointment of an external administrator

of an ADI or of an authorised NOHC of an ADI; or

(iii) appoints an external administrator of an ADI or of an

authorised NOHC of an ADI (otherwise than as the

result of an application made by another person); and

(b) APRA did not give the person written notice, before the

person made the application or appointment, of APRA's

consent to the person making the application or appointment,

in accordance with subsection (1B); and

appointment:

(i) if there is an approved form for the purposes of this

paragraph--the person did not give APRA notice in the

approved form indicating that the person proposed to

make the application or appointment; or

(ii) otherwise--the person did not give APRA written

notice indicating that the person proposed to make the

application or appointment.

Penalty: 60 penalty units.

Amendment of the Banking Act 1959 Schedule 1

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Financial Sector Legislation Amendment (Crisis Resolution Powers

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242 Subsection 62C(1)

Omit "the winding-up of an ADI", substitute "the winding-up of an

entity covered by subsection (4), or the proposed winding-up of an

entity covered by subsection (4)".

243 At the end of section 62C

Add:

(4) This subsection covers the following entities:

(a) an ADI;

(b) an authorised NOHC;

244 After section 62C

Insert:

62D Application by APRA for directions

(1) APRA may apply to the Federal Court of Australia for directions

regarding any matter arising under:

(a) the winding-up of an entity covered by subsection 62C(4)

(whether the winding-up occurs as a result of an application

made under the Corporations Act 2001 or by APRA under

section 11EA or 16AAA); or

(b) the proposed winding-up of an entity covered by

subsection 62C(4) (whether the winding-up will occur as a

result of an application made, or proposed to be made, under

the Corporations Act 2001 or by APRA under section 11EA

or 16AAA).

(2) APRA must give the liquidator written notice that APRA proposes

to make the application.

(3) The notice must include details of the proposed application.

(4) The liquidator is entitled to be heard on the application.

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62E APRA may request information from liquidator

(1) APRA may request a liquidator of an entity covered by

subsection 62C(4) in writing to give APRA, within a reasonable

time specified in the request, specified information in writing

about:

(a) the winding-up of the entity (whether the winding-up occurs

as a result of an application made under the Corporations Act

2001 or by APRA under section 11EA or 16AAA) and the

other affairs of the entity; or

(b) the proposed winding-up of the entity (whether the

winding-up will occur as a result of an application made, or

proposed to be made, under the Corporations Act 2001 or by

APRA under section 11EA or 16AAA) and the other affairs

of the entity.

(2) The liquidator must comply with the request.

Note:

Action may be taken under the Corporations Act 2001 against a

liquidator who does not comply with such a request.

245 Section 65 (heading)

Repeal the heading, substitute:

65 ADIs etc. may be directed to comply with Act

246 Subsection 65(1)

Omit "Where an ADI or an authorised NOHC", substitute "Where an

ADI, an authorised NOHC or a subsidiary of an ADI or of an authorised

NOHC".

247 Section 65

Omit "the ADI or NOHC" (wherever occurring), substitute "the ADI,

NOHC or subsidiary".

248 Subsection 65(3)

Omit "authorised NOHCs", substitute "authorised NOHCs and such

subsidiaries".

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249 After section 69B

69BA Institution of offence proceedings no bar to winding up

The institution of proceedings against a body corporate for an

offence against this Act or the Financial Sector (Collection of

Data) Act 2001 does not prevent the institution of proceedings for

the winding-up of the body corporate on a ground that relates to the

matter that constitutes the offence.

250 After subsection 69F(4)

Insert:

References to a holding company of an ADI

(4A) This Act has, by force of this subsection, the effect it would have if

the Act separately provided as mentioned in the following

paragraphs:

(a) the Act has effect as if a reference to a holding company of

an ADI were expressly limited to a reference to a holding

company of an ADI, being a holding company that is a

corporation to which paragraph 51(xx) of the Constitution

applies;

(b) the Act has effect as if a reference to a holding company of

an ADI were expressly limited to a reference to a holding

company of an ADI, being a holding company that carries on

banking business as mentioned in paragraph (a) of the

banking business definition;

an ADI were expressly limited to a reference to a holding

company of an ADI, being a holding company that carries on

banking business as mentioned in paragraph (b) of the

banking business definition.

251 Section 70A (heading)

Repeal the heading, substitute:

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70A Protection from liability--general

252 After section 70A

Insert:

70AA Protection from liability--directions and secrecy

(1) An action, suit or proceeding (whether criminal or civil) does not

lie against a person in relation to anything done, or omitted to be

done, in good faith by the person if:

(a) the person does the thing, or omits to do the thing, for the

purpose of any of the following:

(i) complying with a direction under this Act given by

APRA to a body corporate;

(ii) complying with section 11CI (secrecy) in relation to a

direction under this Act given by APRA to a body

corporate; and

(b) it is reasonable for the person to do the thing, or to omit to do

the thing, in order to achieve that purpose; and

(i) an officer or senior manager of the body corporate, or of

a member of a relevant group of bodies corporate of

which the body corporate is also a member;

(ii) an employee or agent of the body corporate, or of a

member of a relevant group of bodies corporate of

which the body corporate is also a member;

(iii) the body corporate or a member of a relevant group of

bodies corporate of which the body corporate is also a

member.

(2) For the purposes of paragraph (1)(b), treat it as reasonable for a

person to do a thing, or to omit to do a thing, in order to achieve a

purpose unless no reasonable person in that person's position

would do the thing, or omit to do the thing, in order to achieve that

purpose.

(3) In this section:

employee of a body corporate includes a person engaged to provide

advice or services to the body corporate.

Amendment of the Banking Act 1959 Schedule 1

Main amendments Part 1

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Financial Sector Legislation Amendment (Crisis Resolution Powers

and Other Measures) Bill 2017

officer has the meaning given by section 9 of the Corporations Act

2001.

70AB Protection from liability--provisions do not limit each other

The following provisions do not limit the operation of each other:

(a) section 14C;

(b) section 52A;

(d) section 70A;

(e) section 70AA;

(f) section 58 of the Australian Prudential Regulation Authority

Act 1998.

Schedule 1 Amendment of the Banking Act 1959

Part 2 Application provisions

Financial Sector Legislation Amendment (Crisis Resolution Powers

and Other Measures) Bill 2017

No. , 2017

Part 2--Application provisions

253 Interpretation

In this Part:

commencement time means the time when this item commences.

new Banking Act means the Banking Act 1959 as amended by this

Schedule.

old Banking Act means the Banking Act 1959 as in force immediately

before the commencement time.

254 Application

--amendments to directions powers

(1)

The amendments made by this Schedule to section 11CA of the

Banking Act 1959 apply to directions given on and after the

commencement time.

(2)

The amendments made by this Schedule to Subdivision AA of

Division 2 of Part II of the Banking Act 1959 apply to directions given

on and after the commencement time.

(3)

The amendments made by this Schedule to section 65 of the Banking

Act 1959 apply to directions given on and after the commencement

time.

255 Continuation of prudential standards

To avoid doubt, the amendments made by this Schedule do not affect

the validity of a prudential standard made under section 11AF of the

Banking Act 1959 that was in force immediately before the

commencement time.

256 Saving

--conditions on section 9 authority

(1)

A condition in effect under subsection 9(4) of the old Banking Act is

taken to be in effect on and after the commencement time under

section 9AA of the new Banking Act.

(2)

To avoid doubt, this item does not prevent the variation or revocation of

a condition on or after the commencement time.

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Application provisions Part 2

No. , 2017

Financial Sector Legislation Amendment (Crisis Resolution Powers

and Other Measures) Bill 2017

257 Application

--conditions on section 9 authority

The amendments made by items 13 and 14 of this Schedule apply to:

(a) the imposition of new conditions on a body corporate's

section 9 authority on or after the commencement time; and

(b) the variation or revocation of conditions on a body

corporate's section 9 authority on or after the commencement

time (even if the conditions were imposed before the

commencement time); and

failure to do an act on or after the commencement time,

resulting in a contravention of such a condition.

258 Application

--revocation of section 9 authority

(1)

The amendment made by item 16 of this Schedule applies to a body

corporate's section 9 authority, whether the authority was granted

before, on or after the commencement time.

(2)

The amendment made by item 16 of this Schedule applies in relation to

a matter mentioned in a paragraph of subsection 9A(2) of the new

Banking Act that occurs on or after the commencement time (including

such a matter that starts before the commencement time and continues

on or after the commencement time).

259 Saving

--conditions on NOHC authority

(1)

A condition in effect under subsection 11AA(3) of the old Banking Act

is taken to be in effect on and after the commencement time under

section 11AAA of the new Banking Act.

(2)

To avoid doubt, this item does not prevent the variation or revocation of

a condition on or after the commencement time.

260 Application

--conditions on NOHC authority

The amendments made by items 17 and 18 of this Schedule apply to:

(a) the imposition of new conditions on a body corporate's

NOHC authority on or after the commencement time; and

(b) the variation or revocation of conditions on a body

corporate's NOHC authority on or after the commencement

Schedule 1 Amendment of the Banking Act 1959

Part 2 Application provisions

Financial Sector Legislation Amendment (Crisis Resolution Powers

and Other Measures) Bill 2017

No. , 2017

time (even if the conditions were imposed before the

commencement time); and

failure to do an act on or after the commencement time,

resulting in a contravention of such a condition.

261 Application

--revocation of NOHC authority

(1)

The amendments made by items 19 and 20 of this Schedule apply to a

body corporate's NOHC authority, whether the authority was granted

before, on or after the commencement time.

(2)

The amendments made by items 19 and 20 of this Schedule apply in

relation to a matter mentioned in a paragraph of subsection 11AB(2) of

the new Banking Act that occurs on or after the commencement time

(including such a matter that starts before the commencement time and

continues on or after the commencement time).

262 Application

--conversion and write-off provisions

The amendment made by item 31 of this Schedule applies in relation to

the conversion or writing-off of any instrument on or after the

commencement time, whether the instrument was issued before, at or

after that time.

263 Application

--stay provisions

(1)

The amendment made by item 43 of this Schedule applies in relation to

a direction referred to in subsection 11CD(1B) of the new Banking Act

that is given on or after the commencement time.

(2)

The amendment made by item 102 of this Schedule applies in relation

to a recapitalisation direction referred to in subsection 13N(3) of the

new Banking Act that is given on or after the commencement time.

(3)

The amendment made by item 143 of this Schedule applies in relation

to an act referred to in subsection 14AC(3) of the new Banking Act that

is done on or after the commencement time.

(4)

The amendment made by item 191 of this Schedule applies in relation

to a Banking Act statutory manager taking control, or being appointed

to take control, of the business of a body corporate as referred to in

Schedule 2 Amendment of the Insurance Act 1973

Part 1 Main amendments

Financial Sector Legislation Amendment (Crisis Resolution Powers

and Other Measures) Bill 2017

No. , 2017

Schedule 2--Amendment of the Insurance Act

1973

Part 1--Main amendments

Insurance Act 1973

1 Subsection 3(1)

Insert:

administrator, of a body corporate's business, means an

administrator appointed under subsection 62ZOA(1) to take control

of the body corporate's business.

Australian business assets and liabilities, of a foreign general

insurer, has the meaning given by subsection 62ZVA(3).

Australian financial sector statutory manager (or AFS statutory

manager) means:

(a) a Banking Act statutory manager (within the meaning of

the Banking Act 1959); or

(b) an Insurance Act statutory manager; or

meaning of the Life Insurance Act 1995).

direction under this Act means a direction under any of the

following provisions:

(a) section 17;

(b) section 27;

(d) section 74;

(e) section 76;

(f) section 78;

(g) section 103B;

(h) section 104.

Amendment of the Insurance Act 1973 Schedule 2

Main amendments Part 1

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Financial Sector Legislation Amendment (Crisis Resolution Powers

and Other Measures) Bill 2017

2 Subsection 3(1) (paragraph (a) of the definition of external

administrator)

Omit "or provisional liquidator".

3 Subsection 3(1) (paragraph (b) of the definition of external

administrator)

Omit "a judicial manager", substitute "a judicial manager or an

Insurance Act statutory manager".

4 Subsection 3(1)

Insert:

financial market has the meaning given by section 761A of the

Corporations Act 2001.

holding company, of a body corporate, means another body

corporate of which the first body corporate is a subsidiary.

Insurance Act statutory manager has the meaning given by

subsection 62ZOA(8).

liquidator includes a provisional liquidator.

listing rules has the meaning given by section 761A of the

Corporations Act 2001.

NOHC/NOHC subsidiary has the meaning given by

subsection 103A(5).

5 Subsection 3(1) (definition of prudential matters)

Repeal the definition, substitute:

prudential matters means matters relating to:

(a) the conduct of any part of the affairs of, or the structuring or

organising of, a general insurer, 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 general insurer, NOHC, group or member or

members of the group in a sound financial position; or

(ii) to facilitate resolution of the general insurer, NOHC,

group or member or members of the group; or

Schedule 2 Amendment of the Insurance Act 1973

Part 1 Main amendments

Financial Sector Legislation Amendment (Crisis Resolution Powers

and Other Measures) Bill 2017

No. , 2017

(iii) to protect the interests of policyholders of any general

insurer; or

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

financial system; or

(b) the conduct of any part of the affairs of a general insurer, 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.

6 Subsection 3(1) (definition of recapitalisation direction)

Omit "subsection 103B(1)", substitute "subsection 103B(1) or (1B)".

7 Subsection 3(1)

Insert:

related body corporate, in relation to a body corporate, means:

(a) in Part V--a body corporate that is related to the

first-mentioned body, as determined in accordance with

section 50; and

(b) otherwise--a body corporate that is related to the

first-mentioned body, as determined in accordance with

section 4B.

relevant group of bodies corporate has the meaning given by

section 4A.

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

payment;

including through the exercise of powers and functions under this

Act or another law.

transferred liabilities determination means a determination under

subsection 62ZZMA(1).

Amendment of the Insurance Act 1973 Schedule 2

Main amendments Part 1

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Financial Sector Legislation Amendment (Crisis Resolution Powers

and Other Measures) Bill 2017

8 Section 4

Repeal the section, substitute:

4 Meaning of subsidiary

For the purposes of this Act (except Part V), 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.

4A Meaning of relevant group of bodies corporate

For the purposes of this Act:

(a) a general insurer 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.

4B Determining whether bodies corporate are related to one another

For the purposes of this Act (except Part V), 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.

9 Section 15 (heading)

Repeal the heading, substitute:

15 Revocation of authorisation etc.

10 Subparagraph 15(1)(a)(iii)

Repeal the subparagraph, substitute:

(iia) a requirement of a provision of another law of the

Commonwealth, if the provision is specified in the

regulations; or

(iii) a direction under this Act to the insurer; or

11 After paragraph 15(1)(f)

Insert:

Schedule 2 Amendment of the Insurance Act 1973

Part 1 Main amendments

Financial Sector Legislation Amendment (Crisis Resolution Powers

and Other Measures) Bill 2017

No. , 2017

(fa) both of the following apply:

(i) the insurer is a foreign corporation within the meaning

of paragraph 51(xx) of the Constitution;

(ii) an authorisation (however described) for the insurer to

carry on insurance business in a foreign country has

been revoked or otherwise withdrawn in that foreign

country; or

12 Paragraph 15(1)(g)

Omit "authority", substitute "authorisation".

13 Subparagraph 21(1)(a)(iii)

Repeal the subparagraph, substitute:

(iia) a requirement of a provision of another law of the

Commonwealth, if the provision is specified in the

regulations; or

(iii) a direction under this Act to the authorised NOHC; or

14 At the end of Division 4 of Part III

Add:

23A APRA may give notice to ensure that general insurer has an

authorised NOHC

(1) This section applies if:

(a) a body corporate is a holding company of a general insurer;

and

(b) the general insurer 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

general insurer;

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

NOHC of the general insurer.

Amendment of the Insurance Act 1973 Schedule 2

Main amendments Part 1

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Financial Sector Legislation Amendment (Crisis Resolution Powers

and Other Measures) Bill 2017

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 108 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 a general insurer under section 104.

(9) However, section 108 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

authorise the body corporate (or its subsidiary) under

section 18; 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.

15 Subparagraph 32(3)(a)(iv)

Omit "NOHCs; or", substitute "NOHCs;".

16 At the end of paragraph 32(3)(a)

Add:

Schedule 2 Amendment of the Insurance Act 1973

Part 1 Main amendments

Financial Sector Legislation Amendment (Crisis Resolution Powers

and Other Measures) Bill 2017

No. , 2017

(v) each subsidiary of a general insurer or of an authorised

NOHC;

(vi) each subsidiary of a general insurer or of an authorised

NOHC, included in a specified class of subsidiaries; or

17 After Division 1 of Part IIIA

Insert:

Division 2--Conversion and write-off provisions

36A Definitions

In this Division:

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 of the first

entity.

converts: an instrument converts into one or more ordinary shares

of an entity including by redeeming or cancelling the instrument or

rights under the instrument, and replacing the instrument or rights

with ordinary shares.

operating rules has the meaning given by section 761A of the

Corporations Act 2001.

related subsidiary of a general insurer means a subsidiary of a

holding company of the general insurer.

Amendment of the Insurance Act 1973 Schedule 2

Main amendments Part 1

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Financial Sector Legislation Amendment (Crisis Resolution Powers

and Other Measures) Bill 2017

specified law means any of the following:

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

(b) the Foreign Acquisitions and Takeovers Act 1975;

(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.

36B 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) a general insurer;

(b) a holding company of a general insurer;

(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

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.

Schedule 2 Amendment of the Insurance Act 1973

Part 1 Main amendments

Financial Sector Legislation Amendment (Crisis Resolution Powers

and Other Measures) Bill 2017

No. , 2017

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 (the

relevant entity):

(i) the entity issuing the instrument;

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

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.

36C 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;

(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;

Amendment of the Insurance Act 1973 Schedule 2

Main amendments Part 1

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Financial Sector Legislation Amendment (Crisis Resolution Powers

and Other Measures) Bill 2017

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 36B 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 36B 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.

18 Subsection 38A(2)

Omit "related body corporate" (wherever occurring), substitute

"whistleblower related body corporate".

19 Subsection 38A(3)

Omit "related body corporate", substitute "whistleblower related body

corporate".

20 Subparagraph 38E(1)(b)(i)

Omit "a related body corporate in within", substitute "a whistleblower

related body corporate within".

21 Subparagraph 38E(1)(b)(ii)

Omit "related body corporate", substitute "whistleblower related body

corporate within the meaning of subsection 38A(3)".

Schedule 2 Amendment of the Insurance Act 1973

Part 1 Main amendments

Financial Sector Legislation Amendment (Crisis Resolution Powers

and Other Measures) Bill 2017

No. , 2017

22 Paragraph 38E(1)(c)

Omit "related body corporate" (wherever occurring), substitute

"whistleblower related body corporate within the meaning of

subsection 38A(3)".

23 Section 49C

Repeal the section.

24 At the end of section 50

Add:

(3) The question whether bodies corporate are related to each other for

the purposes of this Part is to be determined in the same way as the

question whether bodies corporate are related to each other would

be determined under the Corporations Act 2001 if, in section 46 of

that Act:

(a) the reference to a body corporate that is in a position to cast,

or control the casting of, more than one-half of the maximum

number of votes that might be cast at a general meeting of

another body corporate were a reference to a body corporate

that is in a position to cast, or control the casting of, more

than one-quarter of that number of votes; and

(b) the reference to a body corporate holding more than one-half

of the issued share capital of another body corporate were a

reference to a body corporate holding more than one-quarter

of the issued share capital of another body corporate.

25 Part VB (heading)

Repeal the heading, substitute:

Part VB--Judicial management, statutory

management, other external administration

and winding up

26 Section 62L (note)

Repeal the note, substitute:

Amendment of the Insurance Act 1973 Schedule 2

Main amendments Part 1

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Financial Sector Legislation Amendment (Crisis Resolution Powers

and Other Measures) Bill 2017

Note:

This section and other provisions relating to judicial management do

not apply to the aspects described in subsection 62ZVA(1) of the

business and management of a foreign general insurer.

27 Section 62M

Before "On an application", insert "(1)".

28 Subparagraph 62M(a)(i)

Before "the general insurer", insert "in the absence of external

support,".

29 Subparagraph 62M(a)(ii)

After "the general insurer is a foreign general insurer and", insert ", in

the absence of external support,".

30 After subparagraph 62M(a)(iv)

Insert:

(iva) an external administrator has been appointed to a

holding company of the general insurer (or a similar

appointment has been made in a foreign country in

respect of such a holding company), and the

requirement in subsection (2) is satisfied; or

(ivb) if the general insurer is a foreign general insurer--an

application for the appointment of an external

administrator of the foreign general insurer, or for a

similar procedure in respect of the foreign general

insurer, has been made in a foreign country; or

(ivc) if the general insurer is a foreign general insurer--an

external administrator has been appointed to the foreign

general insurer, or a similar appointment has been made

in respect of the foreign general insurer, in a foreign

country; or

31 Section 62M (note 1)

Repeal the note, substitute:

Note 1:

This section and other provisions relating to judicial management do

not apply to the aspects described in subsection 62ZVA(1) of the

business and management of a foreign general insurer.

Schedule 2 Amendment of the Insurance Act 1973

Part 1 Main amendments

Financial Sector Legislation Amendment (Crisis Resolution Powers

and Other Measures) Bill 2017

No. , 2017

32 At the end of section 62M

Add:

(2) For the purposes of subparagraph (1)(a)(iva), the requirement in

this subsection is that the appointment mentioned in that

subparagraph poses a significant threat to:

(a) the operation or soundness of the general insurer; or

(b) the interests of policyholders of the general insurer; or

(3) The regulations may specify that a particular form of support for a

general insurer is not to be considered external support for the

purposes of subparagraphs (1)(a)(i) and (ii).

33 Section 62P

Repeal the section, substitute:

62P Moratorium--effect of judicial management on court and

tribunal proceedings

(1) A person cannot begin or continue a proceeding in a court or

tribunal covered by subsection (9) in respect of a general insurer if

the general insurer is under judicial management.

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

(a) the court or tribunal grants leave for the proceedings to be

begun or continued on the ground that the person would be

caused hardship if leave were not granted; and

(b) the beginning or continuing of the proceedings is in

accordance with such terms (if any) as the court or tribunal

imposes.

(3) A person intending to apply for leave of the court or tribunal under

paragraph (2)(a) must give APRA and the judicial manager at least

10 days notice of the intention to apply (or a shorter period, if the

court or tribunal considers that exceptional circumstances make

this necessary).

Amendment of the Insurance Act 1973 Schedule 2

Main amendments Part 1

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Financial Sector Legislation Amendment (Crisis Resolution Powers

and Other Measures) Bill 2017

(4) APRA may apply to the court or tribunal to be joined as a party to

the proceedings for leave. If APRA is joined as a party, the court or

tribunal must have regard to APRA's views in deciding:

(a) whether to grant leave under paragraph (2)(a); and

(b) if the court or tribunal decides to grant the leave--whether to

impose terms as mentioned in paragraph (2)(b); and

nature of those terms.

(5) The judicial manager may apply to the court or tribunal to be

joined as a party to the proceedings for leave. If the judicial

manager is joined as a party, the court or tribunal must have regard

to the judicial manager's views in deciding:

(a) whether to grant leave under paragraph (2)(a); and

(b) if the court or tribunal decides to grant the leave--whether to

impose terms as mentioned in paragraph (2)(b); and

nature of those terms.

(6) Subsection (1) also does not apply if the judicial manager, after

considering APRA's views, consents to the proceedings beginning

or continuing.

(7) The judicial manager cannot revoke a consent given for the

purposes of subsection (6).

(8) The judicial manager is not liable to an action or other proceedings

for damages in respect of a refusal to give consent under

subsection (6).

(9) A proceeding in a court or tribunal is covered by this subsection in

respect of a general insurer if it is any of the following:

(a) a proceeding against the general insurer (including a

cross-claim or third party claim against the general insurer);

(b) a proceeding in relation to property of the general insurer;

charge) granted by the general insurer, or by a related body

corporate of the general insurer, over any property that the

general insurer owns, uses, possesses, occupies or in which

the general insurer otherwise has an interest.

Schedule 2 Amendment of the Insurance Act 1973

Part 1 Main amendments

Financial Sector Legislation Amendment (Crisis Resolution Powers

and Other Measures) Bill 2017

No. , 2017

(10) Subsection (9) does not cover a proceeding in respect of an offence

or a contravention of a provision of a law for which a pecuniary

penalty (however described) may be imposed.

(11) In this section, a reference to a tribunal includes a reference to the

following:

(a) an industrial tribunal;

(b) an arbitral tribunal.

62PA Moratorium--effect of judicial management on enforcement

process regarding property

(1) No enforcement process in relation to property of a general insurer

can be begun or proceeded with if the general insurer is under

judicial management.

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

(a) the Federal Court grants leave for the process to be begun or

continued on the ground that the person would be caused

hardship if leave were not granted; or

(b) the beginning or continuing of the process is in accordance

with such terms (if any) as the Federal Court imposes.

(3) A person intending to apply for leave of the Federal Court under

paragraph (2)(a) must give APRA and the judicial manager at least

10 days notice of the intention to apply (or a shorter period, if the

Federal Court considers that exceptional circumstances make this

necessary).

(4) APRA may apply to the Federal Court to be joined as a party to the

proceedings for leave. If APRA is joined as a party, the Federal

Court must have regard to APRA's views in deciding:

(a) whether to grant leave under paragraph (2)(a); and

(b) if the Federal Court decides to grant the leave--whether to

impose terms as mentioned in paragraph (2)(b); and

nature of those terms.

(5) The judicial manager may apply to the Federal Court to be joined

as a party to the proceedings for leave. If the judicial manager is

Amendment of the Insurance Act 1973 Schedule 2

Main amendments Part 1

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Financial Sector Legislation Amendment (Crisis Resolution Powers

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joined as a party, the Federal Court must have regard to the judicial

manager's views in deciding:

(a) whether to grant leave under paragraph (2)(a); and

(b) if the Federal Court decides to grant the leave--whether to

impose terms as mentioned in paragraph (2)(b); and

nature of those terms.

(6) Subsection (1) also does not apply if the judicial manager consents

to the process beginning or continuing.

(7) The judicial manager cannot revoke a consent given for the

purposes of subsection (6).

(8) The judicial manager is not liable to an action or other proceedings

for damages in respect of a refusal to give consent under

subsection (6).

62PB Moratorium--effect of judicial management on disposal of

property

(1) A person must not dispose of property if:

(a) the property is owned by another person; and

(b) the other person is a general insurer; and

Note:

The Federal Court may grant an injunction under section 129D in

respect of a contravention of this subsection.

(2) Subsection (1) does not apply if the judicial manager consents to

the disposal.

(3) The judicial manager is not liable to an action or other proceedings

for damages in respect of a refusal to give consent under

subsection (2).

62PC Moratorium--Restrictions on exercise of third party property

rights

(1) Section 440B of the Corporations Act 2001 applies during a period

in which a general insurer is under judicial management in the

same way it applies during the administration of a company.

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(2) For the purposes of this section, treat the reference in

paragraph 440B(2)(a) of the Corporations Act 2001 to the

administrator's written consent as being a reference to the judicial

manager's written consent.

(3) The judicial manager is not liable to an action or other proceedings

for damages in respect of a refusal to give consent as mentioned in

subsection (2).

(4) This section applies despite sections 62P, 62PA and 62PB.

62PD Moratorium--effect of judicial management on supply of

essential services

(1) If:

(a) a general insurer is under judicial management; and

(b) the judicial manager requests, or authorises someone else to

request, a person or authority (the supplier) to supply an

essential service to the general insurer in Australia; and

of the supply of the essential service before the day on which

the judicial manager took control of the general insurer's

business;

the supplier must not:

(d) refuse to comply with the request for the reason only that the

amount is owing; or

(e) make it a condition of the supply of the essential service

pursuant to the request that the amount is to be paid.

Note:

The Federal Court may grant an injunction under section 129D in

respect of a contravention of this subsection.

(2) In this section:

essential service has the same meaning as in section 600F of the

Corporations Act 2001.

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62PE Moratorium--effect of judicial management on annual

general meeting

(1) This section applies to a general insurer that is required under

section 250N or section 601BR of the Corporations Act 2001 to

hold an annual general meeting within a particular period.

(2) Despite section 250N and section 601BR of that Act, if the general

insurer is under judicial management at the end of that period, the

general insurer need not hold that annual general meeting.

34 Section 62Q

Repeal the section.

35 After subsection 62R(1)

Insert:

(1A) If, subsequent to that order, a situation arises where there is no

judicial manager of the general insurer, or it appears to the Federal

Court that it is likely that such a situation will arise, the Federal

Court may appoint another judicial manager of the general insurer.

(1B) If the Federal Court appoints 2 or more judicial managers of a

general insurer, or appoints one or more additional judicial

managers of a general insurer:

(a) except to the extent (if any) specified in a declaration by the

Federal Court under paragraph (b), the functions and powers

under this Act of a judicial manager of the general insurer

may be performed or exercised by:

(i) all of the judicial managers of the general insurer acting

jointly; or

(ii) each of the judicial managers of the general insurer

acting individually; and

(b) at the time of appointment, the Federal Court may make a

declaration for the purposes of paragraph (a), specifying

limits or conditions on the judicial managers' ability to

perform functions and exercise powers jointly or

individually; and

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reference to whichever one or more of those judicial

managers the case requires.

36 Subsection 62R(2)

Repeal the subsection, substitute:

(2) The Federal Court may cancel the appointment of a judicial

manager and appoint another person as judicial manager:

(a) on application by APRA; or

(b) of its own motion.

37 Subsection 62R(3)

Omit "However,".

38 Section 62T

Repeal the section, substitute:

62T Effect of judicial management on powers of officers etc.

(1) Subject to subsection (3), if the Federal Court has made an order

placing a general insurer under judicial management:

(a) at the time the judicial management commences:

(i) a person with the powers and functions of an officer of

the general insurer immediately before that time ceases

to have those powers and functions; and

(ii) if the general insurer is a foreign general insurer and

there is a person with the powers and functions of an

agent of the general insurer for the purposes of

section 118 immediately before that time--the person

ceases to have those powers and functions; and

(iii) the judicial manager appointed by the Court starts to

have the powers and functions mentioned in

subparagraph (i) (and, if applicable, subparagraph (ii));

and

(b) while the general insurer is under judicial management:

(i) if a person mentioned in subparagraph (a)(i) or (ii)

purports to act in relation to the general insurer's

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business, the purported act is invalid and of no effect;

and

(ii) the judicial manager has the powers and functions of the

members of the board of directors of the general insurer

(collectively and individually), including the board's

powers of delegation.

(2) Subsection (1) does not remove an officer or agent of the general

insurer from office.

(3) A general insurer may not issue policies without the leave of the

Federal Court if the company is under judicial management.

Note:

This section and other provisions relating to judicial management do

not apply to the aspects described in subsection 62ZVA(1) of the

business and management of a foreign general insurer.

(4) In this section, officer has the same meaning as it has in the

Corporations Act 2001.

39 Subsection 62U(1)

Omit "when the management of the general insurer vests in the judicial

manager appointed by the Federal Court", substitute "when the judicial

management of the general insurer commences".

40 Subsection 62U(2)

Omit "while the management of the general insurer is vested in the

judicial manager appointed by the Federal Court", substitute "while the

general insurer is under judicial management".

41 Subsection 62U(3)

Omit "while the management of the general insurer is vested in a

judicial manager", substitute "while the general insurer is under judicial

management".

42 Subsection 62U(4)

Omit "that the management of the general insurer vests in the judicial

manager when the judicial management commences", substitute "that

the general insurer is under judicial management".

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43 Section 62V

Repeal the section, substitute:

62V Judicial management not ground 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).

(2) None of the matters mentioned in subsection (3) 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;

(d) enforce any security under the contract.

(3) The matters are as follows:

(a) the making by the Federal Court of an order that the body

corporate be placed under judicial management;

(b) the commencement of the judicial management of the body

corporate;

bodies corporate:

(i) the making by the Federal Court of an order that another

member of the group be placed under judicial

management; or

(ii) the commencement of the judicial management of

another member of the group.

44 Section 62W

Before "The appointment of", insert "(1)".

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45 Section 62W

Omit "The appointment of a judicial manager under this Part does not

affect", substitute "None of the matters mentioned in subsection (2)

affect".

46 At the end of section 62W

Add:

(2) The matters are as follows:

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FINANCIAL SECTOR LEGISLATION AMENDMENT (CRISIS RESOLUTION POWERS AND OTHER MEASURES) BILL 2017