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:

(a) the making by the Federal Court of an order that the general

insurer be placed under judicial management;

(b) the commencement of the judicial management of the general

insurer.

47 Paragraph 62Z(4)(a)

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

of section 127B of this Act)".

48 Paragraph 62Z(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".

49 Section 62ZB

Repeal the section, substitute:

62ZB Act under section 62Z 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;

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(d) enforce any security under the contract.

(3) The matters are as follows:

(a) a judicial manager doing an act under subsection 62Z(1)

relating to the body corporate;

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

bodies corporate--a judicial manager doing an act under

subsection 62Z(1) relating to another member of the group.

50 Subsection 62ZF(5)

Repeal the subsection, substitute:

(5) At the time when an order cancelling the judicial management of

the general insurer comes into force:

(a) the judicial manager ceases to have the powers and functions

of an officer of the general insurer; and

(b) the board of directors or other governing body of the general

insurer starts to have those powers; and

a person appointed as an agent of the general insurer for the

purposes of section 118--the person starts to have the powers

and functions of such an agent.

51 Paragraph 62ZI(2)(aa)

Omit "Financial Sector (Business Transfer and Group Restructure) Act

1999", substitute "Financial Sector (Transfer and Restructure) Act

1999".

52 After paragraph 62ZI(2)(aa)

Insert:

(ab) to transfer shares in the company to another company under

section 25AA of the Financial Sector (Transfer and

Restructure) Act 1999;

53 Subparagraph 62ZJ(3)(b)(i)

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

of section 127B of this Act)".

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54 Subparagraph 62ZJ(3)(b)(iv)

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".

55 Subsection 62ZK(2)

Omit "the management of the general insurer continues to be vested in

the judicial manager", substitute "the general insurer continues to be

under judicial management".

56 Section 62ZM

Repeal the section, substitute:

62ZM Immunity

(1) A judicial manager, or a person acting on behalf of a judicial

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 judicial

manager by or under this Act.

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

(3) A judicial manager is not liable under section 588G of the

Corporations Act 2001. This subsection does not limit the scope of

subsection (1).

Signpost to secrecy obligations

(4) Part 6 of the Australian Prudential Regulation Authority Act 1998

prohibits certain disclosures of information received by judicial

managers under this Act.

57 Section 62ZO

Repeal the section.

58 After Division 1 of Part VB

Insert:

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Division 1A--Statutory management of general insurers

Subdivision A--General provisions relating to statutory

management

62ZOA Consequences of inability or failure of general insurer etc. to

meet certain requirements

Appointment of administrator or control by APRA

(1) APRA may take control of a general insurer's business or appoint

an administrator to take control of the general insurer's business if

both of the following requirements are met:

(a) APRA is satisfied of the matters of which the Federal Court

is required to be satisfied for the purposes of section 62L or

62M;

(b) subsection (2) applies.

(2) This subsection applies if APRA is satisfied that at least one of the

following situations exists:

(a) both:

(i) an AFS statutory manager has taken control of a body

corporate under this Act, the Banking Act 1959 or the

Life Insurance Act 1995 (or APRA intends for that to

occur); and

(ii) the general insurer and the body corporate are related

bodies corporate;

(b) both:

(i) the general insurer's financial position is deteriorating

rapidly, or is likely to deteriorate rapidly; and

(ii) failure to respond quickly to the deterioration would be

likely to prejudice the interests of policyholders of the

insurer;

insurance business in Australia consistently with the stability

of the financial system in Australia;

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

company of the general insurer (or a similar appointment has

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been made in a foreign country in respect of such a holding

company), and the appointment poses a significant threat to:

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

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

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

(e) if the general insurer is a foreign general insurer:

(i) 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

(ii) 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.

(3) APRA may take any of the actions mentioned in subsection (4) in

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

(a) the target body corporate is a body corporate that is any of

the following:

(i) an authorised NOHC of a general insurer (the relevant

general insurer);

(ii) a subsidiary of an authorised NOHC of a general insurer

(also the relevant general insurer);

(iii) a subsidiary of a general insurer (also the relevant

general insurer); and

(b) the condition in subsection (5), (6) or (7) 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.

(4) 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.

(5) The condition in this subsection is satisfied if:

(a) either:

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(i) an Insurance Act statutory manager has taken control of

the relevant general insurer; or

(ii) the conditions in paragraphs (1)(a) and (b) are satisfied

in relation to the relevant general insurer, and APRA

intends that an Insurance Act statutory manager will

take control of the relevant general insurer; 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 general insurer to maintain its

operations.

(6) The condition in this subsection is satisfied if:

(a) either:

(i) an Insurance Act statutory manager has taken control of

the relevant general insurer; or

(ii) the conditions in paragraphs (1)(a) and (b) are satisfied

in relation to the relevant general insurer, and APRA

intends that an Insurance Act statutory manager will

take control of the relevant general insurer; and

(b) APRA considers that it is necessary for an Insurance 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 general insurer;

(ii) an authorised NOHC of the relevant general insurer;

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

relevant general insurer is a member;

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

group.

(7) The condition in this subsection is satisfied if:

(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 (4) in respect of the target body

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corporate in order to enable the relevant general insurer to

maintain its operations, or in order to facilitate the resolution

of any of the following:

(i) the relevant general insurer;

(ii) an authorised NOHC of the relevant general insurer;

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

relevant general insurer is a member;

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

group.

(8) If:

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

Subdivision--APRA is the Insurance 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 Insurance 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 62ZVA(1) of the

business and management of a foreign general insurer.

(9) If APRA appoints 2 or more Insurance Act statutory managers of a

body corporate, or appoints one or more additional Insurance Act

statutory managers of a body corporate:

(a) the functions and powers under this Act of an Insurance Act

statutory manager of the body corporate may be performed or

exercised by:

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

corporate acting jointly; or

(ii) each of the Insurance 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

Insurance 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

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manager as being a reference to whichever one or more of

those Insurance Act statutory managers the case requires.

62ZOB Start of control of body corporate's business by Insurance

Act statutory manager

(1) After the decision that an Insurance Act statutory manager will

take control of a body corporate's business is made, APRA must

give the body corporate written notice that the Insurance Act

statutory manager will take, or is taking, control of the business.

Note:

Subsections 62ZOQ(4) and 62ZOZA(3) also require APRA to give

notice of the taking of control.

(2) An Insurance Act statutory manager takes control of a body

corporate's business:

(a) at the time specified in a notice under this section as the time

when the Insurance Act statutory manager takes control of

the business (which must not be earlier than the notice is

given); or

(b) if a notice under this section does not specify a time as the

time when the Insurance Act statutory manager takes control

of the business--at the time the notice is given.

(3) A notice under subsection (1) is not a legislative instrument.

62ZOC Insurance Act statutory managers--termination of control

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

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.

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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.

Events to precede termination

(2) Before making an ultimate termination of control by an Insurance

Act statutory manager of a body corporate's business, APRA must:

(a) do both of the following:

(i) ensure that directors of the body corporate have been

appointed or elected under the body corporate's

constitution at a meeting called by the statutory manager

in accordance with the body corporate's constitution;

(ii) if the body corporate is a foreign general insurer--

appoint an agent in Australia for the purpose of

section 118 by instrument in writing; or

(b) do both of the following:

(i) appoint directors of the body corporate by instrument in

writing;

(ii) if the body corporate is a foreign general insurer--

appoint an agent in Australia for the purpose of

section 118 by instrument in writing; or

(i) unless subparagraph (ii) applies--for the body

corporate; or

(ii) if the body corporate is a foreign general insurer--for

the body corporate in relation to its Australian business

assets and liabilities.

Power to terminate control

(3) If the requirements in subsections (1) and (2) are satisfied, APRA

may by instrument in writing make an ultimate termination of

control of a body corporate's business by an Insurance Act

statutory manager.

(4) If the Insurance Act statutory manager at the time of the

termination is an administrator, the instrument of termination also

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operates as a termination of the appointment of the administrator.

A copy of the instrument must be given to the administrator.

However, mere failure to give the copy to the administrator does

not affect the termination of the appointment.

Period of director's appointment

(5) If a director is elected or appointed under subsection (2), the

director takes office on the termination of the Insurance Act

statutory manager's control of the body corporate's business. If the

director was appointed by APRA, the director holds office until the

body corporate's next annual general meeting, subject to any terms

and conditions imposed by APRA on the director's appointment. If

the director was appointed or elected under the body corporate's

constitution, the constitution governs the appointment.

Note:

For further information about what happens when an Insurance Act

statutory manager is in control of a body corporate's business, see

Subdivision B.

Subdivision B--Provisions dealing with control of a body

corporate's business by an Insurance Act statutory

manager

62ZOD Insurance Act statutory manager's powers and functions

Insurance Act statutory manager's powers and functions include

powers and functions of board

(1) An Insurance Act statutory manager has the powers and functions

of the members of the board of directors of the body corporate

(collectively and individually), including the board's powers of

delegation.

Note:

When an Insurance Act statutory manager takes control of the

business of a body corporate, the directors of the body corporate cease

to hold office (see section 62ZOP).

Insurance Act statutory manager's power to obtain information

(2) An Insurance Act statutory manager 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 Insurance Act statutory manager any

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information relating to the business of the body corporate that the

Insurance Act statutory manager requires. A requirement to give

information may include a requirement to produce books, accounts

or documents.

(3) A person who is or has been an officer of a body corporate

commits an offence if:

(a) there is an Insurance Act statutory manager in relation to the

body corporate; and

(b) under subsection (2), the Insurance Act statutory manager

requires the person to give information or to produce books,

accounts or documents; and

Penalty: Imprisonment for 12 months.

Note 1:

Subsection 4B(2) of the Crimes Act 1914 allows a court to impose a

fine instead of, or in addition to, a term of imprisonment. The

maximum fine a court may impose is worked out as provided in that

subsection.

Note 2:

If a body corporate is convicted of an offence against this subsection,

subsection 4B(3) of the Crimes Act 1914 allows a court to impose a

fine of up to 5 times the maximum fine worked out as mentioned in

Note 2.

(4) An individual is not excused from complying with a requirement

under subsection (2) to give information on the ground that doing

so would tend to incriminate the individual or make the individual

liable to a penalty.

(5) If:

(a) before giving information in compliance with a requirement

under subsection (2), an individual claims that giving the

information might tend to incriminate the individual or make

the individual liable to a penalty; and

(b) giving the information might in fact tend to incriminate the

individual or make the individual so liable;

the information given in compliance with the requirement is not

admissible in evidence against the individual in a criminal

proceeding or a proceeding for the imposition of a penalty, other

than a proceeding in respect of the falsity of the information.

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(6) Subsections (4) and (5) apply to the production of books, accounts

or documents in a corresponding way to the way in which they

apply to the giving of information.

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

body corporate's business

(7) An Insurance Act statutory manager may sell or otherwise dispose

of the whole or any part of the body corporate's business. The sale

or disposal may occur on any terms and conditions that the

Insurance Act statutory manager considers appropriate.

Insurance Act statutory manager's powers to alter body

corporate's constitution etc.

(8) An Insurance Act statutory manager may, if the body corporate

concerned is registered under the Corporations Act 2001, alter the

body corporate's constitution, rules or other arrangements for

governance if the alteration:

(a) is necessary or convenient for enabling or facilitating the

performance of the Insurance Act statutory manager's

functions and duties, or the exercise of the Insurance Act

statutory manager's other powers, under this Division in

relation to the body corporate; and

(b) promotes:

(i) the protection of the policyholders of the body

corporate; and

(ii) financial system stability in Australia.

(9) An Insurance Act statutory manager may do an act under

subsection (7) or (8) despite:

(a) the Corporations Act 2001; and

(b) the body corporate's constitution; and

party; and

(d) any listing rules of a financial market in whose official list

the body corporate is included.

Interpretation

(10) In this section:

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

2001.

62ZOE Safeguards on exercise of Insurance Act statutory

manager's powers and functions

(1) Despite anything else in this Subdivision, an Insurance Act

statutory manager of a body corporate (the body corporate under

management) may not perform a function or exercise a power

under section 62ZOD 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 Insurance Act statutory manager under

subsection 62ZOF(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 a general

insurer; and

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

(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 Insurance 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.

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(3) This subsection applies if:

(a) the body corporate under management is an authorised

NOHC of a general insurer; 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 general insurer 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 a general insurer; and

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

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

insurer to a specified level; and

ordinary resolution, to that use of the funds.

62ZOF Insurance Act statutory manager's additional powers to

facilitate recapitalisation

Powers

(1) An Insurance Act statutory manager of a body corporate that is a

company that has a share capital and is registered under the

Corporations Act 2001 may do one or more of the following acts

on terms determined by the Insurance Act statutory manager:

(a) issue shares, or rights to acquire shares, in the company;

(b) cancel shares, or rights to acquire shares, in the company;

share capital that is not represented by available assets;

(d) sell shares, or rights to acquire shares, in the company;

(e) vary or cancel rights or restrictions attached to shares in a

class of shares in the company.

Note:

Before doing such an act, the Insurance Act statutory manager will

usually need to get and consider a report on the fair value of each

share or right concerned: see section 62ZOG.

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Giving company members notice of exercise of powers

(2) As soon as practicable after doing an act described in

paragraph (1)(a), (b), (c) or (e) or subsection (3), the Insurance Act

statutory manager must give written notice to the persons who

were members (under section 231 of the Corporations Act 2001) of

the company just before the act, identifying the act and explaining

its effect on their interests as members.

(3) One of the acts to which subsection (2) relates is the offering of

shares, or rights to acquire shares, in the company for sale under

paragraph (1)(d).

Exercise of powers despite other laws etc.

(4) An Insurance Act statutory manager may do an act under

subsection (1) despite:

(a) the Corporations Act 2001; and

(b) the company's constitution; and

and

(d) any listing rules of a financial market in whose official list

the company is included.

Section does not apply to foreign general insurers etc.

(5) This section does not apply in relation to a body corporate that is:

(a) a foreign general insurer; or

(b) a subsidiary of a foreign general insurer; or

62ZOG Considering report before acting under section 62ZOF

Getting and considering report on fair value of shares or rights

(1) Before determining terms for an act under subsection 62ZOF(1),

the Insurance Act statutory manager must:

(a) obtain a report meeting the requirements in subsection (2) of

this section on the fair value of the shares or rights concerned

from an expert who is not an associate of the statutory

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manager, or of the company, under Division 2 of Part 1.2 of

the Corporations Act 2001; and

(b) consider the report;

unless APRA determines under subsection (8) that this subsection

does not apply in relation to that act relating to those shares or

rights.

Content of report

(2) The report must set out:

(a) the amount that is, in the expert's opinion, the fair value for

each share or right concerned; and

(b) the reasons for forming the opinion; and

persons:

(i) the Insurance Act statutory manager;

(ii) a person who is an associate of the Insurance Act

statutory manager under Division 2 of Part 1.2 of the

Corporations Act 2001;

(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;

including any circumstances in which the expert gives them

advice, or acts on their behalf, in the proper performance of

the functions attaching to the expert's professional capacity

or business relationship with them; and

(d) any financial or other interest of the expert that could

reasonably be regarded as being capable of affecting the

expert's ability to give an unbiased opinion in relation to the

matter being reported on.

Determining fair value of shares

(3) In determining for the purposes of paragraph (2)(a) the amount that

is, in the expert's opinion, the fair value for each share concerned,

the expert must:

(a) first, assess the value of the company as a whole, in

accordance with the assumptions (if any) notified to the

expert by the Minister for the valuation of the company; and

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(b) then allocate that value among the classes of shares in the

company that either have been issued or that the Insurance

Act statutory manager proposes to issue (taking into account

the relative financial risk, and voting and distribution rights,

of the classes); and

shares in that class that either have been issued or that the

Insurance Act statutory manager proposes to issue (without

allowing a premium or applying a discount for particular

shares in that class).

Assumptions for valuation of company

(4) The Minister may give the expert written notice of assumptions for

the valuation of the company. The Minister may, by further written

notice given to the expert, revoke, but not vary, notice of the

assumptions. A notice under this subsection is not a legislative

instrument.

Determining fair value of rights

(5) In determining for the purposes of paragraph (2)(a) the amount that

is, in the expert's opinion, the fair value for each right concerned,

the expert must act in accordance with the assumptions (if any)

notified to the expert by the Minister for the valuation of the right.

Assumptions for valuation of rights

(6) The Minister may give the expert written notice of assumptions for

the valuation of the rights concerned. The Minister may, by further

written notice given to the expert, revoke, but not vary, notice of

the assumptions. A notice under this subsection is not a legislative

instrument.

Contravention does not invalidate act

(7) A contravention of subsection (1), (2), (3), (5) or (9) does not

affect the validity of anything done under section 62ZOF.

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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) policyholders with:

(i) if the company is a general insurer--the general insurer;

(ii) if the company is not a general insurer--the relevant

general insurer mentioned in subsection 62ZOA(3); and

(b) financial system stability in Australia.

(9) APRA must:

(a) publish a copy of a determination under subsection (8) in the

Gazette; and

(b) give a copy of a determination under subsection (8) to the

Insurance Act statutory manager concerned (unless that

manager is APRA).

(10) A determination made under subsection (8) is not a legislative

instrument.

62ZOH Act under section 62ZOF not ground for denying obligation

(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) an Insurance Act statutory manager of the body corporate

doing an act under subsection 62ZOF(1) relating to the body

corporate;

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

bodies corporate--an Insurance Act statutory manager of

another member of the group doing an act under

subsection 62ZOF(1) in relation that other member.

62ZOI APRA may require a person to give information etc. for the

purposes of this Division

APRA may require person to give information etc.

(1) APRA may require a person, by written notice given to the person,

to give APRA information, or documents containing information,

relating to the business of a body corporate that has an Insurance

Act statutory manager if:

(a) in a case where the Insurance Act statutory manager is

APRA:

(i) APRA believes, on reasonable grounds, that the person

has such information or documents; and

(ii) APRA requires the information or documents for the

purposes of this Division; and

(b) in a case where the Insurance Act statutory manager is not

APRA:

(i) the Insurance Act statutory manager requests, in

writing, that APRA require the person to give the

information or documents under this subsection; and

(ii) APRA believes, on reasonable grounds, that the person

has such information or documents; and

(iii) APRA is satisfied that the Insurance Act statutory

manager requires the information or documents for the

purposes of this Division.

(2) The notice:

(a) must specify a period within which the information or

documents must be given to APRA; and

(b) may specify the form and manner in which the information or

documents must be given to APRA.

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(3) The period specified under paragraph (2)(a) must be reasonable in

all the circumstances.

Offence

(4) A person commits an offence if:

(a) APRA requires the person to give APRA information or

documents under subsection (1); and

(b) the person refuses or fails to give the information or

documents as required.

Penalty: Imprisonment for 12 months or 50 penalty units, or both.

Self-incrimination

(5) A person is not excused from complying with a requirement under

subsection (1) to give information or documents on the ground that

doing so would tend to incriminate the individual or make the

individual liable to a penalty.

(6) However, in the case of an individual:

(a) the information or document given; and

(b) giving the information or document; and

indirect consequence of giving the information or document;

are not admissible in evidence against the individual in a criminal

proceeding or a proceeding for the imposition of a penalty, other

than a proceeding in respect of the falsity of the information or

document.

Section 62ZOD not limited

(7) This section does not limit section 62ZOD.

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62ZOJ Administrator in control--additional powers to recommend

action by APRA

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

subsection 62ZOM(3) or Division 2 of Part IX in respect of

the body corporate;

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

the general insurer's authorisation under section 12;

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

revoke the authorised NOHC's authorisation under

section 18.

Effect of recommendation

(2) If an administrator of a body corporate's business makes a

recommendation under this section, APRA must consider the

recommendation but is not required to act on it.

62ZOK Insurance Act statutory manager's liabilities and duties

Immunity

(1) An Insurance Act statutory manager, or a person acting on behalf

of an Insurance 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 Insurance 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, an Insurance 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

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

functions or duties conferred or imposed on the Insurance Act

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

limit the scope of subsection (1).

Signpost to secrecy obligations

(4) Part 6 of the Australian Prudential Regulation Authority Act 1998

prohibits certain disclosures of information received by Insurance

Act statutory managers under this Act.

62ZOL Transaction by Insurance 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:

(a) the transaction was entered into at a time when an Insurance

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.

62ZOM Administrator in control--additional duties

Duty to report to APRA on request

(1) A person who is an administrator of a body corporate's business

must give to APRA a written report showing how the control of the

body corporate's business is being carried out if APRA requests

that such a report be provided to it. The report must be given to

APRA within a reasonable time after the request.

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Duty to report to APRA on termination of appointment

(2) A person who was an administrator of a body corporate's business

must give to APRA a written report showing how the control of the

body corporate's business was carried out over the period of the

administrator's appointment if the administrator's appointment has

been terminated. The report must be given to APRA within a

reasonable time of the termination.

Duty to follow directions by APRA

(3) APRA may give an administrator of a body corporate's business a

direction relating to the control of the body corporate's business,

and may alter such a direction. If a direction (including an altered

direction) is given to an administrator by APRA, the administrator

must:

(a) act in accordance with the direction; or

(b) immediately provide to APRA information relating to the

control of the body corporate's business and request APRA

to alter the direction.

(4) If an administrator of a body corporate's business requests APRA

to alter a direction and APRA considers the request then confirms

the direction, the administrator must act in accordance with the

direction.

62ZON Administrator in control--additional duties where action

may affect financial system stability in Australia

(1) If an administrator of a body corporate's business has reasonable

cause to believe that an action that the administrator proposes to

take is an action that is likely to have a detrimental effect on

financial system stability in Australia, the administrator must:

(a) notify APRA as soon as practicable; and

(b) obtain APRA's written consent before taking the action.

(2) The administrator is not required to comply with subsection (1) if

the administrator is satisfied that it is not reasonably practicable to

do so, having regard to urgency or other similar constraint.

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(3) The performance of a function or the exercise of a power by an

administrator is not invalid merely because of a failure by the

administrator to comply with this section.

62ZOO Termination of Insurance Act statutory manager's

appointment

(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 a general insurer--protect the

interests of policyholders of the general insurer; or

(iii) promote financial system stability in Australia.

(2) 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.

(3) This section has effect subject to section 62ZOC.

62ZOP Effect on directors of Insurance Act statutory manager

taking control of a body corporate's business

(1) The directors of a body corporate cease to hold office when an

Insurance Act statutory manager takes control of the body

corporate's business.

Note:

For the definition of director, see subsection (10).

(2) A director of a body corporate must not be appointed or elected

while an Insurance Act statutory manager is in control of the body

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corporate's business unless the appointment is made under

subsection 62ZOC(2).

(3) The appointment of an agent of a body corporate under section 118

ceases to have effect when an Insurance Act statutory manager

takes control of the body corporate's business.

(4) A person must not be appointed as an agent of a body corporate

under section 118 while an Insurance Act statutory manager is in

control of the body corporate's business unless the appointment is

made under subsection 62ZOC(2).

(5) If a person who ceased to hold office as a director of a body

corporate under subsection (1), or a purported director of a body

corporate appointed or elected in contravention of subsection (2),

purports to act in relation to the body corporate's business while an

Insurance Act statutory manager has control of the body

corporate's business, those acts are invalid and of no effect.

(6) If a person whose appointment as an agent of a body corporate

under section 118 ceased to have effect under subsection (3)

purports to act in relation to the body corporate's business while an

Insurance Act statutory manager has control of the body

corporate's business, those acts are invalid and of no effect.

(7) Subsections (1), (2) and (5) do not apply in relation to a body

corporate that is a foreign general insurer.

(8) Subsection (9) applies if:

(a) subsections (1), (2) and (5) do not apply in relation to a body

corporate because of subsection (7); and

(b) an Insurance Act statutory manager takes control of the body

corporate's business; and

relation to the body corporate's business while the Insurance

Act statutory manager has control of the body corporate's

business.

(9) 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

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(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.

(10) For the purposes of this section, director has the same meaning as

it has in the Corporations Act 2001.

62ZOQ Effect on external administrator of Insurance Act statutory

manager taking control of a body corporate's business

(1) The appointment of an external administrator of a body corporate

is terminated when an Insurance Act statutory manager takes

control of the body corporate's business.

Note:

For the definition of external administrator, see subsection 3(1).

(2) An external administrator of a body corporate must not be

appointed while an Insurance Act statutory manager is in control of

the body corporate's business unless APRA approves the

appointment.

(3) If a person who ceased to be the external administrator of a body

corporate under subsection (1), or a purported external

administrator of the body corporate appointed in contravention of

subsection (2), purports to act in relation to the body corporate's

business while an Insurance Act statutory manager has control of

the body corporate's business, those acts are invalid and of no

effect.

(4) APRA must inform the external administrator of a body corporate

that an Insurance Act statutory manager will take control of the

body corporate's business as soon as possible after the decision

that an Insurance Act statutory manager will take control of the

body corporate's business is made. However, failure to inform the

external administrator does not affect the operation of this section.

62ZOR Moratorium--effect of Insurance 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

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an Insurance 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 Insurance Act statutory manager, after considering

APRA's views, consents to the proceedings beginning or

continuing.

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

consent given for the purposes of subsection (5).

(7) Neither APRA nor the Insurance 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:

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(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.

62ZOS Moratorium--effect of Insurance 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 an Insurance Act statutory

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

(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 Court imposes.

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

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

intention to apply (or a shorter period, if the 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

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

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

those terms.

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

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

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

beginning or continuing.

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

consent given for the purposes of subsection (5).

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

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

to give consent under subsection (5).

62ZOT Moratorium--effect of Insurance 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 may grant an injunction under section 129D in

respect of a contravention of this subsection.

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

(a) APRA consents to the disposal; or

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

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

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

to give consent under subsection (2).

62ZOU Moratorium--Restrictions on exercise of third party

property rights

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

in which an Insurance Act statutory manager is in control of a body

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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 Insurance Act statutory manager's written consent; or

(b) APRA's written consent.

(3) Neither APRA nor an Insurance 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 62ZOR, 62ZOS and 62ZOT.

62ZOV Moratorium--effect of Insurance Act statutory

management on supply of essential services

(1) If:

(a) an Insurance Act statutory manager is in control of a body

corporate's business; and

(b) the Insurance 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

the Insurance 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 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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62ZOW Moratorium--effect of Insurance 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 an

Insurance 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.

62ZOX Insurance Act statutory manager being in control 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) an Insurance 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--an Insurance Act statutory manager being

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

of another member of the group.

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62ZOY 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 an Insurance Act statutory manager of the

body corporate's business under this Division;

(b) the fact that an Insurance 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 an Insurance Act

statutory manager.

62ZOZ Costs of statutory management

(1) APRA's costs (including costs in the nature of remuneration and

expenses) of being in control of a body corporate's business, or of

having an administrator in control of a body corporate's business,

are payable from the body corporate's funds and are a debt due to

APRA.

(2) Despite anything contained in any law relating to the winding-up

of companies, debts due to APRA by a body corporate under

subsection (1) have priority in a winding-up of the body corporate

over all other unsecured debts.

62ZOZA APRA must report to Treasurer and publish information

about statutory management

Reports to the Treasurer

(1) If the Treasurer requests APRA to give him or her a written report

concerning the activities of Insurance Act statutory managers in

respect of specified body corporates or in respect of a specified

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period, APRA must give the Treasurer such a written report within

a reasonable time after the Treasurer requests it.

(2) If an Insurance Act statutory manager takes control of a body

corporate's business during a financial year, or if there is an

ultimate termination of control during a financial year, APRA must

give the Treasurer a written report within a reasonable time after

the end of the financial year concerning activities of all Insurance

Act statutory managers and each ultimate termination of control

that occurred during that financial year.

Requirement to publish notices in Gazette

(3) If APRA:

(a) takes control of a body corporate's business; or

(b) appoints an administrator of a body corporate's business; or

corporate's business;

APRA must publish notice of that fact in the Gazette. However,

mere failure to publish such a notice does not affect the validity of

the act.

62ZOZB Exceptions to Part IV of the Competition and Consumer Act

2010

For the purposes of subsection 51(1) of the Competition and

Consumer Act 2010, the following things are specified and

specifically authorised:

(a) the acquisition of assets in:

(i) a sale or disposal of the whole or part of the business of

a body corporate under this Division by an Insurance

Act statutory manager in control of the body corporate's

business; or

(ii) a transfer of insurance business of a general insurer

under a scheme prepared by an Insurance Act statutory

manager in control of the general insurer's business and

confirmed (with or without modifications) by the

Federal Court under Division 3A of Part III;

(whether the assets are shares in another body corporate or

other assets);

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(b) the acquisition of shares in a body corporate as a direct result

of:

(i) the issue or sale of the shares under this Division by an

Insurance Act statutory manager in control of the body

corporate's business; or

(ii) the exercise of a right to acquire shares that was issued

or sold under this Division by an Insurance Act

statutory manager in control of the body corporate's

business.

59 Section 62ZQ

Repeal the section, substitute:

62ZQ Involving APRA in proposed appointment of external

administrators of general insurers and NOHCs

(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 a general insurer or of an authorised NOHC

of a general insurer; or

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

for the appointment of an external administrator of a general

insurer or of an authorised NOHC of a general insurer; or

an authorised NOHC of a general insurer (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.

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

notice in the approved form.

(3) 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.

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

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(5) After receiving the notice, APRA may request the person to

provide details of the proposed application.

Offence

(6) 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 a general insurer or of an

authorised NOHC of a general insurer; or

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

court) for the appointment of an external administrator

of a general insurer or of an authorised NOHC of a

general insurer; or

(iii) appoints an external administrator of a general insurer

or of an authorised NOHC of a general insurer

(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 (3); 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.

(7) An offence against subsection (6) is an offence of strict liability.

Note:

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

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60 Subsection 62ZR(1)

Omit "the winding-up of a general insurer", substitute "the winding-up

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

entity covered by subsection (4)".

61 At the end of section 62ZR

Add:

(4) This subsection covers the following entities:

(a) a general insurer;

(b) an authorised NOHC;

62 Subsection 62ZS(1)

Repeal the subsection, substitute:

(1) APRA may apply to the Federal Court for directions regarding any

matter arising under:

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

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

made under the Corporations Act 2001 or by APRA under

Division 3 of this Part); or

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

subsection 62ZR(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 Division 3 of

this Part).

63 Subsection 62ZT(1)

Repeal the subsection, substitute:

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

subsection 62ZR(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 Division 3 of this Part) and the other

affairs of the general insurer; or

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(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 Division 3 of this Part) and the other affairs of

the general insurer.

64 At the end of section 62ZU

Add:

(3) To avoid doubt, subsection (1) applies whether or not an Insurance

Act statutory manager is in control of:

(a) unless paragraph (b) applies--the general insurer's business;

(b) if the general insurer is a foreign general insurer--the

Australian business assets and liabilities of the foreign

general insurer.

65 At the end of section 62ZV

Note:

APRA may choose to apply under section 62ZU for an order that a

general insurer be wound up. Alternatively, APRA may choose to

apply under the Corporations Act 2001 for an order that the general

insurer be wound up (for example, under section 459P or 462 of that

Act).

66 At the end of Part VB

Add:

Division 4--Special provisions relating to foreign general

insurers

62ZVA Limited application of Divisions 1, 1A and 2 to foreign

general insurers

(1) Divisions 1, 1A and 2 do not apply in relation to:

(a) business of a foreign general insurer (other than Australian

business assets and liabilities); or

(b) the management of a foreign general insurer, to the extent

that the management relates to such business of the foreign

general insurer.

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(2) Subsection 62T(3) does not apply to the issue of policies by a

foreign general insurer in the course of insurance business carried

on outside Australia by the foreign general insurer.

(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 general

insurer, means the following:

(a) the assets and liabilities of the foreign general insurer in

Australia;

(b) any other assets and liabilities of the foreign general insurer

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.

67 After subparagraph 62ZW(a)(i)

Insert:

(ia) that is under statutory management under Division 1A

of Part VB; or

68 At the end of section 62ZW

Add:

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

declared general insurer 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 policies.

69 Paragraph 62ZZC(1)(a)

Repeal the paragraph, substitute:

(a) any of the following requirements are satisfied:

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(i) the general insurer is under judicial management under

Division 1 of Part VB;

(ii) the general insurer is under statutory management under

Division 1A of Part VB;

(iii) an external administrator for the general insurer has

been appointed under Chapter 5 of the Corporations Act

2001; and

70 Subsection 62ZZC(1) (note 2)

After "the judicial management" insert "or statutory management".

71 After section 62ZZF

Insert:

62ZZFA Interim claims and payments for section 62ZZF

entitlements

(1) This section applies if:

(a) a person makes a claim under insurance cover provided under

a protected policy, in the approved form (if any), within the

period mentioned in paragraph 62ZZF(1)(b); and

(b) the person is not covered by a determination under

section 62ZZ; and

claim for payment of part or parts of the person's entitlement

under section 62ZZF (whether or not the person has made a

previous interim claim for such a payment); and

(d) APRA determines, under subsection (2), the amount of the

interim claim mentioned in paragraph (c) that ought to be

recognised as valid; and

(e) if the regulations prescribe conditions for the purposes of this

paragraph--those conditions are met.

(2) For the purposes of paragraph (1)(d), APRA may determine, in

writing, the amount of the interim claim mentioned in

subsection (1)(c), to the extent that it ought to be recognised as

valid.

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(3) If the regulations prescribe conditions according to which APRA

can make a determination under subsection (2), APRA can only

make such a determination in accordance with those conditions.

(4) The person is entitled to be paid by APRA an amount equal to:

(a) unless paragraph (b) applies--the amount mentioned in

paragraph (1)(d); or

(b) if the regulations prescribe limits, or methods for determining

limits, for entitlements under this subsection--the lesser of:

(i) the amount mentioned in paragraph (1)(d); or

(ii) the applicable limit specified in or worked out in

accordance with the regulations.

(5) If the person is entitled under subsection 62ZZF(2) or (3) to be

paid an amount by APRA in respect of the claim mentioned in

paragraph (1)(a), the person's entitlement under subsection (4) to

be paid an amount discharges, to the extent of that amount, the

person's entitlement under subsection 62ZZF(2) or (3).

72 Subsection 62ZZG(2) (note)

Omit "under section 51 of the Insurance Contracts Act 1984", substitute

"under various provisions".

73 Subsection 62ZZG(3) (note 1)

Omit "under section 51 of the Insurance Contracts Act 1984", substitute

"under various provisions".

74 Subsection 62ZZG(3) (note 2)

Omit "also".

75 After section 62ZZG

Insert:

62ZZGA Interim claims and payments for section 62ZZG

entitlements

(1) This section applies if:

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(a) a person makes a claim under insurance cover provided under

a protected policy, in the approved form (if any), within the

period mentioned in paragraph 62ZZG(1)(aa); and

(b) the person is not covered by a determination under

section 62ZZ; and

claim for payment of part or parts of the person's entitlement

under section 62ZZG (whether or not the person has made a

previous interim claim for such a payment); and

(d) APRA determines, under subsection (2), the amount of the

interim claim mentioned in paragraph (c) that ought to be

recognised as valid; and

(e) if the regulations prescribe conditions for the purposes of this

paragraph--those conditions are met.

(2) For the purposes of paragraph (1)(d), APRA may determine, in

writing, the amount of the interim claim mentioned in

subsection (1)(c), to the extent that it ought to be recognised as

valid.

(3) If the regulations prescribe conditions according to which APRA

can make a determination under subsection (2), APRA can only

make such a determination in accordance with those conditions.

(4) The person is entitled to be paid by APRA an amount equal to:

(a) unless paragraph (b) applies--the amount mentioned in

paragraph (1)(d); or

(b) if the regulations prescribe limits, or methods for determining

limits, for entitlements under this subsection--the lesser of:

(i) the amount mentioned in paragraph (1)(d); or

(ii) the applicable limit specified in or worked out in

accordance with the regulations.

(5) If the person is entitled under subsection 62ZZG(2) or (3) to be

paid an amount by APRA in respect of the claim mentioned in

paragraph (1)(a), the person's entitlement under subsection (4) to

be paid an amount discharges, to the extent of that amount, the

person's entitlement under subsection 62ZZG(2) or (3).

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76 Subsection 62ZZH(1)

Omit "62ZZF, 62ZZG,", substitute "62ZZF, 62ZZFA, 62ZZG,

62ZZGA,".

77 Subsection 62ZZH(1) (note)

Omit "62ZZF and 62ZZG", substitute "62ZZF, 62ZZFA, 62ZZG and

62ZZGA".

78 Subsection 62ZZJ(3)

Omit "section 51 of the Insurance Contracts Act 1984, or

section 601AG of the Corporations Act 2001,", substitute "any

provision mentioned in subsection (4B)".

79 Paragraph 62ZZJ(4)(a)

Omit "section 51 of the Insurance Contracts Act 1984, or

section 601AG of the Corporations Act 2001,", substitute "any

provision mentioned in subsection (4B)".

80 After subsection 62ZZJ(4A)

Insert:

(4B) The provisions are as follows:

(a) section 51 of the Insurance Contracts Act 1984;

(b) section 601AG of the Corporations Act 2001;

purposes of this paragraph.

81 After subsection 62ZZK(1)

Insert:

(1A) For the purposes of this section, treat the application of an amount,

or part of an amount, in satisfaction of a liability of the person as

being an application of the amount, or the part of the amount, for

the person's benefit.

82 Subsection 62ZZKA(3)

Repeal the subsection.

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83 After subsection 62ZZM(1)

Insert:

(1A) To avoid doubt, for the purposes of subsection 562(1) of the

Corporations Act 2001, the amount taken to have been paid by the

general insurer to the person under subsection (1) is taken to have

been received by the person from the general insurer.

84 At the end of Division 3 of Part VC

Add:

62ZZMA APRA may make transferred liabilities determination

where transfer of business

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

determination) if:

(a) a general insurer is a declared general insurer as a result of

the Minister having made a declaration under section 62ZZC;

and

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

section 25 of the Financial Sector (Transfer and Restructure)

Act 1999 (compulsory transfer determination) that there is to

be a total transfer or partial transfer of business from the

declared general insurer to a receiving body (within the

meaning of that Act); and

declared general insurer in respect of one or more protected

policies issued by the declared general insurer; and

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

protected policies; and

(e) APRA has worked out:

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

FCS amount) to which policyholders of those protected

policies will be entitled (disregarding the determination)

under sections 62ZZF and 62ZZG 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

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powers and the performance of its functions under this

Part relating to the declared general insurer if it did not

make the determination; and

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

with section 62ZZMB; 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 general insurer;

(b) the receiving body;

policies of the declared general insurer;

(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.

62ZZMB Payment amounts under transferred liabilities

determination

(1) For the purposes of paragraph 62ZZMA(1)(f), APRA may work

out:

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

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(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 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 general insurer to the receiving body in

accordance with the transfer of business;

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

may be a nil amount.

62ZZMC 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.

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Reduction of rights and entitlements of policyholder

(3) A policyholder's entitlement under this Division to be paid an

amount in respect of a protected policy with the declared general

insurer is reduced to nil, if the transfer of business will transfer the

liability of the declared general insurer in respect of that protected

policy.

Declared general insurer liable to APRA for total payment amount

(4) The declared general insurer 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 subsection 62ZZL(1), APRA does not have the rights

mentioned in that subsection.

62ZZMD Certain provisions do not apply in relation to entitlement

of receiving body as a result of transferred liabilities

determination

To avoid doubt, sections 62ZZK, 62ZZKA, 62ZZL and 62ZZM do

not apply in relation to an entitlement under

subsection 62ZZMC(2).

85 Paragraph 62ZZO(b)

Omit "(including a provisional liquidator)".

86 After paragraph 62ZZO(c)

Insert:

; (d) an administrator appointed under subsection 62ZOA(1) to

take control of a general insurer's business.

87 Paragraph 62ZZP(1)(b)

Omit "(including a provisional liquidator)".

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88 After paragraph 62ZZP(1)(c)

Insert:

or (d) an administrator appointed under subsection 62ZOA(1) to

take control of a general insurer's business; or

(e) any other person;

89 Subsection 62ZZP(1)

Omit "or judicial manager", substitute ", judicial manager,

administrator or other person".

90 Paragraph 62ZZP(4)(da)

Omit "or report".

91 Paragraph 62ZZP(4)(e)

Omit "(c) and (d)", substitute "(c), (da), (db) and (d)".

92 Subsection 62ZZQ(5)

Omit "(including a provisional liquidator)".

93 Subsection 62ZZQ(7)

Omit "(including a provisional liquidator)".

94 At the end of section 62ZZQ

Add:

Requirement made of other person--civil penalty

(11) A person mentioned in paragraph 62ZZP(1)(e) must comply with a

requirement made of the person under subsection 62ZZP(1).

Civil penalty:

200 penalty units.

95 Section 103A

Before "This Division", insert "(1)".

96 At the end of section 103A

Add:

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

(a) APRA has given a recapitalisation direction to the general

insurer under subsection 103B(1) (the primary

recapitalisation direction); and

(b) the general insurer 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 an Insurance Act

statutory manager.

(3) This Division applies to the NOHC/NOHC subsidiary in the same

way that it does to a general insurer.

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

Division to the NOHC/NOHC subsidiary:

(a) subsection 103B(1);

(b) subsection 103C(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.

97 Paragraph 103B(1)(b)

After "APRA considers that", insert ", in the absence of external

support".

98 After subsection 103B(1)

Insert:

(1A) Subsection (1B) applies if subsections 103A(3) and (4) apply to a

NOHC/NOHC subsidiary because of a primary recapitalisation

direction given to a general insurer (as mentioned in

subsection 103A(2)).

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(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.

99 After subsection 103B(2)

Insert:

(2A) The regulations may specify that a particular form of support is not

external support for the purposes of paragraph (1)(b).

100 At the end of section 103B

Add:

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

period during which, it is to be complied with.

(5) APRA may, by notice in writing to the general insurer, vary the

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

that the variation is necessary and appropriate.

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

to the general insurer. APRA may revoke the direction if, at the

time of revocation, it considers that the direction is no longer

necessary or appropriate.

101 After subsection 103C(1)

Insert:

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

subsidiary under subsection 103B(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:

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(i) shares, or rights to acquire shares, in the general insurer

mentioned in subsection 103B(1A); or

(ii) other capital instruments in the general insurer

mentioned in subsection 103B(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 general insurer 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.

102 Subsection 103C(2)

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

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

103 Subsection 103C(3)

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

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

104 Subsection 103D(3) (heading)

Repeal the heading, substitute:

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

105 Subsection 103D(3)

After "issue", insert "or acquire".

106 Paragraph 103D(3)(a)

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

of section 127B of this Act)".

107 Paragraph 103D(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".

108 After subsection 103E(1)

Insert:

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

subsidiary under subsection 103B(1B), treat the reference in

paragraph (1)(a) to "the policyholders of the insurer" as being a

reference to "the policyholders of the general insurer mentioned in

subsection 103B(1A)".

109 At the end of section 103E

Add:

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

subsidiary under subsection 103B(1B), treat the references in

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

NOHC/NOHC subsidiary mentioned in subsection 103B(1B)".

110 Section 103K

Repeal the section, substitute:

103K 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

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(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 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.

111 Subsection 103L(9)

Repeal the subsection.

112 Subsection 104(1)

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

"APRA may".

113 Paragraph 104(1)(b)

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".

114 Subsection 104(1A)

Repeal the subsection, substitute:

(1A) APRA may give a body corporate that is a general insurer or is an

authorised NOHC a direction of a kind specified in subsection (3)

if APRA has reason to believe that:

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

provision of this Act, regulations made under this Act,

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prudential standards, or the Financial Sector (Collection of

Data) Act 2001; or

(b) a subsidiary of the body corporate is likely to contravene this

Act, regulations made under this Act, prudential standards, or

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

corporate and is necessary in the interests of:

(i) if the body corporate is a general insurer--policyholders

of the general insurer; or

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

policyholders of any general insurer that is a subsidiary

of the NOHC; or

(d) a subsidiary of the body corporate is, or is about to become,

unable to meet the subsidiary's liabilities; or

(e) there is, or there might be, a material risk to the security of

the assets of a subsidiary of the body corporate; or

(f) there has been, or there might be, a material deterioration in

the financial condition of a subsidiary of the body corporate;

(g) a subsidiary of the body corporate is conducting the

subsidiary's affairs in an improper or financially unsound

way; or

(h) 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

(j) 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 a general insurer--the general

insurer; or

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

general insurer that is a subsidiary of the NOHC; or

(k) 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 a general insurer--policyholders

of the general insurer; or

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

policyholders of any general insurer that is a subsidiary

of the NOHC.

(1B) However, APRA can only make a direction as a result of a ground

referred to in paragraph (1A)(a), (b), (d), (e), (f), (g) or (j) if APRA

considers that the direction is reasonably necessary for one or more

prudential matters relating to the body corporate.

(1C) APRA may give a body corporate that is a subsidiary of a general

insurer or of an authorised NOHC a direction of a kind specified in

subsection (3) if:

(a) APRA has given the general insurer or authorised NOHC a

direction under subsection (1A) 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 general insurer or authorised NOHC a

direction under subsection (1A) because one or more of the

grounds referred to in that subsection have been satisfied in

respect of the subsidiary.

(1D) APRA cannot give a direction under subsection (1C) to a body

corporate of a kind specified in regulations (if any) made for the

purposes of this subsection.

(1E) Subsections (1), (1A) and (1C) do not limit each other.

115 Paragraph 104(2)(b)

Repeal the paragraph, substitute:

(b) specify:

(i) in the case of a direction under subsection (1C)--the

ground referred to in subsection (1A) as a result of

which the direction is given; or

(ii) otherwise--the ground referred to in subsection (1) or

(1A) as a result of which the direction is given.

116 After subsection 104(2)

Insert:

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APRA may disregard external support

(2A) In deciding whether to give a direction under subsection (1), (1A)

or (1C) to a body corporate, APRA may disregard any external

support for the body corporate.

(2B) The regulations may specify that a particular form of support is not

external support for the purposes of subsection (2A).

117 Paragraph 104(3)(u)

Repeal the paragraph, substitute:

(u) to make changes to the body corporate's systems, business

practices or operations;

(v) 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;

(w) to do, or to refrain from doing, anything else in relation to the

affairs of the body corporate.

118 After subsection 104(4)

Insert:

(4A) Without limiting the generality of paragraph (3)(w), a direction

under that paragraph to a foreign general insurer may be any one or

more of the following:

(a) a direction that the foreign general insurer act in a way so as

to ensure that:

(i) a particular asset, or a particular class of assets, of the

foreign general insurer is returned to the control

(however described) of the part of the foreign general

insurer's insurance business that is carried on in

Australia; or

(ii) a particular liability, or a particular class of liabilities, of

the foreign general insurer ceases to be the

responsibility (however described) of the part of the

foreign general insurer's insurance business that is

carried on in Australia;

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(b) a direction that the foreign general insurer not act in a way

that has the result that:

(i) a particular asset, or a particular class of assets, of the

foreign general insurer ceases to be under the control

(however described) of the part of the foreign general

insurer's insurance business that is carried on in

Australia; or

(ii) a particular liability, or a particular class of liabilities, of

the foreign general insurer becomes the responsibility

(however described) of the part of the foreign general

insurer's insurance business that is carried on in

Australia.

(4B) The kinds of direction that may be given as mentioned in

subsection (3) are not limited by any other provision in this Part.

(4C) The kinds of direction that may be given as mentioned in a

particular paragraph of subsection (3) are not limited by any other

paragraph of that subsection.

119 Subsection 104(10)

Repeal the subsection, substitute:

(10) 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) or (d); or

(b) under subsection (1A) as a result of the ground referred to in

paragraph (1A)(a), (b) or (c); or

paragraph (1C)(a) or (b), to the extent that the paragraph

relates to a ground referred to in paragraph (1A)(a), (b) or (c).

120 Subsections 105(1) to (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).

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(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).

(1B) The matters are as follows:

(a) the body corporate being subject to a direction by APRA

under section 104;

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

bodies corporate--another member of the group being

subject to a direction by APRA under section 104.

(2) If the body corporate is prevented from fulfilling its obligations

under the contract because of a direction under section 104, other

than a direction under paragraph 104(3)(t), the other party or

parties to the contract are, subject to any orders made under

subsection (3) of this section, relieved from obligations owed to the

body corporate under the contract.

121 Subsection 106(1)

Omit "general insurer or authorised NOHC", substitute "general insurer,

authorised NOHC or other body corporate".

122 Paragraph 106(3)(a)

Omit "a particular general insurer or authorised NOHC", substitute "a

particular general insurer, authorised NOHC or other body corporate".

123 Paragraph 106(3)(b)

Omit "any general insurers or authorised NOHCs", substitute "any

general insurers, authorised NOHCs or other bodies corporate".

124 Paragraph 106(4)(a)

Omit "any general insurer or authorised NOHC", substitute "any

general insurer, authorised NOHC or other body corporate".

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125 Section 107

Repeal the section.

126 Subsection 108(1)

Omit "A general insurer or an authorised NOHC", substitute "A general

insurer, an authorised NOHC or another body corporate".

127 Paragraph 108(1)(c)

Omit "general insurer or authorised NOHC", substitute "general insurer,

authorised NOHC or other body corporate".

128 Subsection 108(3)

Omit "a general insurer or authorised NOHC", substitute "a general

insurer, an authorised NOHC or another body corporate".

129 Subsection 108(3)

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

NOHC or other body corporate".

130 Subsection 108(4)

Omit "a general insurer or an authorised NOHC", substitute "a general

insurer, an authorised NOHC or another body corporate".

131 Subsection 108(4)

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

NOHC or other body corporate".

132 Paragraph 108(4)(c)

Omit "the general insurer or authorised NOHC", substitute "the insurer,

authorised NOHC or other body corporate".

133 Subsection 108(6)

Omit "a general insurer or authorised NOHC", substitute "a general

insurer, an authorised NOHC or another body corporate".

134 Subsection 108(6)

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

corporate".

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135 At the end of Part IX

Add:

Division 3--Secrecy and disclosure provisions relating to

all directions

109 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 policyholders of any general insurer 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 109C(2)

and 109C(5).

109A Secrecy relating to directions

(1) A person commits an offence if:

(a) APRA has given an entity (the directed entity) a direction

under this Act; and

(b) the direction is covered by a determination under

subsection 109(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.

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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 109B, 109C, 109D,

109E, 109F or 109G; 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).

109B Disclosure of publicly available information

A person covered by subsection 109A(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.

109C Disclosure allowed by APRA

(1) A person covered by subsection 109A(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) allows the disclosure by

the person; and

(b) if APRA has included conditions in the determination--those

conditions are satisfied.

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Determinations relating to specified person

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

(a) a specified person covered by subsection 109A(2) in relation

to a specified direction; or

(b) a specified person covered by subsection 109A(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 109A(2) in relation to a direction that is in a specified

class of directions to disclose:

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

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

Conditions in determinations

(6) APRA may include conditions in a determination under

subsection (2) or (5) that relate to any of the following:

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

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

109D Disclosure to legal representative for purpose of seeking legal

advice

A person covered by subsection 109A(2) in relation to a direction

may disclose information that reveals the fact that the direction was

made if:

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(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.

109E Disclosure allowed by APRA Act secrecy provision

(1) A person covered by subsection 109A(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

Authority Act 1998 if the disclosure is authorised by section 109B,

109C, 109D, 109F or 109G.

109F Disclosure in circumstances set out in the regulations

A person covered by subsection 109A(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.

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109G Disclosure for purpose

A person covered by subsection 109A(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 109A(2) in relation to

the direction disclosed that information to the relevant person

for a particular purpose in accordance with section 109C,

109D, 109E or 109F, or in accordance with a previous

operation of this section; and

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

109H Exceptions operate independently

Sections 109B, 109C, 109D, 109E, 109F and 109G do not limit

each other.

136 At the end of section 127

Add:

(5) 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 a

general insurer were expressly limited to a reference to such

a holding company that is a corporation to which

paragraph 51(xx) of the Constitution applies;

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

general insurer were expressly limited to a reference to such

a holding company that carries on banking with respect to

which the Parliament has the power to make laws under

paragraph 51(xiii) of the Constitution.

137 After section 127A

Insert:

127B Protection from liability--general

(1) A person is not subject to any liability to any person in respect of

anything done, or omitted to be done, in good faith and without

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negligence in the exercise or performance, or the purported

exercise or performance, of powers, functions or duties under this

Act.

(2) To avoid doubt, any information provided by a person to APRA

under section 49B is taken, for the purposes of subsection (1), to be

provided in the exercise of a power or the performance of a

function under this Act.

(3) Subsection (1) does not apply to a person referred to in section 58

of the Australian Prudential Regulation Authority Act 1998 and, to

avoid doubt, does not affect the operation of that section.

127C 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 109A (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

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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.

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

2001.

127D Protection from liability--provisions do not limit each other

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

(a) section 62ZOK;

(b) section 38A;

(d) section 127B;

(e) section 127C;

(f) section 62ZM;

(g) section 58 of the Australian Prudential Regulation Authority

Act 1998.

127E Act has effect despite the Corporations Act

This Act has effect despite any provision of the Corporations Act

2001.

138 After section 129

Insert:

129AA Institution of offence proceedings no bar to judicial

management or 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:

(a) the judicial management; or

(b) the winding-up;

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Part 2--Application provisions

139 Interpretation

In this Part:

commencement time means the time when this item commences.

new Insurance Act means the Insurance Act 1973 as amended by this

Schedule.

140 Application

--amendments to directions powers

(1)

The amendments made by this Schedule to section 104 of the Insurance

Act 1973 apply to directions given on and after the commencement

time.

(2)

The amendments made by this Schedule to Division 1 of Part IX of the

Insurance Act 1973 apply to directions given on and after the

commencement time.

141 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 32 of the

Insurance Act 1973 that was in force immediately before the

commencement time.

142 Application

--revocation of authorisation under

section 12

(1)

The amendments made by items 9 to 12 of this Schedule apply to a

general insurer's authorisation under section 12 of the Insurance Act

1973, whether the authorisation was granted before, on or after the

commencement time.

(2)

The amendments made by items 9 to 12 of this Schedule apply in

relation to a matter mentioned in a paragraph of subsection 15(1) of the

new Insurance 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).

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143 Application

--revocation of NOHC authorisation

(1)

The amendment made by item 13 of this Schedule applies to a NOHC

authorisation, whether the authorisation was granted before, on or after

the commencement time.

(2)

The amendment made by item 13 of this Schedule applies in relation to

a matter mentioned in a paragraph of subsection 21(1) of the new

Insurance 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).

144 Application

--conversion and write-off provisions

The amendment made by item 17 of this Schedule applies in relation to

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

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

after that time.

145 Application

--stay provisions

(1)

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

a matter referred to in subsection 62V(3) of the new Insurance Act that

occurs on or after the commencement time.

(2)

The amendment made by item 49 of this Schedule applies in relation to

an act referred to in subsection 62ZB(3) of the new Insurance Act that is

done on or after the commencement time.

(3)

The amendment made by item 110 of this Schedule applies in relation

to a recapitalisation direction referred to in subsection 103K(3) of the

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

(4)

The amendment made by item 120 of this Schedule applies in relation

to a direction referred to in subsection 105(1B) of the new Insurance

Act that is given on or after the commencement time.

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Schedule 3--Amendment of the Life Insurance

Act 1995

Part 1--Main amendments

Life Insurance Act 1995

1 At the end of section 4

Add:

(4) Without prejudice to its effect apart from this subsection, this Act

also has the effect it would have if each reference to a holding

company of a life company were, by express provision, confined to

such a holding company that:

(a) is a corporation to which paragraph 51(xx) of the

Constitution applies; or

(b) carries on banking with respect to which the Parliament has

the power to make laws under paragraph 51(xiii) of the

Constitution.

2 After subparagraph 7(1)(a)(iii)

Insert:

(iiia) Part 10A; and

3 At the end of subsection 7A(1)

Add:

; (j) section 230AAA.

4 After section 15

Insert:

15A Relevant group of bodies corporate

For the purposes of this Act:

(a) a life company and its subsidiaries together constitute a

relevant group of bodies corporate; and

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(b) a registered NOHC and its subsidiaries together also

constitute a relevant group of bodies corporate.

5 Section 16 (heading)

Repeal the heading, substitute:

16 Related bodies corporate and subsidiaries

6 Section 16ZE

Repeal the section, substitute:

16ZE Limited application of Act to eligible foreign life insurance

companies

(1) Subject to this section, this Act does not apply in relation to life

insurance business carried on outside Australia by an eligible

foreign life insurance company.

(2) Subsection (1) does not apply to sections 180, 181 and 182.

(3) Subsection (1) also does not apply to the provisions listed in

subsection (4), however those provisions do not apply in relation

to:

(a) business of an eligible foreign life insurance company (other

than Australian business assets and liabilities); or

(b) the management of an eligible foreign life insurance

company, to the extent that the management relates to such

business of the eligible foreign life insurance company.

(4) The provisions are as follows:

(a) Divisions 1, 1AA and 1A of Part 8;

(b) sections 183, 183A, 183B, 183, 184, 185, 186, 187 and 188.

(5) Subsection 165(4) does not apply to the issue of policies by an

eligible foreign life insurance company in the course of carrying on

life insurance business carried on outside Australia by the

company.

(6) In this section:

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

and Restructure) Act 1999.

Australian business assets and liabilities, of an eligible foreign

life insurance company, means the following:

(a) the assets and liabilities of the eligible foreign life insurance

company in Australia;

(b) any other assets and liabilities of the eligible foreign life

insurance company 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.

7 Section 22

Repeal the section, substitute:

22 Conditions on registration

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

(a) impose conditions, or additional conditions, on the

company's registration under section 21; or

(b) vary or revoke conditions imposed on the company's

registration under section 21.

The conditions must relate to prudential matters.

(2) A condition may be expressed to have effect despite anything in

the prudential standards.

(3) Without limiting the conditions that APRA may impose on a

registration, APRA may make the registration conditional on a

body corporate, of which the company is a subsidiary, being a

registered NOHC.

(4) If APRA imposes, varies or revokes the conditions on a company's

registration, APRA must:

(a) give written notice to the company; and

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(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).

23 Breach of registration conditions

(1) A company commits an offence if:

(a) the company 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 company's registration under section 21;

and

subsection does not apply to the company.

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.

8 Section 26

Repeal the section, substitute:

26 When APRA may revoke registration

(1) APRA may revoke (in writing) a company's registration under

section 21 if APRA is satisfied that the company has no liabilities

in respect of life insurance business carried on by it in Australia

and that:

(a) the company has failed to comply with:

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(i) a requirement of this Act or of an instrument made for

the purposes of this Act; or

(ii) a requirement of the Financial Sector (Collection of

Data) Act 2001; or

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

Commonwealth, if the provision is specified in the

regulations; or

(iv) a direction under this Act; or

(v) a condition of the company's registration; or

(b) it would be contrary to the public interest for the registration

to remain in force; or

(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

(d) the company is insolvent and is unlikely to return to solvency

within a reasonable period of time; or

(e) the company has inadequate capital and is unlikely to have

adequate capital within a reasonable period of time; or

(f) the company has ceased to carry on life insurance business in

Australia; or

(g) the company has not, within the period of 12 months after it

was granted a registration, carried on life insurance business

in Australia; or

(h) both of the following apply:

(i) the company is a foreign corporation within the

meaning of paragraph 51(xx) of the Constitution;

(ii) an authorisation (however described) for the company

to carry on life insurance business in a foreign country

has been revoked or otherwise withdrawn in that foreign

country.

(2) Before revoking a company's registration, APRA must give

written notice to the company advising it that:

(a) APRA is considering revoking the registration for the reasons

specified; and

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(b) the company may make submissions about the revocation to

APRA, in accordance with the notice, by a specified date

(which must be at least 90 days after the notice is given).

(3) To avoid doubt, APRA may give a notice under subsection (2) to a

company even if, at the time the notice is given, APRA is not

satisfied that the company has no liabilities in respect of life

insurance business carried on by it in Australia.

(4) If APRA gives a notice under subsection (2) to a company, APRA

must not revoke the company's registration until after the date

specified in the notice, and after consideration of any submission,

as mentioned in paragraph (2)(b).

(5) APRA may decide that subsection (2) does not apply if APRA is

satisfied that complying with that subsection could result in a delay

in revocation that would be contrary to the public interest.

(6) If APRA revokes a company's registration, APRA must:

(a) give written notice to the company; and

(b) ensure that notice of the revocation is published in the

Gazette.

(7) A revocation is not invalid merely because of a failure to comply

with subsection (6).

9 Subsection 27(1)

Omit "APRA may cancel (under this section) the registration under

section 21 of the company by giving the company written notice of

cancellation", substitute "APRA may revoke (under this section) the

registration under section 21 of the company by giving the company

written notice of revocation".

10 Subsection 27(2)

Repeal the subsection, substitute:

(2) Revocation under this section of the registration of a company

takes effect when APRA gives the company written notice of

revocation.

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11 At the end of Division 1 of Part 3

Add:

27A Assignment of liabilities to enable revocation

(1) If APRA considers that it would, under section 26, revoke a

company's registration if the company had no liabilities in respect

of life insurance business carried on by it in Australia, APRA may

direct the company to arrange, subject to APRA's approval, to

assign those liabilities to one or more other companies that are

registered under section 21. The company must effect the

assignment of the liabilities within the period specified in the

direction and comply with such conditions relating to the

assignment as are specified by APRA in the direction.

(2) Subsection (1) has effect despite subsection 190(1).

Note:

A company that has asked APRA for a revocation under section 27

may, for the purpose of obtaining the revocation, make an application

to the Court under Part 9 for an order transferring the company's life

insurance business to another company.

(3) A company must not assign its liabilities under this section, and a

purported assignment under this section is of no effect, unless the

assignment is approved by APRA under subsection (4).

(4) APRA may only approve a proposed assignment of a company's

liabilities under this section if APRA is satisfied that the

assignment is appropriate, having regard to:

(a) the interests of the company's policy owners; and

(b) the interests of the policy owners of the company or

companies to which the liabilities are to be assigned; and

(d) any other matter APRA considers relevant.

The approval must be in writing and may be made subject to

specified conditions.

(5) If a company (the first company) accepts an assignment of

liabilities from another company (the second company) approved

by APRA under subsection (4), the following are taken to have

occurred:

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(a) policies in respect of which liability is accepted by the first

company (the transferring policies) are to be treated for all

purposes as if each policy had been transferred by novation

from the second company to the first company;

(b) a policy owner of a transferring policy is taken to have the

same rights against the first company as the person would

have against that company had the person's policy been

transferred by novation to the first company;

transferring policies are the same as they would be had the

transferring policies been transferred by novation to the first

company from the second company.

(6) If APRA approves an assignment, the company must:

(a) comply with the conditions on the approval; and

(b) give reasonable notice (in writing) of the assignment to the

company's policy owners; and

APRA reasonably requires.

(7) An assignment of liabilities under this section may include the

assignment of any rights or benefits in connection with life policies

in respect of the life insurance business carried on in Australia by

the company concerned.

(8) A direction under subsection (1) has effect despite anything in the

Insurance Acquisitions and Takeovers Act 1991.

(9) A company commits an offence if:

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

(b) by doing or failing to do the act, the company fails to comply

with a direction under this section.

Penalty: 300 penalty units.

(10) If an individual:

(a) commits an offence against subsection (9) 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 (9);

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

penalty units.

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

Note:

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

12 At the end of subsection 28B(1)

Add:

The conditions must relate to prudential matters.

13 Subsection 28B(3)

Repeal the subsection, substitute:

(3) If APRA imposes, varies or revokes the conditions on a NOHC

registration, APRA must:

(a) give written notice to the registered NOHC; and

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

in the Gazette.

14 After section 28B

Insert:

28BA Breach of conditions on a NOHC registration

(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 registration;

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);

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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 Subparagraph 28C(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 registered NOHC; or

16 Section 28

Omit "cancels a company's registration by a notice under

subsection 26(2) or 27(1), the notice may state that the registration

continues in effect in relation to a specified matter or specified period,

as though the cancellation", substitute "revokes a company's

registration by a notice under subsection 26(1) or 27(1), the notice may

state that the registration continues in effect in relation to a specified

matter or specified period, as though the revocation".

17 At the end of Division 2 of Part 3

Add:

28AA APRA may give notice to ensure that life company has a

registered NOHC

(1) This section applies if:

(a) a body corporate is a holding company of a life company;

and

(b) the life company is not a subsidiary of a registered 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 a registered NOHC of the life

company;

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(b) a subsidiary of the body corporate becomes a registered

NOHC of the life company.

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) Section 230F 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 life company under section 230B.

(8) However, section 230F 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

Division 2 of Part 3; 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.

18 Paragraph 43(3)(c)

Omit "a statutory fund in a related company that is not a subsidiary of

the life company", substitute "a statutory fund in a company that is

related to the life company but is not a subsidiary of the life company".

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19 Subsection 88A(1)

Omit "(1)".

20 Subsection 88A(2)

Repeal the subsection.

21 Subsection 98A(1)

Omit "(1)".

22 Subsection 98A(2)

Repeal the subsection.

23 At the end of section 158

Add:

Note:

This section and other provisions relating to judicial management do

not apply to the aspects described in subsection 16ZE(3) of the

business and management of an eligible foreign life insurance

company.

24 Section 159

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

25 Subparagraph 159(a)(i)

Before "the company", insert "in the absence of external support,".

26 After subparagraph 159(a)(iii)

Insert:

(iiia) an external administrator has been appointed to a

holding company of the company (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

(iiib) if the company is an eligible foreign life insurance

company--an application for the appointment of an

external administrator of the eligible foreign life

insurance company, or for a similar procedure in respect

of the eligible foreign life insurance company, has been

made in a foreign country; or

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(iiic) if the company is an eligible foreign life insurance

company--an external administrator has been appointed

to the eligible foreign life insurance company, or a

similar appointment has been made in respect of the

eligible foreign life insurance company, in a foreign

country; or

27 At the end of section 159

Add:

(2) For the purposes of subparagraph (1)(a)(iiia), 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 life company; or

(b) the interests of owners of policies issued by the life company;

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

company is not to be considered external support for the purposes

of subparagraph (1)(a)(i).

28 Section 161

Repeal the section, substitute:

161 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 life company if

the life company 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.

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(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).

(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 life company if it is any of the following:

(a) a proceeding against the life company (including a

cross-claim or third party claim against the life company);

(b) a proceeding in relation to property of the life company;

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charge) granted by the life company, or by a related body

corporate of the life company, over any property that the life

company owns, uses, possesses, occupies or in which the life

company otherwise has an interest.

(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.

161A Moratorium--effect of judicial management on enforcement

process regarding property

(1) No enforcement process in relation to property of a life company

can be begun or proceeded with if the life company is under

judicial management.

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

(a) the 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 Court imposes.

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

Court considers that exceptional circumstances make this

necessary).

(4) APRA may apply to the Court to be joined as a party to the

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

have regard to APRA's views in deciding:

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

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

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

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those terms.

(5) The judicial manager may apply to the Court to be joined as a party

to the proceedings for leave. If the judicial manager is joined as a

party, the 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 Court decides to grant the leave--whether to impose

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

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).

161B 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 life company; and

Note:

The Court may grant an injunction under section 235 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).

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161C Moratorium--Restrictions on exercise of third party property

rights

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

in which a life company is under judicial management 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 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 161, 161A and 161B.

161D Moratorium--effect of judicial management on supply of

essential services

(1) If:

(a) a life company 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 life company in Australia; and

the supply of the essential service before the day on which

the judicial manager took control of the life company'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 Court may grant an injunction under section 235 in respect of a

contravention of this subsection.

(2) In this section:

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

Corporations Act 2001.

161E Moratorium--effect of judicial management on annual

general meeting

(1) This section applies to a life company 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 life

company is under judicial management at the end of that period,

the life company need not hold that annual general meeting.

(3) To avoid doubt, subsection (2) does not apply if only part of the

business of the life company is under judicial management.

29 Section 162

Repeal the section.

30 After subsection 163(1)

Insert:

(1A) If, subsequent to that order, a situation arises where there is no

judicial manager of the company, or it appears to the Court that it

is likely that such a situation will arise, the Court may appoint

another judicial manager of the company.

(1B) If the Court appoints 2 or more judicial managers of a company, or

appoints one or more additional judicial managers of a company:

(a) except to the extent (if any) specified in a declaration by the

Court under paragraph (b), the functions and powers under

this Act of a judicial manager of the company may be

performed or exercised by:

(i) all of the judicial managers of the company acting

jointly; or

(ii) each of the judicial managers of the company acting

individually; and

(b) at the time of appointment, the Court may make a declaration

for the purposes of paragraph (a), specifying limits or

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conditions on the judicial managers' ability to perform

functions and exercise powers jointly or individually; and

reference to whichever one or more of those judicial

managers the case requires.

31 Subsection 163(2)

Repeal the subsection, substitute:

(2) The 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.

32 Subsection 163(3)

Omit "However,".

33 Section 165

Repeal the section, substitute:

165 Effect of judicial management on powers of officers etc.

(1) Subject to subsection (4), if the Court has made an order placing a

company under judicial management:

(a) at the time the judicial management commences:

(i) a person with the powers and functions of an officer of

the company immediately before that time ceases to

have those powers and functions; and

(ii) if the company is an eligible foreign life insurance

company and there is a person with the powers and

functions of a member of the Compliance Committee of

the company 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 company is under judicial management:

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(i) if a person mentioned in subparagraph (a)(i) or (ii)

purports to act in relation to the company's 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 company

(collectively and individually), including the board's

powers of delegation.

(2) Subject to subsection (4), if the Court has made an order placing

part of the business of a company under judicial management:

(a) at the time the judicial management commences:

(i) a person with the powers and functions of an officer of

the company in relation to that part of the business

immediately before that time ceases to have those

powers and functions in relation to that part of the

business; and

(ii) if the company is an eligible foreign life insurance

company and there is a person with the powers and

functions of a member of the Compliance Committee of

the company immediately before that time in relation to

that part of the business--the person ceases to have

those powers and functions in relation to that part of the

business; 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))

in relation to that part of the business; and

(b) while the company is under judicial management:

(i) if a person mentioned in subparagraph (a)(i) or (ii)

purports to act in relation to that part of the 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 company

(collectively and individually), including the board's

powers of delegation, in relation to that part of the

business.

(3) Subsections (1) and (2) do not remove an officer or member of the

Compliance Committee of the company from office.

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(4) A life company may not issue policies without the leave of the

Court if the company, or any part of the business of the company,

is under judicial management.

(5) Subsection (4) does not prevent the variation of a policy under

section 209.

(6) In this section, officer has the same meaning as it has in the

Corporations Act 2001.

Note:

This section and other provisions relating to judicial management do

not apply to the aspects described in subsection 16ZE(3) of the

business and management of an eligible foreign life insurance

company.

34 Subsection 165A(1)

Omit "when the management of the company vests in the judicial

manager appointed by the Court", substitute "when the judicial

management of the company commences".

35 Subsection 165A(2)

Omit "while the management of the company is vested in the judicial

manager appointed by the Court", substitute "while the company is

under judicial management".

36 Subsection 165A(3)

Omit "while the management of the company is vested in a judicial

manager", substitute "while the company is under judicial

management".

37 Subsection 165A(4)

Omit "that the management of the company vests in the judicial

manager when the judicial management commences", substitute "that

the company is under judicial management".

38 Section 165B

Repeal the section, substitute:

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165B 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 Court of an order that the body corporate,

or part of the business of the body corporate, be placed under

judicial management;

(b) the commencement of the judicial management of the body

corporate, or of part of the business of the body corporate;

bodies corporate:

(i) the making by the Court of an order that another

member of the group, or part of the business of another

member of the group, be placed under judicial

management; or

(ii) the commencement of the judicial management of

another member of the group, or part of the business of

another member of the group.

39 Section 166

Before "The appointment of", insert "(1)".

40 Section 166

Omit "The appointment of a judicial manager under this Part does not

affect", substitute "None of the matters mentioned in subsection (2)

affect".

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41 At the end of section 166

Add:

(2) The matters are as follows:

(a) the making by the Court of an order that the life company be

placed under judicial management;

(b) the commencement of the judicial management of the life

company.

42 Paragraph 168A(4)(a)

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

of section 251AA of this Act)".

43 Paragraph 168A(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".

44 Section 168C

Repeal the section, substitute:

168C Act under section 168A 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:

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(a) a judicial manager doing an act under subsection 168A(1)

relating to the body corporate;

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

bodies corporate--a judicial manager of another member of

the group doing an act under subsection 168A(1) relating to

that other member.

45 Subsection 172(5)

Repeal the subsection, substitute:

(5) At the time when an order cancelling the judicial management of

the life company comes into force:

(a) the judicial manager ceases to have the powers and functions

of an officer of the life company; and

(b) the board of directors or other governing body of the life

company starts to have those powers; and

and there is a committee of the company that satisfies the

requirements mentioned in subsections 16ZF(1) and (2)--the

members of the committee start to have the powers

mentioned in that section.

46 Paragraph 175(2)(aa)

Omit "Financial Sector (Business Transfer and Group Restructure) Act

1999", substitute "Financial Sector (Transfer and Restructure) Act

1999".

47 After paragraph 175(2)(aa)

Insert:

(ab) to transfer shares in the company to another company under

section 25AA of the Financial Sector (Transfer and

Restructure) Act 1999;

48 Subparagraph 176(3)(b)(i)

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

of section 251AA of this Act)".

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49 Subparagraph 176(3)(b)(iv)

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".

50 Subsection 177(2)

Omit "the management of the company, or of that part of the business

of the company, as the case may be, continues to be vested in the

judicial manager", substitute "the company continues to be under

judicial management".

51 Section 179

Repeal the section, substitute:

179 Immunity

(1) A judicial manager, or a person acting on behalf of a judicial

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 judicial

manager by or under this Act.

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

(3) A judicial manager is not liable under section 588G of the

Corporations Act 2001. This subsection does not limit the scope of

subsection (1).

Signpost to secrecy obligations

(4) Part 6 of the Australian Prudential Regulation Authority Act 1998

prohibits certain disclosures of information received by judicial

managers under this Act.

52 After Division 1 of Part 8

Insert:

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Division 1AA--Statutory management of life company

Subdivision A--General provisions relating to statutory

management

179AA Consequences of inability or failure of life company etc. to

meet certain requirements

Appointment of administrator or control by APRA

(1) APRA may take control of a life company's business or appoint an

administrator to take control of the life company's business if both

of the following requirements are met:

(a) APRA is satisfied of the matters of which the Court is

required to be satisfied for the purposes of section 158 or

159;

(b) subsection (2) applies.

(2) This subsection applies if APRA is satisfied that at least one of the

following situations exists:

(a) both:

(i) an AFS statutory manager has taken control of a body

corporate under this Act, the Banking Act 1959 or the

Insurance Act 1973 (or APRA intends for that to occur);

and

(ii) the life company and the body corporate are related

bodies corporate;

(b) both:

(i) the life company's financial position is deteriorating

rapidly, or is likely to deteriorate rapidly; and

(ii) failure to respond quickly to the deterioration would be

likely to prejudice the interests of policy owners of the

life company;

life insurance business in Australia consistently with the

stability of the financial system in Australia;

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

company of the life company (or a similar appointment has

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been made in a foreign country in respect of such a holding

company), and the appointment poses a significant threat to:

(i) the operation or soundness of the life company; or

(ii) the interests of policy owners of the life company; or

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

(e) if the life company is an eligible foreign life insurance

company:

(i) an application for the appointment of an external

administrator of the eligible foreign life insurance

company, or for a similar procedure in respect of the

eligible foreign life insurance company, has been made

in a foreign country; or

(ii) an external administrator has been appointed to the

eligible foreign life insurance company, or a similar

appointment has been made in respect of the eligible

foreign life insurance company, in a foreign country.

(3) APRA may take any of the actions mentioned in subsection (4) in

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

(a) the target body corporate is a body corporate that is any of

the following:

(i) a registered NOHC of a life company (the relevant life

company);

(ii) a subsidiary of a registered NOHC of a life company

(also the relevant life company);

(iii) a subsidiary of a life company (also the relevant life

company); and

(b) the condition in subsection (5), (6) or (7) 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.

(4) 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.

(5) The condition in this subsection is satisfied if:

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(a) either:

(i) a Life Insurance Act statutory manager has taken

control of the relevant life company; or

(ii) the conditions in paragraphs (1)(a) and (b) are satisfied

in relation to the relevant life company, and APRA

intends that a Life Insurance Act statutory manager will

take control of the relevant life company; 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 life company to maintain its

operations.

(6) The condition in this subsection is satisfied if:

(a) either:

(i) a Life Insurance Act statutory manager has taken

control of the relevant life company; or

(ii) the conditions in paragraphs (1)(a) and (b) are satisfied

in relation to the relevant life company, and APRA

intends that a Life Insurance Act statutory manager will

take control of the relevant life company; and

(b) APRA considers that it is necessary for a Life Insurance 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 life company;

(ii) a registered NOHC of the relevant life company;

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

relevant life company is a member;

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

group.

(7) The condition in this subsection is satisfied if:

(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

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

mentioned in subsection (4) in respect of the target body

corporate in order to enable the relevant life company to

maintain its operations, or in order to facilitate the resolution

of any of the following:

(i) the relevant life company;

(ii) a registered NOHC of the relevant life company;

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

relevant life company is a member;

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

group.

(8) If:

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

Subdivision--APRA is the Life Insurance 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 Life Insurance 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 16ZE(3) of the

business and management of an eligible foreign life insurance

company.

(9) If APRA appoints 2 or more Life Insurance Act statutory managers

of a body corporate, or appoints one or more additional Life

Insurance Act statutory managers of a body corporate:

(a) the functions and powers under this Act of a Life Insurance

Act statutory manager of the body corporate may be

performed or exercised by:

(i) all of the Life Insurance Act statutory managers of the

body corporate acting jointly; or

(ii) each of the Life Insurance 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 Life

Insurance Act statutory managers of the body corporate a

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

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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 Life Insurance Act statutory managers the case

requires.

179AB Start of control of body corporate's business by Life

Insurance Act statutory manager

(1) After the decision that a Life Insurance Act statutory manager will

take control of a body corporate's business is made, APRA must

give the body corporate written notice that the Life Insurance Act

statutory manager will take, or is taking, control of the business.

Note:

Subsections 179AQ(4) and 179AZA(3) also require APRA to give

notice of the taking of control.

(2) A Life Insurance Act statutory manager takes control of a body

corporate's business:

(a) at the time specified in a notice under this section as the time

when the Life Insurance Act statutory manager takes control

of the business (which must not be earlier than the notice is

given); or

(b) if a notice under this section does not specify a time as the

time when the Life Insurance Act statutory manager takes

control of the business--at the time the notice is given.

(3) A notice under subsection (1) is not a legislative instrument.

179AC Life Insurance Act statutory managers--termination of

control

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

must ensure that either it or an administrator of the body

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

until:

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(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.

Events to precede termination

(2) Before making an ultimate termination of control by a Life

Insurance Act statutory manager of a body corporate's business,

APRA must:

(a) do both of the following:

(i) ensure that directors of the body corporate have been

appointed or elected under the body corporate's

constitution at a meeting called by the statutory manager

in accordance with the body corporate's constitution;

(ii) if the body corporate is an eligible foreign life insurance

company--ensure that a Compliance Committee of the

body corporate is established and operating for the

purpose of section 16ZF; or

(b) do both of the following:

(i) appoint directors of the body corporate by instrument in

writing;

(ii) if the body corporate is an eligible foreign life insurance

company--ensure that a Compliance Committee of the

body corporate is established and operating for the

purpose of section 16ZF; or

(i) unless subparagraph (ii) applies--for the body

corporate; or

(ii) if the body corporate is an eligible foreign life insurance

company--for the body corporate in relation to its

Australian business assets and liabilities.

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Power to terminate control

(3) If the requirements in subsections (1) and (2) are satisfied, APRA

may by instrument in writing make an ultimate termination of

control of a body corporate's business by a Life Insurance Act

statutory manager.

(4) If the Life Insurance Act statutory manager at the time of the

termination is an administrator, the instrument of termination also

operates as a termination of the appointment of the administrator.

A copy of the instrument must be given to the administrator.

However, mere failure to give the copy to the administrator does

not affect the termination of the appointment.

Period of director's appointment

(5) If a director is elected or appointed under subsection (2), the

director takes office on the termination of the Life Insurance Act

statutory manager's control of the body corporate's business. If the

director was appointed by APRA, the director holds office until the

body corporate's next annual general meeting, subject to any terms

and conditions imposed by APRA on the director's appointment. If

the director was appointed or elected under the body corporate's

constitution, the constitution governs the appointment.

Note:

For further information about what happens when a Life Insurance

Act statutory manager is in control of a body corporate's business, see

Subdivision B.

Subdivision B--Provisions dealing with control of a body

corporate's business by a Life Insurance Act

statutory manager

179AD Life Insurance Act statutory manager's powers and

functions

Life Insurance Act statutory manager's powers and functions

include powers and functions of board

(1) A Life Insurance Act statutory manager has the powers and

functions of the members of the board of directors of the body

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corporate (collectively and individually), including the board's

powers of delegation.

Note:

When a Life Insurance Act statutory manager takes control of the

business of a body corporate, the directors of the body corporate cease

to hold office (see section 179AP).

Life Insurance Act statutory manager's power to obtain

information

(2) A Life Insurance Act statutory manager 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 Life Insurance Act

statutory manager any information relating to the business of the

body corporate that the Life Insurance Act statutory manager

requires. A requirement to give information may include a

requirement to produce books, accounts or documents.

(3) A person who is or has been an officer of a body corporate

commits an offence if:

(a) there is a Life Insurance Act statutory manager in relation to

the body corporate; and

(b) under subsection (2), the Life Insurance Act statutory

manager requires the person to give information or to

produce books, accounts or documents; and

Penalty: Imprisonment for 12 months.

Note 1:

Subsection 4B(2) of the Crimes Act 1914 allows a court to impose a

fine instead of, or in addition to, a term of imprisonment. The

maximum fine a court may impose is worked out as provided in that

subsection.

Note 2:

If a body corporate is convicted of an offence against this subsection,

subsection 4B(3) of the Crimes Act 1914 allows a court to impose a

fine of up to 5 times the maximum fine worked out as mentioned in

Note 2.

(4) An individual is not excused from complying with a requirement

under subsection (2) to give information on the ground that doing

so would tend to incriminate the individual or make the individual

liable to a penalty.

(5) If:

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(a) before giving information in compliance with a requirement

under subsection (2), an individual claims that giving the

information might tend to incriminate the individual or make

the individual liable to a penalty; and

(b) giving the information might in fact tend to incriminate the

individual or make the individual so liable;

the information given in compliance with the requirement is not

admissible in evidence against the individual in a criminal

proceeding or a proceeding for the imposition of a penalty, other

than a proceeding in respect of the falsity of the information.

(6) Subsections (4) and (5) apply to the production of books, accounts

or documents in a corresponding way to the way in which they

apply to the giving of information.

Life Insurance Act statutory manager's power to sell whole or part

of body corporate's business

(7) A Life Insurance Act statutory manager may sell or otherwise

dispose of the whole or any part of the body corporate's business.

The sale or disposal may occur on any terms and conditions that

the Life Insurance Act statutory manager considers appropriate.

Life Insurance Act statutory manager's powers to alter body

corporate's constitution etc.

(8) A Life Insurance Act statutory manager may, if the body corporate

concerned is registered under the Corporations Act 2001, alter the

body corporate's constitution, rules or other arrangements for

governance if the alteration:

(a) is necessary or convenient for enabling or facilitating the

performance of the Life Insurance Act statutory manager's

functions and duties, or the exercise of the Life Insurance Act

statutory manager's other powers, under this Division in

relation to the body corporate; and

(b) promotes:

(i) the protection of the policy owners of the body

corporate; and

(ii) financial system stability in Australia.

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(9) A Life Insurance Act statutory manager may do an act under

subsection (7) or (8) despite:

(a) the Corporations Act 2001; and

(b) the body corporate's constitution; and

party; and

(d) any listing rules of a financial market in whose official list

the body corporate is included.

Interpretation

(10) In this section:

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

2001.

179AE Safeguards on exercise of Life Insurance Act statutory

manager's powers and functions

(1) Despite anything else in this Subdivision, a Life Insurance Act

statutory manager of a body corporate (the body corporate under

management) may not perform a function or exercise a power

under section 179AD 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 Life Insurance Act statutory manager under

subsection 179AF(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 a life company;

and

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

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

management to a related body corporate of the body

corporate under management; or

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(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 Life Insurance 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 a registered NOHC

of a life company; 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 life company 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 a registered NOHC

of a life company; and

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

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

company to a specified level; and

ordinary resolution, to that use of the funds.

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179AF Life Insurance Act statutory manager's additional powers to

facilitate recapitalisation

Powers

(1) A Life Insurance Act statutory manager of a body corporate that is

a company that has a share capital and is registered under the

Corporations Act 2001 may do one or more of the following acts

on terms determined by the Life Insurance Act statutory manager:

(a) issue shares, or rights to acquire shares, in the company;

(b) cancel shares, or rights to acquire shares, in the company;

share capital that is not represented by available assets;

(d) sell shares, or rights to acquire shares, in the company;

(e) vary or cancel rights or restrictions attached to shares in a

class of shares in the company.

Note:

Before doing such an act, the Life Insurance Act statutory manager

will usually need to get and consider a report on the fair value of each

share or right concerned: see section 179AG.

Giving company members notice of exercise of powers

(2) As soon as practicable after doing an act described in

paragraph (1)(a), (b), (c) or (e) or subsection (3), the Life Insurance

Act statutory manager must give written notice to the persons who

were members (under section 231 of the Corporations Act 2001) of

the company just before the act, identifying the act and explaining

its effect on their interests as members.

(3) One of the acts to which subsection (2) relates is the offering of

shares, or rights to acquire shares, in the company for sale under

paragraph (1)(d).

Exercise of powers despite other laws etc.

(4) A Life Insurance Act statutory manager may do an act under

subsection (1) despite:

(a) the Corporations Act 2001; and

(b) the company's constitution; and

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and

(d) any listing rules of a financial market in whose official list

the company is included.

Section does not apply to EFLICs etc.

(5) This section does not apply in relation to a body corporate that is:

(a) an eligible foreign life insurance company; or

(b) a subsidiary of an eligible foreign life insurance company; or

company.

179AG Considering report before acting under section 179AF

Getting and considering report on fair value of shares or rights

(1) Before determining terms for an act under subsection 179AF(1),

the Life Insurance Act statutory manager must:

(a) obtain a report meeting the requirements in subsection (2) of

this section on the fair value of the shares or rights concerned

from an expert who is not an associate of the statutory

manager, or of the company, under Division 2 of Part 1.2 of

the Corporations Act 2001; and

(b) consider the report;

unless APRA determines under subsection (8) that this subsection

does not apply in relation to that act relating to those shares or

rights.

Content of report

(2) The report must set out:

(a) the amount that is, in the expert's opinion, the fair value for

each share or right concerned; and

(b) the reasons for forming the opinion; and

persons:

(i) the Life Insurance Act statutory manager;

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(ii) a person who is an associate of the Life Insurance Act

statutory manager under Division 2 of Part 1.2 of the

Corporations Act 2001;

(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;

including any circumstances in which the expert gives them

advice, or acts on their behalf, in the proper performance of

the functions attaching to the expert's professional capacity

or business relationship with them; and

(d) any financial or other interest of the expert that could

reasonably be regarded as being capable of affecting the

expert's ability to give an unbiased opinion in relation to the

matter being reported on.

Determining fair value of shares

(3) In determining for the purposes of paragraph (2)(a) the amount that

is, in the expert's opinion, the fair value for each share concerned,

the expert must:

(a) first, assess the value of the company as a whole, in

accordance with the assumptions (if any) notified to the

expert by the Minister for the valuation of the company; and

(b) then allocate that value among the classes of shares in the

company that either have been issued or that the Life

Insurance Act statutory manager proposes to issue (taking

into account the relative financial risk, and voting and

distribution rights, of the classes); and

shares in that class that either have been issued or that the

Life Insurance Act statutory manager proposes to issue

(without allowing a premium or applying a discount for

particular shares in that class).

Assumptions for valuation of company

(4) The Minister may give the expert written notice of assumptions for

the valuation of the company. The Minister may, by further written

notice given to the expert, revoke, but not vary, notice of the

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assumptions. A notice under this subsection is not a legislative

instrument.

Determining fair value of rights

(5) In determining for the purposes of paragraph (2)(a) the amount that

is, in the expert's opinion, the fair value for each right concerned,

the expert must act in accordance with the assumptions (if any)

notified to the expert by the Minister for the valuation of the right.

Assumptions for valuation of rights

(6) The Minister may give the expert written notice of assumptions for

the valuation of the rights concerned. The Minister may, by further

written notice given to the expert, revoke, but not vary, notice of

the assumptions. A notice under this subsection is not a legislative

instrument.

Contravention does not invalidate act

(7) A contravention of subsection (1), (2), (3), (5) or (9) does not

affect the validity of anything done under section 179AF.

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) policy owners with:

(i) if the company is a life company--the life company; or

(ii) if the company is not a life company--the relevant life

company mentioned in subsection 179AA(3); and

(b) financial system stability in Australia.

(9) APRA must:

(a) publish a copy of a determination under subsection (8) in the

Gazette; and

(b) give a copy of a determination under subsection (8) to the

Life Insurance Act statutory manager concerned (unless that

manager is APRA).

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(10) A determination made under subsection (8) is not a legislative

instrument.

179AH Act under section 179AF not ground for denying obligation

(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) a Life Insurance Act statutory manager of the body corporate

doing an act under subsection 179AF(1) relating to the body

corporate;

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

bodies corporate--a Life Insurance Act statutory manager of

another member of the group doing an act under

subsection 179AF(1) in relation that other member.

179AI APRA may require a person to give information etc. for the

purposes of this Division

APRA may require person to give information etc.

(1) APRA may require a person, by written notice given to the person,

to give APRA information, or documents containing information,

relating to the business of a body corporate that has a Life

Insurance Act statutory manager if:

(a) in a case where the Life Insurance Act statutory manager is

APRA:

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(i) APRA believes, on reasonable grounds, that the person

has such information or documents; and

(ii) APRA requires the information or documents for the

purposes of this Division; and

(b) in a case where the Life Insurance Act statutory manager is

not APRA:

(i) the Life Insurance Act statutory manager requests, in

writing, that APRA require the person to give the

information or documents under this subsection; and

(ii) APRA believes, on reasonable grounds, that the person

has such information or documents; and

(iii) APRA is satisfied that the Life Insurance Act statutory

manager requires the information or documents for the

purposes of this Division.

(2) The notice:

(a) must specify a period within which the information or

documents must be given to APRA; and

(b) may specify the form and manner in which the information or

documents must be given to APRA.

(3) The period specified under paragraph (2)(a) must be reasonable in

all the circumstances.

Offence

(4) A person commits an offence if:

(a) APRA requires the person to give APRA information or

documents under subsection (1); and

(b) the person refuses or fails to give the information or

documents as required.

Penalty: Imprisonment for 12 months or 50 penalty units, or both.

Self-incrimination

(5) A person is not excused from complying with a requirement under

subsection (1) to give information or documents on the ground that

doing so would tend to incriminate the individual or make the

individual liable to a penalty.

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(6) However, in the case of an individual:

(a) the information or document given; and

(b) giving the information or document; and

indirect consequence of giving the information or document;

are not admissible in evidence against the individual in a criminal

proceeding or a proceeding for the imposition of a penalty, other

than a proceeding in respect of the falsity of the information or

document.

Section 179AD not limited

(7) This section does not limit section 179AD.

179AJ Administrator in control--additional powers to recommend

action by APRA

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

subsection 179AM(3) or Subdivision B of Division 2 of

Part 10A in respect of the body corporate;

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

the life company's registration under section 21;

(d) if the body corporate is a registered NOHC--that APRA

revoke the registered NOHC's registration under

section 28A.

Effect of recommendation

(2) If an administrator of a body corporate's business makes a

recommendation under this section, APRA must consider the

recommendation but is not required to act on it.

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179AK Life Insurance Act statutory manager's liabilities and duties

Immunity

(1) A Life Insurance Act statutory manager, or a person acting on

behalf of a Life Insurance 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 Life Insurance 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 Life Insurance 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 Life Insurance Act

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

limit the scope of subsection (1).

Signpost to secrecy obligations

(4) Part 6 of the Australian Prudential Regulation Authority Act 1998

prohibits certain disclosures of information received by Life

Insurance Act statutory managers under this Act.

179AL Transaction by Life Insurance 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:

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

Insurance 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

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(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.

179AM Administrator in control--additional duties

Duty to report to APRA on request

(1) A person who is an administrator of a body corporate's business

must give to APRA a written report showing how the control of the

body corporate's business is being carried out if APRA requests

that such a report be provided to it. The report must be given to

APRA within a reasonable time after the request.

Duty to report to APRA on termination of appointment

(2) A person who was an administrator of a body corporate's business

must give to APRA a written report showing how the control of the

body corporate's business was carried out over the period of the

administrator's appointment if the administrator's appointment has

been terminated. The report must be given to APRA within a

reasonable time of the termination.

Duty to follow directions by APRA

(3) APRA may give an administrator of a body corporate's business a

direction relating to the control of the body corporate's business,

and may alter such a direction. If a direction (including an altered

direction) is given to an administrator by APRA, the administrator

must:

(a) act in accordance with the direction; or

(b) immediately provide to APRA information relating to the

control of the body corporate's business and request APRA

to alter the direction.

(4) If an administrator of a body corporate's business requests APRA

to alter a direction and APRA considers the request then confirms

the direction, the administrator must act in accordance with the

direction.

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179AN Administrator in control--additional duties where action

may affect financial system stability in Australia

(1) If an administrator of a body corporate's business has reasonable

cause to believe that an action that the administrator proposes to

take is an action that is likely to have a detrimental effect on

financial system stability in Australia, the administrator must:

(a) notify APRA as soon as practicable; and

(b) obtain APRA's written consent before taking the action.

(2) The administrator is not required to comply with subsection (1) if

the administrator is satisfied that it is not reasonably practicable to

do so, having regard to urgency or other similar constraint.

(3) The performance of a function or the exercise of a power by an

administrator is not invalid merely because of a failure by the

administrator to comply with this section.

179AO Termination of Life Insurance Act statutory manager's

appointment

(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 a life company--protect the

interests of policy owners of the life company; or

(iii) promote financial system stability in Australia.

(2) 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.

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(3) This section has effect subject to section 179AC.

179AP Effect on directors of Life Insurance Act statutory manager

taking control of a body corporate's business

(1) The directors of a body corporate cease to hold office when a Life

Insurance Act statutory manager takes control of the body

corporate's business.

Note:

For the definition of director, see subsection (4).

(2) A director of a body corporate must not be appointed or elected

while a Life Insurance Act statutory manager is in control of the

body corporate's business unless the appointment is made under

subsection 179AC(2).

(3) The appointment of a person as a member of the Compliance

Committee of an eligible foreign life insurance company under

section 16ZF ceases to have effect when a Life Insurance Act

statutory manager takes control of the eligible foreign life

insurance company's business.

(4) A person must not be appointed as a member of the Compliance

Committee of an eligible foreign life insurance company under

section 16ZF while a Life Insurance Act statutory manager is in

control of the eligible foreign life insurance company's business

unless the appointment is made under subsection 179AC(2).

(5) If a person who ceased to hold office as a director of a body

corporate under subsection (1), or a purported director of a body

corporate appointed or elected in contravention of subsection (2),

purports to act in relation to the body corporate's business while a

Life Insurance Act statutory manager has control of the body

corporate's business, those acts are invalid and of no effect.

(6) If a person whose appointment as a member of the Compliance

Committee of a body corporate under section 16ZF ceased to have

effect under subsection (3) purports to act in relation to the body

corporate's business while a Life Insurance Act statutory manager

has control of the body corporate's business, those acts are invalid

and of no effect.

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(7) Subsections (1), (2) and (5) do not apply in relation to a body

corporate that is an eligible foreign life insurance company.

(8) Subsection (9) applies if:

(a) subsections (1), (2) and (5) do not apply in relation to a body

corporate because of subsection (7); and

(b) a Life Insurance Act statutory manager takes control of the

body corporate's business; and

relation to the body corporate's business while the Life

Insurance Act statutory manager has control of the body

corporate's business.

(9) 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.

(10) For the purposes of this section, director has the same meaning as

it has in the Corporations Act 2001.

179AQ Effect on external administrator of Life Insurance Act

statutory manager taking control of a body corporate's

business

(1) The appointment of an external administrator of a body corporate

is terminated when a Life Insurance Act statutory manager takes

control of the body corporate's business.

Note:

For the definition of external administrator, see the Schedule.

(2) An external administrator of a body corporate must not be

appointed while a Life Insurance Act statutory manager is in

control of the body corporate's business unless APRA approves the

appointment.

(3) If a person who ceased to be the external administrator of a body

corporate under subsection (1), or a purported external

administrator of the body corporate appointed in contravention of

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subsection (2), purports to act in relation to the body corporate's

business while a Life Insurance Act statutory manager has control

of the body corporate's business, those acts are invalid and of no

effect.

(4) APRA must inform the external administrator of a body corporate

that a Life Insurance Act statutory manager will take control of the

body corporate's business as soon as possible after the decision

that a Life Insurance Act statutory manager will take control of the

body corporate's business is made. However, failure to inform the

external administrator does not affect the operation of this section.

179AR Moratorium--effect of Life Insurance 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 Life Insurance 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.

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

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

continuing; or

(b) the Life Insurance Act statutory manager, after considering

APRA's views, consents to the proceedings beginning or

continuing.

(6) APRA (or the Life Insurance Act statutory manager) cannot revoke

a consent given for the purposes of subsection (5).

(7) Neither APRA nor the Life Insurance 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.

179AS Moratorium--effect of Life Insurance 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 Life Insurance Act statutory

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

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

(a) the 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 Court imposes.

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

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

intention to apply (or a shorter period, if the Court considers that

exceptional circumstances make this necessary).

(4) APRA may apply to the Court to be joined as a party to the

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

have regard to APRA's views in deciding:

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

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

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

those terms.

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

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

(b) the Life Insurance Act statutory manager consents to the

process beginning or continuing.

(6) APRA (or the Life Insurance Act statutory manager) cannot revoke

a consent given for the purposes of subsection (5).

(7) Neither APRA nor the Life Insurance Act statutory manager is

liable to an action or other proceedings for damages in respect of a

refusal to give consent under subsection (5).

179AT Moratorium--effect of Life Insurance 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

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body corporate's business.

Note:

The Court may grant an injunction under section 235 in respect of a

contravention of this subsection.

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

(a) APRA consents to the disposal; or

(b) the Life Insurance Act statutory manager consents to the

disposal.

(3) Neither APRA nor the Life Insurance Act statutory manager is

liable to an action or other proceedings for damages in respect of a

refusal to give consent under subsection (2).

179AU Moratorium--Restrictions on exercise of third party

property rights

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

in which a Life Insurance 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 Life Insurance Act statutory manager's written consent;

(b) APRA's written consent.

(3) Neither APRA nor a Life Insurance 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 179AR, 179AS and 179AT.

179AV Moratorium--effect of Life Insurance Act statutory

management on supply of essential services

(1) If:

(a) a Life Insurance Act statutory manager is in control of a body

corporate's business; and

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(b) the Life Insurance 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

the Life Insurance 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 Court may grant an injunction under section 235 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.

179AW Moratorium--effect of Life Insurance 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 Life

Insurance 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.

179AX Life Insurance Act statutory manager being in control 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

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(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) a Life Insurance 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 Life Insurance Act statutory manager

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

business of another member of the group.

179AY 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 Life Insurance Act statutory manager of

the body corporate's business under this Division;

(b) the fact that a Life Insurance 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 Life Insurance Act

statutory manager.

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179AZ Costs of statutory management

(1) APRA's costs (including costs in the nature of remuneration and

expenses) of being in control of a body corporate's business, or of

having an administrator in control of a body corporate's business,

are payable from the body corporate's funds and are a debt due to

APRA.

(2) Despite anything contained in any law relating to the winding-up

of companies, debts due to APRA by a body corporate under

subsection (1) have priority in a winding-up of the body corporate

over all other unsecured debts.

(3) If the body corporate is a life company, subsection (2) does not

apply the extent that a debt due to APRA by the life company is

referable to the business of a statutory fund of the life company.

Note:

APRA may be able to recover a debt that is referable to the business

of a statutory fund of the life company that is being wound up, in

accordance with paragraph 187(3)(c).

179AZA APRA must report to Treasurer and publish information

about statutory management

Reports to the Treasurer

(1) If the Treasurer requests APRA to give him or her a written report

concerning the activities of Life Insurance Act statutory managers

in respect of specified body corporates or in respect of a specified

period, APRA must give the Treasurer such a written report within

a reasonable time after the Treasurer requests it.

(2) If a Life Insurance Act statutory manager takes control of a body

corporate's business during a financial year, or if there is an

ultimate termination of control during a financial year, APRA must

give the Treasurer a written report within a reasonable time after

the end of the financial year concerning activities of all Life

Insurance Act statutory managers and each ultimate termination of

control that occurred during that financial year.

Requirement to publish notices in Gazette

(3) If APRA:

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(a) takes control of a body corporate's business; or

(b) appoints an administrator of a body corporate's business; or

corporate's business;

APRA must publish notice of that fact in the Gazette. However,

mere failure to publish such a notice does not affect the validity of

the act.

179AZB Exceptions to Part IV of the Competition and Consumer Act

2010

For the purposes of subsection 51(1) of the Competition and

Consumer Act 2010, the following things are specified and

specifically authorised:

(a) the acquisition of assets in:

(i) a sale or disposal of the whole or part of the business of

a body corporate under this Division by a Life Insurance

Act statutory manager in control of the body corporate's

business; or

(ii) a transfer of life insurance business of a life company

under a scheme prepared by a Life Insurance Act

statutory manager in control of the life company's

business and confirmed (with or without modifications)

by the Court under Part 9;

(whether the assets are shares in another body corporate or

other assets);

(b) the acquisition of shares in a body corporate as a direct result

of:

(i) the issue or sale of the shares under this Division by a

Life Insurance Act statutory manager in control of the

body corporate's business; or

(ii) the exercise of a right to acquire shares that was issued

or sold under this Division by a Life Insurance Act

statutory manager in control of the body corporate's

business.

53 Section 179C

Repeal the section, substitute:

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179C Involving APRA in proposed appointment of external

administrators of life companies and NOHCs

(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 a life company or of a registered NOHC of a

life company; or

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

for the appointment of an external administrator of a life

company or of a registered NOHC of a life company; or

registered NOHC of a life company (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.

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

notice in the approved form.

(3) 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.

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

(5) After receiving the notice, APRA may request the person to

provide details of the proposed application.

Offence

(6) 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 a life company or of a

registered NOHC of a life company; or

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

court) for the appointment of an external administrator

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of a life company or of a registered NOHC of a life

company; or

(iii) appoints an external administrator of a life company or

of a registered NOHC of a life company (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 (3); 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.

(7) An offence against subsection (6) is an offence of strict liability.

Note:

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

54 Subsection 181(2)

Repeal the subsection, substitute:

(2) APRA may only make an application if any of the following

requirements are met:

(a) APRA is satisfied that it is necessary or proper that the

application be made, having regard to the conclusions

reached by APRA as a result of any of the following

situations:

(i) APRA investigating the business of the life company

under Division 3 of Part 7;

(ii) APRA taking control of the life company's business

under subsection 179AA(1);

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(iii) an administrator of the life company's business

recommending to APRA under section 179AJ that

APRA apply for the life company to be wound up;

(b) if the life company is an eligible foreign life insurance

company--APRA considers that any of the following

requirements are met:

(i) an application for the appointment of an external

administrator of the eligible foreign life insurance

company, or for a similar procedure in respect of the

eligible foreign life insurance company, has been made

in one or more foreign countries;

(ii) an external administrator has been appointed to the

eligible foreign life insurance company, or a similar

appointment has been made in respect of the eligible

foreign life insurance company, in a foreign country.

55 At the end of section 181

Add:

(4) To avoid doubt, subsection (1) applies whether or not a Life

Insurance Act statutory manager is in control of:

(a) unless paragraph (b) applies--the life company's business; or

(b) if the life company is an eligible foreign life insurance

company--the Australian business assets and liabilities of the

eligible foreign life insurance company.

56 Subsection 183(1)

Omit "a life company", substitute "an entity covered by subsection (4),

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

57 At the end of section 183

Add:

(4) This subsection covers the following entities:

(a) a life company;

(b) a registered NOHC;

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58 Paragraph 183B(2)(a)

After "the winding up of the friendly society", insert ", or the proposed

winding up of the friendly society".

59 Subsection 184(1)

Repeal the subsection, substitute:

(1) APRA may apply to the Court for directions regarding any matter

arising under:

(a) the winding-up of an entity covered by subsection 183(4); or

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

subsection 183(4).

60 Subsection 185(1)

Repeal the subsection, substitute:

(1) APRA may ask a liquidator for specified information in writing

about:

(a) the winding-up of an entity covered by subsection 183(4) and

the other affairs of the entity; or

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

subsection 183(4) and the other affairs of the entity.

61 Subsection 190(5)

Omit "Financial Sector (Business Transfer and Group Restructure) Act

1999", substitute "Financial Sector (Transfer and Restructure) Act

1999".

62 After paragraph 230A(3A)(d)

Insert:

or (e) each subsidiary of a life company or of a registered NOHC;

(f) each subsidiary of a life company or of a registered NOHC,

included in a specified class of subsidiaries;

63 At the end of Division 1 of Part 10A

Add:

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230AAA Obligation to comply with the prudential standards

A life company, registered NOHC or a subsidiary of a life

company or registered NOHC to which a prudential standard

applies must comply with the standard.

64 After Division 1 of Part 10A

Insert:

Division 1A--Conversion and write-off provisions

230AAB 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 life company means a subsidiary of a

holding company of the life company.

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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.

230AAC 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 is issued by, or to which any of the following is a party:

(a) a life company;

(b) a holding company of a life company;

(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.

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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.

230AAD 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;

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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 230AAC 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 230AAC 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.

65 Section 230AA

Before "This Subdivision", insert "(1)".

66 At the end of section 230AA

Add:

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

(a) APRA has given a recapitalisation direction to the life

company under subsection 230AB(1) (the primary

recapitalisation direction); and

(b) the life company 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 Life Insurance

Act statutory manager.

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

same way that it does to a life company.

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

Subdivision to the NOHC/NOHC subsidiary:

(a) subsection 230AB(1);

(b) subsection 230AC(1).

(5) In this section:

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

the following:

(a) a registered NOHC;

(b) a subsidiary of a registered NOHC.

67 Paragraph 230AB(1)(b)

After "APRA considers that", insert ", in the absence of external

support".

68 After subsection 230AB(1)

Insert:

(1A) Subsection (1B) applies if subsections 230AA(3) and (4) apply to a

NOHC/NOHC subsidiary because of a primary recapitalisation

direction given to a life company (as mentioned in

subsection 230AA(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.

69 After subsection 230AB(2)

Insert:

(2A) The regulations may specify that a particular form of support is not

external support for the purposes of paragraph (1)(b).

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70 At the end of section 230AB

Add:

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

period during which, it is to be complied with.

(5) APRA may, by notice in writing to the life company, vary the

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

that the variation is necessary and appropriate.

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

to the life company. APRA may revoke the direction if, at the time

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

or appropriate.

71 After subsection 230AC(1)

Insert:

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

subsidiary under subsection 230AB(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 life company

mentioned in subsection 230AB(1A); or

(ii) other capital instruments in the life company mentioned

in subsection 230AB(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:

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

subsidiary; and

(b) the life company 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.

72 Subsection 230AC(2)

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

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

73 Subsection 230AC(3)

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

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

74 Subsection 230AD(3) (heading)

Repeal the heading, substitute:

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

75 Subsection 230AD(3)

After "issue", insert "or acquire".

76 Paragraph 230AD(3)(a)

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

of section 251AA of this Act)".

77 Paragraph 230AD(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".

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78 After subsection 230AE(1)

Insert:

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

subsidiary under subsection 230AB(1B), treat the reference in

paragraph (1)(a) to "the policy owners of the company" as being a

reference to "the policy owners of the life company mentioned in

subsection 230AB(1A)".

79 At the end of section 230AE

Add:

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

subsidiary under subsection 230AB(1B), treat the references in

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

NOHC/NOHC subsidiary mentioned in subsection 230AB(1B)".

80 Section 230AJ

Repeal the section, substitute:

230AJ 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 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 body corporate being subject to a recapitalisation

direction;

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(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.

81 Subsection 230AK(9)

Repeal the subsection.

82 Subsection 230B(1)

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

"APRA may".

83 Paragraph 230B(1)(b)

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".

84 Subsection 230B(1AA)

Repeal the subsection, substitute:

(1AA) APRA may give a body corporate that is a life company or is a

registered 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 this Act or the Financial Sector (Collection of

Data) Act 2001; or

(b) a subsidiary of the body corporate is likely to contravene this

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

corporate and is necessary in the interests of:

(i) if the body corporate is a life company--policy owners

or prospective policy owners of the life company; or

(ii) if the body corporate is a registered NOHC--policy

owners or prospective policy owners of any life

company that is a subsidiary of the NOHC; or

(d) a subsidiary of the body corporate is, or is about to become,

unable to meet the subsidiary's liabilities; or

(e) there is, or there might be, a material risk to the security of

the assets of a subsidiary of the body corporate; or

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(f) there has been, or there might be, a material deterioration in

the financial condition of a subsidiary of the body corporate;

(g) a subsidiary of the body corporate is conducting the

subsidiary's affairs in an improper or financially unsound

way; or

(h) 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

(j) 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 a life company--the life

company; or

(ii) if the body corporate is a registered NOHC--any life

company that is a subsidiary of the NOHC; or

(k) 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 a life company--policy owners

or prospective policy owners of the life company; or

(ii) if the body corporate is a registered NOHC--policy

owners or prospective policy owners of any life

company 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), (d), (e), (f), (g) or (j) if

APRA considers that the direction is reasonably necessary for one

or more prudential matters relating to the body corporate.

(1AC) APRA may give a body corporate that is a subsidiary of a life

company or of a registered NOHC a direction of a kind specified in

subsection (3) if:

(a) APRA has given the life company or registered 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 life company or registered NOHC a

direction under subsection (1AA) because one or more of the

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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.

85 Paragraph 230B(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.

86 After subsection 230B(1A)

Insert:

(1B) In deciding whether to give a direction under subsection (1), (1AA)

or (1AC) to a body corporate, APRA may disregard any external

support for the body corporate.

(1C) The regulations may specify that a particular form of support is not

external support for the purposes of subsection (1B).

87 Paragraph 230B(2)(v)

Repeal the paragraph, substitute:

(v) to make changes to the body corporate's systems, business

practices or operations;

(w) 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;

(x) to do, or to refrain from doing, anything else in relation to the

affairs of the body corporate.

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88 After subsection 230B(3)

Insert:

(3A) Without limiting the generality of paragraph (2)(x), a direction

under that paragraph to an eligible foreign life insurance company

may be any one or more of the following:

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

(i) a particular asset, or a particular class of assets, of the

company is returned to the control (however described)

of the part of the company's life insurance business that

is carried on in Australia; or

(ii) a particular liability, or a particular class of liabilities, of

the company ceases to be the responsibility (however

described) of the part of the company's life insurance

business that is carried on in Australia;

(b) a direction that the company not act in a way that has the

result that:

(i) a particular asset, or a particular class of assets, of the

company ceases to be under the control (however

described) of the part of the company's life insurance

business that is carried on in Australia; or

(ii) a particular liability, or a particular class of liabilities, of

the company becomes the responsibility (however

described) of the part of the company's life insurance

business that is carried on in Australia.

(3B) The kinds of direction that may be given as mentioned in

subsection (2) are not limited by any other provision in this Part.

(3C) 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.

89 Subsections 230C(1) to (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

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(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).

(1B) The matters are as follows:

(a) the body corporate being subject to a direction by APRA

under section 230B;

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

bodies corporate--another member of the group being

subject to a direction by APRA under section 230B.

(2) If the body corporate is prevented from fulfilling its obligations

under the contract because of a direction under section 230B, other

than a direction under paragraph 230B(2)(o), 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.

90 Subsection 230D(1)

Omit "life company or registered NOHC", substitute "life company,

registered NOHC or other body corporate".

91 Paragraph 230D(3)(a)

Omit "a particular life company or registered NOHC", substitute "a

particular life company, registered NOHC or other body corporate".

92 Paragraph 230D(3)(b)

Omit "any life companies or registered NOHCs", substitute "any life

companies, registered NOHCs or other bodies corporate".

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93 Subsection 230D(4)

Omit "any life company or registered NOHC", substitute "any life

company, registered NOHC or other body corporate".

94 Section 230E

Repeal the section.

95 Subsection 230F(1)

Omit "A life company or registered NOHC", substitute "A life

company, registered NOHC or other body corporate".

96 Subsection 230F(2)

Omit "a life company or registered NOHC", substitute "a life company,

registered NOHC or other body corporate".

97 Subsection 230F(2)

Omit "company or NOHC" (wherever occurring), substitute "life

company, NOHC or other body corporate".

98 Subsection 230F(3)

Omit "a life company or registered NOHC", substitute "a life company,

registered NOHC or other body corporate".

99 Subsection 230F(3)

Omit "company or NOHC" (wherever occurring), substitute "life

company, NOHC or other body corporate".

100 Subsection 230F(4)

Omit "a life company or registered NOHC", substitute "a life company,

registered NOHC or other body corporate".

101 Subsection 230F(4)

Omit "company or NOHC", substitute "life company, NOHC or other

body corporate".

102 At the end of Division 2 of Part 10A

Add:

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Subdivision C--Secrecy and disclosure provisions relating to all

directions

231 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 policy owners of any life company 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 231C(2)

and 231C(5).

231A Secrecy relating to directions

(1) A person commits an offence if:

(a) APRA has given an entity (the directed entity) a direction

under this Act; and

(b) the direction is covered by a determination under

subsection 231(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.

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(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 231B, 231C, 231D,

231E, 231F or 231G; 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).

231B Disclosure of publicly available information

A person covered by subsection 231A(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.

231C Disclosure allowed by APRA

(1) A person covered by subsection 231A(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) 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:

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(a) a specified person covered by subsection 231A(2) in relation

to a specified direction; or

(b) a specified person covered by subsection 231A(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 231A(2) in relation to a direction that is in a specified

class of directions to disclose:

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

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

Conditions in determinations

(6) APRA may include conditions in a determination under

subsection (2) or (5) that relate to any of the following:

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

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

231D Disclosure to legal representative for purpose of seeking legal

advice

A person covered by subsection 231A(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

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(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.

231E Disclosure allowed by APRA Act secrecy provision

(1) A person covered by subsection 231A(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

Authority Act 1998 if the disclosure is authorised by section 231B,

231C, 231D, 231F or 231G.

231F Disclosure in circumstances set out in the regulations

A person covered by subsection 231A(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.

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231G Disclosure for purpose

A person covered by subsection 231A(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 231A(2) in relation to

the direction disclosed that information to the relevant person

for a particular purpose in accordance with section 231C,

231D, 231E or 231F, or in accordance with a previous

operation of this section; and

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

231H Exceptions operate independently

Sections 231B, 231C, 231D, 231E, 231F and 231G do not limit

each other.

103 Subsection 236(1) (definition of reviewable decision)

Omit ", subject to subsection (1AA),".

104 Subsection 236(1) (paragraphs (g) and (ga) of the

definition of reviewable decision)

Repeal the paragraphs, substitute:

(g) a decision to revoke registration under subsection 26(1);

(ga) a refusal to revoke the registration of a company under

section 27;

(gaa) a decision to give a direction under subsection 27A(1);

(gab) a refusal to approve a proposed assignment under

subsection 27A(4);

(gac) a decision to impose conditions on an approval under

subsection 27A(4);

105 Subsection 236(1) (after paragraph (ge) of the definition

of reviewable decision)

Insert:

(gf) a decision to give a notice under subsection 28AA(2);

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106 Subsection 236(1) (at the end of the definition of

reviewable decision)

Add:

; (zr) a decision to give a direction under subsection 230B(1AA) as

a result of the ground referred to in paragraph 230B(1AA)(a),

(b) or (c);

(zs) a decision to give a direction under subsection 230B(1AC) as

a result of the ground referred to in paragraph 230B(1AC)(a)

or (b), to the extent that the paragraph relates to a ground

referred to in paragraph 230B(1AA)(a), (b) or (c).

107 After section 246

Insert:

246A Protection from liability--general

(1) A person is not subject to any liability to any person in respect of

anything done, or omitted to be done, in good faith and without

negligence in the exercise or performance, or the purported

exercise or performance, of powers, functions or duties under this

Act.

(2) To avoid doubt, any information provided by a person to APRA

under section 88A or 98A is taken, for the purposes of

subsection (1), to be provided in the exercise of a power or the

performance of a function under this Act.

(3) Subsection (1) does not apply to a person referred to in section 58

of the Australian Prudential Regulation Authority Act 1998 and, to

avoid doubt, does not affect the operation of that section.

246B 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;

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(ii) complying with section 231A (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.

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

2001.

246C Protection from liability--provisions do not limit each other

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

(a) section 179AK;

(b) subsection 50(2);

(d) section 99;

(e) section 156A;

(f) section 156B;

(g) section 179;

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(h) section 246A;

(i) section 246B;

(j) section 247;

(k) section 58 of the Australian Prudential Regulation Authority

Act 1998.

108 After section 251

Insert:

251AA Act has effect despite the Corporations Act

This Act has effect despite any provision of the Corporations Act

2001.

109 Subsection 254(5)

Omit "paragraph (1)(a)", substitute "paragraph (1)(g)".

110 Schedule

Insert:

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

administrator appointed under subsection 179AA(1) to take control

of the body corporate's business.

Australian business assets and liabilities, of an eligible foreign

life insurance company, has the meaning given by

subsection 16ZE(6).

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 (within the meaning of

the Insurance Act 1973); or

direction under this Act means a direction under any of the

following provisions:

(a) section 27A;

(b) section 125A;

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(d) section 230B.

111 Schedule (paragraph (a) of the definition of external

administrator)

Omit "or provisional liquidator".

112 Schedule (paragraph (b) of the definition of external

administrator)

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

Insurance Act statutory manager".

113 Schedule

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.

Life Insurance Act statutory manager has the meaning given by

subsection 179AA(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 230AA(5).

prudential matters means matters relating to:

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

organising of, a life company, a registered 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 life company, NOHC, group or member or

members of the group in a sound financial position; or

(ii) to facilitate resolution of the life company, NOHC,

group or member or members of the group; or

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(iii) to protect the interests of policy owners of any life

company; 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 life company, a

registered NOHC, a relevant group of bodies corporate, or a

particular member or members of such a group, with

integrity, prudence and professional skill.

114 Schedule (definition of recapitalisation direction)

Omit "subsection 230AB(1)", substitute "subsection 230AB(1) or

(1B)".

115 Schedule

Insert:

related body corporate:

(a) in Part 7--has the meaning given by section 129; and

(b) otherwise--has the meaning given by section 16.

116 Schedule (definition of related company)

Repeal the definition.

117 Schedule

Insert:

relevant group of bodies corporate has the meaning given by

section 15A.

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.

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Part 2--Application provisions

118 Interpretation

In this Part:

commencement time means the time when this item commences.

new Life Insurance Act means the Life Insurance Act 1995 as amended

by this Schedule.

old Life Insurance Act means the Life Insurance Act 1995 as in force

immediately before the commencement time.

119 Application

--amendments to directions powers

(1)

The amendments made by this Schedule to section 230B of the Life

Insurance Act 1995 apply to directions given on and after the

commencement time.

(2)

The amendments made by this Schedule to Subdivision A of Division 2

of Part 10A of the Life Insurance Act 1995 apply to directions given on

and after the commencement time.

120 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 230A of the

Life Insurance Act 1995 that was in force immediately before the

commencement time.

121 Saving

--conditions on registration under section 21

(1)

A condition in effect under subsection 22(1) of the old Life Insurance

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

section 22 of the new Life Insurance Act.

(2)

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

a condition on or after the commencement time.

122 Application

--conditions on registration under section 21

The amendment made by item 7 of this Schedule applies to:

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(a) the imposition of new conditions on a company's registration

under section 21 of the Life Insurance Act 1995 on or after

the commencement time; and

(b) the variation or revocation of conditions on a company's

registration under section 21 of the Life Insurance Act 1995

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.

123 Application

--revocation of registration under section 21

(1)

The amendments made by items 8, 9, 10, 11 and 16 of this Schedule

apply to a company's registration under section 21 of the Life Insurance

Act 1995 whether the registration was made before, on or after the

commencement time.

(2)

The amendments made by items 8, 9, 10, 11 and 16 of this Schedule

apply in relation to a matter mentioned in a paragraph of

subsection 26(1) of the new Life Insurance 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).

124 Saving

--conditions on NOHC registration

(1)

A condition in effect under subsection 28B(1) of the old Life Insurance

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

section 28B of the new Life Insurance Act.

(2)

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

a condition on or after the commencement time.

125 Application

--conditions on NOHC registration

The amendments made by items 12, 13 and 14 of this Schedule apply

to:

(a) the imposition of new conditions on a NOHC registration on

or after the commencement time; and

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

registration on or after the commencement time (even if the

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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.

126 Application

--revocation of NOHC registration

(1)

The amendment made by item 15 of this Schedule applies to a NOHC

registration whether the registration was made before, on or after the

commencement time.

(2)

The amendment made by item 15 of this Schedule applies in relation to

a matter mentioned in a paragraph of subsection 28C(1) of the new Life

Insurance 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).

127 Application

--stay provisions

(1)

The amendment made by item 38 of this Schedule applies in relation to

a matter referred to in subsection 165B(3) of the new Life Insurance Act

that occurs on or after the commencement time.

(2)

The amendment made by item 44 of this Schedule applies in relation to

an act referred to in subsection 168C(3) of the new Life Insurance Act

that is done on or after the commencement time.

(3)

The amendment made by item 80 of this Schedule applies in relation to

a recapitalisation direction referred to in subsection 230AJ(3) of the

new Life Insurance Act that is given on or after the commencement

time.

(4)

The amendment made by item 89 of this Schedule applies in relation to

a direction referred to in subsection 230C(1B) of the new Life Insurance

Act that is given on or after the commencement time.

128 Application

--conversion and write-off provisions

The amendment made by item 64 of this Schedule applies in relation to

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

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

after that time.

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Schedule 4--Amendment of the Financial

Sector (Business Transfer and Group

Restructure) Act 1999

Financial Sector (Business Transfer and Group Restructure)

Act 1999

1 Title

After "to provide for transfers of business between some kinds of

financial institutions,", insert "to provide for transfers of shares and

other interests in some kinds of financial institutions,".

2 Section 1

Omit "(Business Transfer and Group Restructure)", substitute

"(Transfer and Restructure)".

Note:

This item amends the short title of the Act. If another amendment of the Act is

described by reference to the Act's previous short title, that other amendment has effect

after the commencement of this item as an amendment of the Act under its amended

short title (see section 10 of the Acts Interpretation Act 1901).

3 Subsection 4(1)

Insert:

Australian business assets and liabilities, of a body corporate that

is a foreign ADI, a foreign general insurer or an eligible foreign

life insurance company, means the following:

(a) the assets and liabilities of the body corporate in Australia;

(b) any other rights and liabilities of the body corporate 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.

4 Subsection 4(1) (definition of certificate of transfer)

Repeal the definition, substitute:

certificate of transfer:

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(a) in relation to a voluntary transfer of business--means a

certificate issued under section 18; and

(b) in relation to a compulsory transfer of business--means a

certificate issued under section 33; and

certificate issued under section 33.

5 Subsection 4(1) (definition of compulsory transfer

determination)

Repeal the definition, substitute:

compulsory transfer determination means:

(a) a compulsory transfer of business determination; or

(b) a compulsory transfer of shares determination.

6 Subsection 4(1)

Insert:

compulsory transfer of business determination means a

determination under section 25.

compulsory transfer of shares determination means a

determination under section 25AA.

eligible foreign life insurance company has the same meaning as

in the Life Insurance Act 1995.

foreign ADI has the same meaning as in the Banking Act 1959.

foreign general insurer has the same meaning as in the Insurance

Act 1973.

7 Subsection 4(1) (definition of partial transfer)

Repeal the definition, substitute:

partial transfer means a transfer of business described in

subsection 8(2).

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8 Subsection 4(1) (after paragraph (a) of the definition of

receiving body)

Insert:

(aa) in relation to a transfer of shares under Part 4--a body

corporate to which shares in another body corporate are to be

transferred, or have been transferred under that Part; or

9 Subsection 4(1) (definition of regulated body)

Repeal the definition, substitute:

regulated body means a body corporate that is:

(a) an ADI; or

(b) a life insurance company; or

10 Subsection 4(1) (definition of regulated business)

Repeal the definition, substitute:

regulated business in relation to a regulated body, means:

(a) for a body that is an ADI--the body's banking business

(within the meaning of the Banking Act 1959); or

(b) for a body that is a life insurance company--the body's life

insurance business (within the meaning of the Life Insurance

Act 1995); or

business (within the meaning of the Insurance Act 1973).

11 Subsection 4(1) (definition of related)

Repeal the definition.

12 Subsection 4(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 section 4A.

relevant group of bodies corporate has the meaning given by

section 4B.

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13 Subsection 4(1) (definition of total transfer)

Repeal the definition, substitute:

total transfer means a transfer of business described in

subsection 8(3).

14 Subsection 4(1) (after paragraph (a) of the definition of

transferring body)

Insert:

(aa) in relation to a transfer of shares under Part 4--a body

corporate, shares in which are to be transferred, or have been

transferred, to another body corporate under that Part; or

15 After section 4

Insert:

4A Related body corporate

For the purposes of this Act, the question whether a body corporate

is related to another body corporate is to be determined in the same

way as that question is determined for the purposes of the

Corporations Act 2001.

4B Relevant group of bodies corporate

For the purposes of this Act, each of the following constitutes a

relevant group of bodies corporate:

(a) a regulated body and its subsidiaries;

(b) an authorised NOHC (within the meaning of the Banking Act

1959) and its subsidiaries;

Act 1973) and its subsidiaries;

(d) a registered NOHC (within the meaning of the Life Insurance

Act 1995) and its subsidiaries.

16 Paragraph 8(1)(a)

Omit "transfers under Part 3", substitute "transfers of business under

Part 3".

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17 Paragraph 8(1)(b)

Omit "transfers under Part 4", substitute "transfers of business under

Part 4".

18 Subsection 8(1)

Omit "Either kind of transfer", substitute "Either kind of transfer of

business".

19 After subsection 8(1)

Insert:

(1A) This Act also provides for compulsory transfers of shares in

regulated bodies.

20 At the end of subsection 8(4)

Add:

Note:

The regulated bodies making the application cannot be general

insurers (see section 10).

21 Paragraph 8(5)(a)

Omit "compulsory transfer determination", substitute "compulsory

transfer of business determination".

22 After subsection 8(5)

Insert:

(5A) For a compulsory transfer of shares to take effect, APRA must:

(a) make a determination (the compulsory transfer of shares

determination) that there is to be a transfer of shares in a

body (the transferring body) to another body (the receiving

body); and

(b) issue a certificate (the certificate of transfer) stating that the

transfer is to take effect.

The transfer of shares takes effect when the certificate of transfer

comes into force.

23 At the end of subsection 9(1)

Add:

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Note:

The regulated bodies making the application cannot be general

insurers (see section 10).

24 Subsection 11(1)

Omit "approve a transfer of business if APRA considers that:",

substitute "approve a transfer of business if:".

25 Paragraph 11(1)(a)

Before "application for approval", insert "APRA considers that".

26 Paragraph 11(1)(b)

Before "the transfer has been", insert "APRA considers that".

27 Paragraph 11(1)(c)

Before "the transfer should be approved", insert "APRA considers

that".

28 Paragraph 11(1)(d)

Repeal the paragraph, substitute:

(d) where:

(i) the transferring body is established in a State or

Territory; and

(ii) the receiving body is established in a State or Territory;

APRA has considered whether legislation to facilitate the

transfer that satisfies the requirements of section 14 has been

enacted in the State or Territory in which the transferring

body is established and the State or Territory in which the

receiving body is established; and

29 After subsection 11(1)

Insert:

(1A) To avoid doubt, APRA may make a determination under this

section even if the legislation mentioned in paragraph (1)(d) has

not been enacted as mentioned in that paragraph.

30 Section 14

Before "State or Territory legislation referred", insert "(1)".

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31 At the end of section 14

Add:

(2) To avoid doubt, this section is enacted only for the purposes of

paragraph 11(1)(d).

Note:

Under that paragraph, in order to make a determination under

section 11 where both the transferring body and the receiving body are

established in a State or Territory, APRA needs to consider whether

legislation satisfying the requirements of this section has been

enacted. However, APRA is not prevented from making such a

determination if such legislation has not been enacted (see

subsection 11(1A)).

32 Paragraph 24(1)(a)

Omit "compulsory transfer determination", substitute "compulsory

transfer of business determination".

33 After subsection 24(1)

Insert:

(1A) For a compulsory transfer of shares to take effect, APRA must:

(a) make a determination (the compulsory transfer of shares

determination) that there is to be a transfer of shares in a

body (the transferring body) to another body (the receiving

body) (see section 25AA); and

(b) issue a certificate (the certificate of transfer) stating that the

transfer is to take effect (see section 33).

(1B) A compulsory transfer of business determination and a compulsory

transfer of shares determination are both compulsory transfer

determinations.

34 Subsection 24(2)

Omit "the compulsory transfer determination", substitute "a compulsory

transfer determination".

35 Subsection 24(3)

Omit "The compulsory transfer determination", substitute "A

compulsory transfer determination".

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36 Subsection 24(3)

Omit "the certificate of transfer", substitute "a certificate of transfer".

37 Subsection 24(4)

Omit "the certificate of transfer", substitute "a certificate of transfer for

a transfer of shares or for a transfer of business".

38 Subsection 24(5)

Omit "The transfer of business", substitute "A transfer of business".

39 At the end of section 24

Add:

(6) A transfer of shares takes effect when the certificate of transfer

comes into force (see section 35A).

40 Section 25 (heading)

Repeal the heading, substitute:

25 Compulsory transfer of business determinations

41 Subparagraphs 25(1)(a)(iii) and (iv)

Repeal the subparagraphs, substitute:

(iii) APRA is investigating the affairs of the transferring

body, or has appointed a person to investigate the affairs

of the transferring body, under subsection 13A(1) of the

Banking Act 1959; or

(iv) there is a Banking Act statutory manager of the

transferring body under the Banking Act 1959; or

42 Paragraph 25(1B)(a)

Repeal the paragraph, substitute:

(a) APRA is making, or has made within a reasonable period:

(i) a determination under subsection (1) or (1A) relating to

the ADI for the total transfer or partial transfer of its

business to a body corporate (the original receiving

body) (whether or not the transfer provided for in that

determination has occurred); or

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(ii) a determination under section 25AA relating to the ADI

for the transfer of the shares in the ADI to a body

corporate (also the original receiving body) (whether or

not the transfer provided for in that determination has

occurred); and

43 Subparagraph 25(1C)(a)(iii)

Omit "company; and", substitute "company; or".

44 At the end of paragraph 25(1C)(a)

Add:

(iv) there is a Life Insurance Act statutory manager of the

transferring body under the Life Insurance Act 1995;

and

45 Subsection 25(1D)

Omit "only the business", substitute "only business".

46 After subparagraph 25(1D)(a)(iii)

Insert:

(iiia) there is a Life Insurance Act statutory manager of the

transferring body under the Life Insurance Act 1995; or

47 After subsection 25(1D)

Insert:

Transfer from a body corporate related to a life insurance

company to another body

(1DA) APRA may make a written determination that there is to be a total

transfer or partial transfer of business from a body corporate that is

related to a life insurance company and is not an ADI, general

insurer or life insurance company to another body corporate (the

transferee). APRA may make the determination only if:

(a) APRA is making, or has made within a reasonable period:

(i) a determination under subsection (1C) or (1D) relating

to the life insurance company for the total transfer or

partial transfer of its business to a body corporate (the

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original receiving body) (whether or not the transfer

provided for in that determination has occurred); or

(ii) a determination under section 25AA relating to the life

insurance company for the transfer of the shares in the

life insurance company to a body corporate (also the

original receiving body) (whether or not the transfer

provided for in that determination has occurred); and

(b) the transferee is the original receiving body or is related to

the original receiving body.

48 Subparagraph 25(1E)(a)(iii)

Omit "insurer; and", substitute "insurer; or".

49 At the end of paragraph 25(1E)(a)

Add:

(iv) there is an Insurance Act statutory manager of the

transferring body under the Insurance Act 1973; and

50 Subsection 25(1F)

Omit "only the business", substitute "only business".

51 After subparagraph 25(1F)(a)(iii)

Insert:

(iiia) there is an Insurance Act statutory manager of the

transferring body under the Insurance Act 1973; or

52 After subsection 25(1F)

Insert:

Transfer from a body corporate related to a general insurer to

another body

(1G) APRA may make a written determination that there is to be a total

transfer or partial transfer of business from a body corporate that is

related to a general insurer and is not an ADI, general insurer or

life insurance company to another body corporate (the transferee).

APRA may make the determination only if:

(a) APRA is making, or has made within a reasonable period:

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(i) a determination under subsection (1E) or (1F) relating to

the general insurer for the total transfer or partial

transfer of its business to a body corporate (the original

receiving body) (whether or not the transfer provided

for in that determination has occurred); or

(ii) a determination under section 25AA relating to the

general insurer for the transfer of the shares in the

general insurer to a body corporate (also the original

receiving body) (whether or not the transfer provided

for in that determination has occurred); and

(b) the transferee is the original receiving body or is related to

the original receiving body.

53 Paragraph 25(2)(f)

Repeal the paragraph, substitute:

(f) where:

(i) the transferring body is established in a State or

Territory; and

(ii) the receiving body is established in a State or Territory;

APRA has considered whether legislation to facilitate the

transfer that satisfies the requirements of section 14 has been

enacted in the State or Territory in which the transferring

body is established and the State or Territory in which the

receiving body is established; and

54 After subsection 25(2)

Insert:

(2A) To avoid doubt, APRA may make a determination under this

section even if the legislation mentioned in paragraph (2)(f) has not

been enacted as mentioned in that paragraph.

55 After section 25

Insert:

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25AA Compulsory transfer of shares determinations

Transferring body is regulated body

(1) APRA may make a written determination that there is to be a

transfer of shares in a regulated body to another body corporate.

APRA may make the determination only if:

(a) any of the following requirements are met:

(i) if the regulated body is an ADI--the Minister has

declared under section 25A that a transfer of shares in

the transferring body to the receiving body should

occur;

(ii) if the regulated body is an ADI and subparagraph (i)

does not apply--APRA is satisfied that any of the

conditions in subparagraph 25(1)(a)(i), (ii), (iii), (iv) or

(v) have been satisfied;

(iii) if the regulated body is a life insurance company--

APRA is satisfied that any of the conditions in

subparagraph 25(1C)(a)(i), (ii), (iii) or (iv) have been

satisfied;

(iv) if the regulated body is a general insurer--APRA is

satisfied that any of the conditions in

subparagraph 25(1E)(a)(i), (ii), (iii) or (iv) have been

satisfied; and

(b) if the transferring body is an ADI--APRA has considered the

interests of depositors of the transferring body (when viewed

as a group) and considers that, having regard to their

interests, it would be appropriate for the transfer to be made;

and

insurer--APRA has considered the interests of policy owners

of the transferring body (when viewed as a group) and

considers that, having regard to their interests, it would be

appropriate for the transfer to be made; and

(d) if the receiving body is an ADI--APRA is satisfied that the

transfer is appropriate, having regard to the interests of

depositors of the receiving body when viewed as a group;

and

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(e) if the receiving body is a life insurance company or general

insurer--APRA is satisfied that the transfer is appropriate,

having regard to the interests of policy owners of the

receiving body when viewed as a group; and

(f) the conditions in subsection (3) exist.

Transferring body cannot be foreign body

(2) APRA cannot make a determination under this section if the

transferring body is any of the following:

(a) a foreign ADI;

(b) a foreign general insurer;

Common conditions for making a determination under this section

(3) APRA may make a determination under this section only if:

(a) APRA is satisfied that the board of directors of the receiving

body has consented to the transfer; and

(b) APRA is satisfied that the transfer is appropriate, having

regard to:

(i) the interests of the financial sector as a whole; and

(ii) any other matters that APRA considers relevant; and

(i) the Minister has consented to the transfer; or

(ii) the Minister's consent to the transfer is not required (see

section 29).

Formal requirements for determinations under this section

(4) A determination under this section must include particulars of the

transfer, including the names of the transferring body and the

receiving body.

(5) A determination under this section must include a statement of the

reasons why the determination has been made.

(6) A determination under this section must be signed by an authorised

APRA officer.

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Determinations under this section are not legislative instruments

(7) A determination made under this section is not a legislative

instrument.

56 Section 25A

Repeal the section, substitute:

25A Ministerial declaration that compulsory transfer should occur

in relation to ADI

(1) The Minister may declare, in writing given to APRA, that:

(a) a transfer of business should occur from a specified ADI to

another specified body corporate; or

(b) a transfer of shares in a specified ADI to another specified

body corporate should occur; or

(i) a transfer of business should occur from a specified ADI

to another specified body corporate; or

(ii) a transfer of shares in a specified ADI to another

specified body corporate should occur.

(2) A declaration made under subsection (1) is not a legislative

instrument.

57 Section 26

Omit "the compulsory transfer determination" (wherever occurring),

substitute "a compulsory transfer determination".

58 Subsection 27(1)

After "paragraph 25(2)(d)", insert "or 25AA(3)(a)".

59 Section 28

Before "State or Territory legislation referred", insert "(1)".

60 Section 28

After "State or Territory legislation referred to in paragraph 25(2)(f)",

insert ", as that paragraph applies in relation to a compulsory transfer of

business".

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61 At the end of section 28

Add:

(2) To avoid doubt, this section is enacted only for the purposes of

paragraph 25(2)(f).

Note:

Under that paragraph, in order to make a determination under

section 25 where both the transferring body and the receiving body are

established in a State or Territory, APRA needs to consider whether

legislation satisfying the requirements of this section has been

enacted. However, APRA is not prevented from making such a

determination if such legislation has not been enacted (see

subsection 25(2A)).

62 Section 29

Before "The Minister's", insert "(1)".

63 Section 29

Omit "the transfer of business (see paragraph 25(2)(g))", substitute "a

transfer of business (see paragraph 25(2)(g)) or a transfer of shares (see

paragraph 25AA(3)(c))".

64 At the end of section 29

Add:

(2) A determination made under paragraph (1)(a) is not a legislative

instrument.

(3) A determination made under paragraph (1)(b) is a legislative

instrument.

65 Subsection 30(1)

Repeal the subsection, substitute:

(1) The transferring body or the receiving body, or both of those

bodies, may provide APRA with a written statement specifying, or

specifying a mechanism for determining, things that are to happen,

or that are taken to be the case, in relation to:

(a) in the case of a transfer of business--assets and liabilities

that are to be transferred, or in relation to the transfer of

business that is to be effected; or

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(b) in the case of a transfer of shares--shares that are to be

transferred, or in relation to the transfer of shares that is to be

effected.

66 Subsection 31(1)

Omit "The compulsory transfer determination", substitute "A

compulsory transfer determination".

67 Paragraph 31(1)(a)

Omit "transfer of business", substitute "transfer of business or transfer

of shares".

68 Paragraph 31(1)(b)

Omit "transfer of business", substitute "transfer of business or transfer

of shares".

69 Section 32

Omit "the compulsory transfer determination", substitute "a compulsory

transfer determination".

70 Paragraph 33(1)(c)

Omit "paragraph 25(2)(d)", substitute "paragraph 25(2)(d) or

25AA(3)(a)".

71 Paragraph 33(2)(b)

Omit "state whether", substitute "in the case of a transfer of business--

state whether".

72 Paragraph 33(2)(c)

Omit "if it is a partial transfer", substitute "in the case of a transfer of

business that is a partial transfer".

73 Subsection 33(3)

Repeal the subsection, substitute:

(3) The certificate may include provisions specifying, or specifying a

mechanism for determining, other things that are to happen, or that

are taken to be the case:

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(a) in the case of a transfer of business--in relation to assets and

liabilities that are to be transferred, or in relation to the

transfer of business that is to be effected, whether the transfer

is total or partial; or

(b) in the case of a transfer of shares--in relation to shares that

are to be transferred, or in relation to the transfer of shares

that is to be effected.

74 Section 35 (heading)

Repeal the heading, substitute:

35 Time and effect of compulsory transfer--transfer of business

75 Before subsection 35(1)

Insert:

(1A) This section applies if a compulsory transfer of business

determination has been made.

76 After section 35

Insert:

35A Time and effect of compulsory transfer--transfer of shares

(1) This section applies if a compulsory transfer of shares

determination has been made.

(2) When the certificate of transfer comes into force, all the shares in

the transferring body, wherever those shares are located, become

shares held by the receiving body without any transfer, conveyance

or assignment.

(3) Furthermore, those shares become shares held by the receiving

body free from any trust, liability or other encumbrance.

(4) If the certificate includes provisions of a kind referred to in

subsection 33(3):

(a) if the provisions specify that particular things are to happen

or are taken to be the case--those things are, by force of this

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section, taken to happen, or to be the case, in accordance with

those provisions; and

(b) if the provisions specify a mechanism for determining things

that are to happen or are taken to be the case--things

determined in accordance with that mechanism are, by force

of this section, taken to happen, or to be the case, as

determined in accordance with that mechanism.

(5) If there is an approved section 30 statement in relation to the

transfer, then:

(a) if the statement specifies that particular things are to happen

or are taken to be the case--those things are, by force of this

section, taken to happen, or to be the case, in accordance with

the statement; and

(b) if the statement specifies a mechanism for determining things

that are to happen or are taken to be the case--things

determined in accordance with that mechanism are, by force

of this section, taken to happen, or to be the case, as

determined in accordance with that mechanism.

77 Before subsection 36(1)

Insert:

(1A) This section applies if a compulsory transfer of business

determination has been made

78 Section 36AA

Repeal the section, substitute:

36AA Compulsory transfer not ground for denial of obligations

(1) This section applies if a body corporate covered by subsection (2)

is or was 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) This subsection covers the following:

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(a) a body corporate that is, or is proposed to become, a

transferring body;

(b) a body corporate that is a member of a relevant group of

bodies corporate, if another member of that group is, or is

proposed to become, a transferring body.

(3) None of the matters mentioned in subsection (4) 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.

(4) The matters are as follows:

(a) an act being done for the purposes of Division 2 or 3, or a

certificate of transfer coming into force under Division 3, in

connection with the body corporate;

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

bodies corporate--an act being done for the purposes of

Division 2 or 3, or a certificate of transfer coming into force

under Division 3, in connection with another member of the

group.

79 At the end of Part 4

Add:

Division 5--Special provisions relating to compulsory

transfers of shares

36AC Application of Division

This Division applies in relation to a compulsory transfer of shares

under this Part, or a proposed compulsory transfer of shares under

this Part.

36AD Extended meaning of share

Treat all of the following things as being a share:

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(a) a legal or equitable right or interest in a share;

(b) an interest in a share that is an interest of a kind specified in

the regulations.

36AE Regulations may make special provision in relation to

compulsory transfer of shares

(1) The regulations may provide in relation to any of the following

matters:

(a) the payment to a holder of shares in the transferring body of a

purchase price for those shares;

(b) the resolution of disputes involving a holder of shares in the

transferring body (including the resolution of such disputes

by the Federal Court);

transfer of shares, or proposed compulsory transfer of shares,

by APRA, the transferring body and the receiving body;

(d) the freeing of shares in the transferring body from any trust,

liability or other encumbrance when they become shares held

by the receiving body;

(e) any matter incidental to:

(i) the compulsory transfer of shares, or proposed

compulsory transfer of shares; or

(ii) any of the other matters mentioned in this subsection.

(2) The regulations may prescribe penalties, not exceeding 50 penalty

units, for offences against the regulations.

(3) This section does not limit the regulations that may be made for the

purposes of this Act.

80 Section 36A(1)

Repeal the subsection, substitute:

(1) This Part deals with proposals by an ADI, general insurer or life

insurer (the operating body) for a restructure arrangement (under

Part 5.1 of the Corporations Act 2001) that would:

(a) make the operating body a subsidiary of a non-operating

holding company (NOHC); or

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(b) would facilitate compliance by the operating body (or a

related body corporate of the operating body) with a

requirement under certain directions or prudential standards.

81 Section 36A(3)

Omit "the NOHC".

82 Paragraph 36B(1)(b)

Repeal the paragraph, substitute:

(b) the arrangement would:

(i) result in the operating body becoming a subsidiary of a

NOHC; or

(ii) facilitate compliance by the operating body (or a related

body corporate of the operating body) with a

requirement covered by subsection (1A).

83 After subsection 36B(1)

Insert:

(1A) This subsection covers a requirement under any of the following:

(a) a direction under any of the following:

(i) section 11CA of the Banking Act 1959;

(ii) section 104 of the Insurance Act 1973;

(iii) section 230B of the Life Insurance Act 1995;

(b) a prudential standard mentioned in the definition of

prudential requirements in subsection 36C(4).

84 Subsection 36E(1)

Omit "(for example, the body that is to become the NOHC)".

85 Subsection 36G(1)

Repeal the subsection, substitute:

(1) A restructure instrument included in a restructure approval is an

instrument in relation to an operating body that gives relief (as

mentioned in subsection (2)) to:

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(a) if the restructure approval relates to a restructure arrangement

covered by subparagraph 36B(1)(b)(i)--any or all of the

following, as specified in the instrument:

(i) the NOHC that is the subject of the restructure approval;

(ii) any body corporate related to that NOHC;

(iii) if the instrument specifies a requirement in Division 1

of Part 2J.1 of the Corporations Act 2001--any other

person involved in complying with the requirement; or

(b) if the restructure approval relates to a restructure arrangement

covered by subparagraph 36B(1)(b)(ii)--any or all of the

following, as specified in the instrument:

(i) the operating body;

(ii) any body corporate related to the operating body;

(iii) if the instrument specifies a requirement in Division 1

of Part 2J.1 of the Corporations Act 2001--any other

person involved in complying with the requirement.

86 Section 36L

Repeal the section, substitute:

36L What is an internal transfer certificate?

An internal transfer certificate is a certificate, issued by APRA

under section 36M for the purpose of giving effect to a restructure

arrangement described in a restructure approval, giving effect to:

(a) if the restructure arrangement is covered by

subparagraph 36B(1)(b)(i)--the transfer of specified assets

and liabilities between any 2 of the following bodies

(including a transfer between any 2 subsidiaries of the NOHC

that is the subject of the restructure arrangement):

(i) the NOHC;

(ii) the operating body;

(iii) any other subsidiary of the NOHC; or

(b) if the restructure approval relates to a restructure arrangement

covered by subparagraph 36B(1)(b)(ii)--the transfer of

specified assets and liabilities between any 2 of the following

bodies (including a transfer between any 2 related bodies

corporate of the operating body):

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(i) the operating body;

(ii) a related body corporate of the operating body.

Note:

The assets or liabilities may be specified by reference to a class or

classes of assets or liabilities--see subsection 33(3A) of the Acts

Interpretation Act 1901.

87 Paragraphs 37(1)(c) and (d)

Repeal the paragraphs, substitute:

transferring body has become a transferred asset of that

receiving body; or

(d) in the case of a transfer of business--a specified liability of

the transferring body has become a transferred liability of the

receiving body; or

(e) in the case of a transfer of shares--a specified share in the

transferring body has become a share held by that receiving

body.

88 Section 41(1)

Omit "For the purposes of deciding whether or how to perform or

exercise functions or powers under this Act in relation to a transfer of

business, or a proposed or possible transfer of business, from or to an

ADI, or in relation to the restructure, or the possible restructure, of an

ADI and one or more related bodies corporate", substitute "For the

purposes of deciding whether or how to perform or exercise functions

or powers under this Act in relation to things mentioned in

subsection (1A)".

89 After subsection 41(1)

Insert:

(1A) For the purposes of subsection (1), the things mentioned in this

subsection are as follows:

(a) a transfer of business, or a proposed or possible transfer of

business, from or to an ADI;

(b) a transfer of shares, or a proposed or possible transfer of

transfer of shares in an ADI;

or more related bodies corporate.

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90 Subsection 41(2)

Omit "For the purpose of deciding whether or how to perform or

exercise functions or powers under this Act in relation to a transfer of

business, or a proposed or possible transfer of business, from or to a life

insurance company, or in relation to the restructure, or the possible

restructure, of a life insurance company and one or more related bodies

corporate", substitute "For the purposes of deciding whether or how to

perform or exercise functions or powers under this Act in relation to

things mentioned in subsection (3)".

91 Subsection 41(3)

Repeal the subsection, substitute:

(3) For the purposes of subsection (2), the things mentioned in this

subsection are as follows:

(a) a transfer of business, or a proposed or possible transfer of

business, from or to a life insurance company;

(b) a transfer of shares, or a proposed or possible transfer of

transfer of shares in a life insurance company;

company and one or more related bodies corporate.

(4) For the purposes of deciding whether or how to perform or

exercise functions or powers under this Act in relation to things

mentioned in subsection (5), each of the following provisions:

(a) section 115 of the Insurance Act 1973;

(b) any other provision of that Act, or of another Act, prescribed

by the regulations;

has effect as if this Act were part of the Act that contains the

provision.

(5) For the purposes of subsection (4), the things mentioned in this

subsection are as follows:

(a) a transfer of business, or a proposed or possible transfer of

business, from or to a general insurer;

(b) a transfer of shares, or a proposed or possible transfer of

transfer of shares in a general insurer;

insurer and one or more related bodies corporate.

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92 Section 42

Omit "about the business that is to be, or that may be, transferred.",

substitute:

about:

(a) in the case of a transfer of business--the business that is to

be, or that may be, transferred; or

(b) in the case of a transfer of shares:

(i) the shares that are to be, or that may be, transferred; and

(ii) the business of the transferring body.

93 Subsection 43(4)

Omit "a transfer of business", substitute "the transfer of business or

transfer of shares".

94 Subsection 43(9)

Omit "a transfer of business (whether voluntary or compulsory),",

substitute "a transfer of business (whether voluntary or compulsory), a

transfer of shares,".

95 Paragraphs 43(9A)(a) and (b)

Repeal the paragraphs, substitute:

(a) a transfer of business or transfer of shares under Part 4;

(b) anything done to enable or facilitate a transfer of business or

transfer of shares under Part 4 (including an agreement

referred to in section 30).

96 After section 43

Insert:

43A Transfers of Australian regulated business of foreign body

(1) This section applies to a transfer of business under Part 3 or 4 from

a transferring body to another body if the transferring body is:

(a) a foreign ADI; or

(b) a foreign general insurer; or

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Schedule 5--Amendment of the Payment

Systems and Netting Act 1998

Part 1--Main amendments

Payment Systems and Netting Act 1998

1 Section 5

Insert:

ADI means an authorised deposit-taking institution within the

meaning of the Banking Act 1959.

Banking Act statutory manager has the same meaning as in the

Banking Act 1959.

2 Section 5 (definition of Business Transfer Act)

Omit "Financial Sector (Business Transfer and Group Restructure) Act

1999", substitute "Financial Sector (Transfer and Restructure) Act

1999".

3 Section 5 (before paragraph (a) of the definition of direction

stay provision)

Insert:

(aa) subsection 11CAC(2) of the Banking Act 1959;

4 Section 5 (after paragraph (b) of the definition of direction

stay provision)

Insert:

(ba) subsection 36C(2) of the Insurance Act 1973;

5 Section 5 (after paragraph (d) of the definition of direction

stay provision)

Insert:

(da) subsection 230AAD(2) of the Life Insurance Act 1995;

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6 Section 5 (paragraph (d) of the definition of external

administration)

Repeal the paragraph, substitute:

(d) a Banking Act statutory manager takes control of the

person's business under the Banking Act 1959; or

(da) an Insurance Act statutory manager takes control of the

person's business under the Insurance Act 1973; or

(db) a Life Insurance Act statutory manager takes control of the

person's business under the Life Insurance Act 1995; or

7 Section 5

Insert:

general insurer has the same meaning as in the Insurance Act

1973.

Insurance Act statutory manager has the same meaning as in the

Insurance Act 1973.

life company has the same meaning as in the Life Insurance Act

1995.

Life Insurance Act statutory manager has the same meaning as in

the Life Insurance Act 1995.

receiving body has the same meaning as in the Business Transfer

Act.

8 Section 5 (definition of regulated body)

Repeal the definition, substitute:

regulated body means a body corporate that is any of the

following:

(a) an ADI;

(b) a general insurer;

(d) an authorised NOHC (within the meaning of the Banking Act

1959);

(e) an authorised NOHC (within the meaning of the Insurance

Act 1973);

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(f) a registered NOHC (within the meaning of the Life Insurance

Act 1995);

(g) a subsidiary of a body corporate mentioned in paragraph (a),

(b), (c), (d), (e) or (f);

(h) a private health insurer within the meaning of the Private

Health Insurance (Prudential Supervision) Act 2015.

9 Section 5 (definition of regulated business)

Repeal the definition, substitute:

regulated business:

(a) in relation to an ADI--means the ADI's banking business

(within the meaning of the Banking Act 1959); and

(b) in relation to a general insurer--means the general insurer's

insurance business (within the meaning of the Insurance Act

1973); and

insurance business (within the meaning of the Life Insurance

Act 1995).

10 Section 5

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 section 5AA.

specified moratorium provision: each of the following is a

specified moratorium provision:

(a) section 15BA of the Banking Act 1959;

(b) section 15BB of the Banking Act 1959;

(d) section 62PA of the Insurance Act 1973;

(e) section 62PB of the Insurance Act 1973;

(f) section 62PC of the Insurance Act 1973;

(g) section 62ZOS of the Insurance Act 1973;

(h) section 62ZOT of the Insurance Act 1973;

(j) section 62ZOU of the Insurance Act 1973;

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(k) section 161A of the Life Insurance Act 1995;

(l) section 161B of the Life Insurance Act 1995;

(m) section 161C of the Life Insurance Act 1995;

(n) section 179AS of the Life Insurance Act 1995;

(o) section 179AT of the Life Insurance Act 1995;

(p) section 179AU of the Life Insurance Act 1995.

11 Section 5 (after paragraph (fb) of the definition of

specified provisions)

Insert:

(fc) the specified moratorium provisions; and

12 Section 5 (before paragraph (a) of the definition of

specified stay provision)

Insert:

(aa) subsection 11CAC(2) of the Banking Act 1959;

13 Section 5 (after paragraph (e) of the definition of specified

stay provision)

Insert:

(ea) subsection 36C(2) of the Insurance Act 1973;

14 Section 5 (after paragraph (g) of the definition of specified

stay provision)

Insert:

(ga) subsection 62ZOH(2) of the Insurance Act 1973;

(gb) subsection 62ZOX(2) of the Insurance Act 1973;

15 Section 5 (after paragraph (k) of the definition of specified

stay provision)

Insert:

(ka) subsection 179AH(2) of the Life Insurance Act 1995;

(kb) subsection 179AX(2) of the Life Insurance Act 1995;

(kc) subsection 230AAD(2) of the Life Insurance Act 1995;

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16 Section 5 (paragraph (a) of the definition of

statutory/judicial management)

Repeal the paragraph, substitute:

(a) a Banking Act statutory manager, Insurance Act statutory

manager or Life Insurance Act statutory manager has control

of the person's business; or

17 After section 5

Insert:

5AA Meaning of related body corporate

For the purposes of this Act, the question whether a body corporate

is related to another body corporate is to be determined in the same

way as that question is determined for the purposes of the

Corporations Act 2001.

5AB Meaning of subsidiary

For the purposes of this Act, the question whether a body corporate

is a subsidiary of another body corporate is to be determined in the

same way as that question is determined for the purposes of the

Corporations Act 2001.

18 Subsection 15A(1)

Omit "to which a regulated body is a party".

19 Before paragraph 15A(1)(a)

Insert:

(aa) a party to the contract is:

(i) a regulated body; or

(ii) a related body corporate of a regulated body; and

20 Subsection 15A(2)

Omit "to which a regulated body is a party".

21 Before paragraph 15A(2)(a)

Insert:

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(aa) a party to the contract is:

(i) a regulated body; or

(ii) a related body corporate of a regulated body; and

22 Paragraph 15B(1)(a)

Omit "to which a regulated body is a party".

23 After paragraph 15B(1)(a)

Insert:

(aa) a party to the contract is:

(i) a regulated body; or

(ii) a related body corporate of a regulated body; and

24 After paragraph 15B(1)(b)

Omit "a party", substitute "the party".

25 Section 15C (heading)

Repeal the heading, substitute:

15C When APRA may declare that non-direction stays continue--

regulated body is party to trigger contract

26 Subsections 15C(1) and (2)

Repeal the subsections, substitute:

(1) Subsection (2) applies if:

(a) a trigger event to which a specified stay provision (other than

a direction stay provision) applies:

(i) is an event that involves a regulated body; and

(ii) happens in relation to a close-out netting contract (the

trigger contract) to which the regulated body is a party;

and

(b) APRA is satisfied that all the matters in subsection (3) will be

satisfied in relation to the party in respect of which the

declaration under subsection (2) will be made:

(i) unless subparagraph (ii) applies--at the time the

declaration will be made; or

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(ii) if a certificate of transfer will come into force under the

Business Transfer Act for a transfer of business from

the regulated body to a receiving body--just after that

coming into force; and

subsection (2) will be made is not in external administration

(disregarding paragraphs (d), (da), (db), (e) and (f) of the

definition of external administration in section 5); and

(d) APRA has not already made a declaration under section 15B

in relation to the trigger event happening in relation to the

trigger contract.

(2) APRA may, before the end of the resolution period for the trigger

event, declare that the specified stay provision is to continue to

apply to:

(a) unless paragraph (b) or (c) applies:

(i) all close-out netting contracts to which the regulated

body is a party; and

(ii) all securities given over financial property, in respect of

obligations under those close-out netting contracts; or

(b) in the case of a total transfer under the Business Transfer Act:

(i) all close-out netting contracts to which the regulated

body is a party (and to which the receiving body will

become a party immediately after the transfer); and

(ii) all securities given over financial property, in respect of

obligations under those close-out netting contracts; or

Act--either or both of the following:

(i) all close-out netting contracts to which the regulated

body is a party (and to which the regulated body will

remain a party immediately after the transfer), and all

securities given over financial property in respect of

obligations under those contracts;

(ii) all close-out netting contracts to which the regulated

body is a party (and to which the receiving body will

become a party immediately after the transfer), and all

securities given over financial property in respect of

obligations under those contracts.

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27 Paragraphs 15C(3)(c) and (d)

Repeal the paragraphs, substitute:

that the party has each material authorisation (however

described) necessary for its regulated business;

(d) if minimum capital requirements under the Banking Act

1959, the Insurance Act 1973 or the Life Insurance Act 1995

apply to the party--that either subsection (4) or

subsection (5) is satisfied in respect of the party.

28 Paragraph 15C(5)(b)

Repeal the paragraph, substitute:

(b) those arrangements will remain in place until at least the

earliest day on which one or more of the following occurs:

(i) subsection (4) is satisfied;

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

party's business--APRA makes an ultimate termination

of control under subsection 13C(3) of the Banking Act

1959;

(iii) if an Insurance Act statutory manager is in control of the

party's business--APRA makes an ultimate termination

of control under subsection 62ZOC(3) of the Insurance

Act 1973;

(iv) if a Life Insurance Act statutory manager is in control of

the party's business--APRA makes an ultimate

termination of control under subsection 179AC(3) of the

Life Insurance Act 1995;

(v) if the party is under judicial management under the

Insurance Act 1973--an order under section 62ZF of

that Act cancelling the judicial management comes into

force;

(vi) if the party is under judicial management under the Life

Insurance Act 1995--an order under section 172 of that

Act cancelling the judicial management comes into

force.

29 At the end of Division 2 of Part 4

Add:

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15D When APRA may declare that non-direction stays continue--

related body corporate of regulated body is party to

trigger contract

(1) Subsection (3) applies if:

(a) a trigger event to which a specified stay provision (other than

a direction stay provision) applies:

(i) is an event that involves a regulated body (the trigger

body); and

(ii) happens in relation to one or more close-out netting

contracts (each of which is a trigger contract) to which

a related body corporate of the trigger body (the

contracting body) is a party; and

(b) APRA is satisfied that all the matters in subsection (5) will be

satisfied in relation to each entity covered under

subsection (2):

(i) unless subparagraph (ii) applies--at the time the

declaration will be made; or

(ii) if a certificate of transfer will come into force under the

Business Transfer Act for a transfer of business from

the trigger body to a receiving body--just after that

coming into force; and

administration (disregarding paragraphs (d), (da), (db), (e)

and (f) of the definition of external administration in

section 5); and

(d) APRA has not already made a declaration under section 15B

in relation to the trigger event happening in relation to the

trigger contract.

(2) For the purposes of paragraphs (1)(b) and (c), an entity is covered

under this subsection if it is:

(a) if section 15E does not apply--the trigger body; or

(b) if section 15E applies because of a transfer of business under

the Business Transfer Act from the trigger body to a

receiving body:

(i) in the case of a total transfer of business--the receiving

body; or

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(ii) in the case of a partial transfer of business--an entity

specified in a determination under subsection 15E(3).

(3) APRA may, before the end of the resolution period for the trigger

event, make a declaration that the specified stay provision is to

continue to apply to:

(a) each trigger contract specified in the declaration; and

(b) all securities given over financial property, in respect of

obligations under each trigger contract specified in the

declaration.

(4) APRA may specify either or both of the following in a declaration

under subsection (3):

(a) one or more trigger contracts;

(b) one or more classes of trigger contracts.

Note:

See subsection 15E(2) for a restriction on when APRA may make a

declaration under subsection (2) of this section in the case of a transfer

of business from the trigger body to a receiving body.

(5) For the purposes of paragraph (1)(b), the matters are as follows:

(a) that the entity covered under subsection (2) is able to meet all

its liabilities under:

(i) close-out netting contracts to which it is a party; and

(ii) securities given over financial property in respect of

obligations of the entity under those contracts;

as and when they become due and payable;

(b) that the entity covered under subsection (2) is solvent (within

the meaning of the Corporations Act 2001);

insurer or a life company--that the entity has each material

authorisation (however described) necessary for its regulated

business;

(d) if minimum capital requirements under the Banking Act

1959, the Insurance Act 1973 or the Life Insurance Act 1995

apply to the entity covered under subsection (2)--that either

subsection (6) or subsection (7) is satisfied in respect of the

entity covered under subsection (2).

(6) This subsection is satisfied if the entity's level of capital complies

with the minimum capital requirements that apply to it under:

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(a) the Banking Act 1959, the Insurance Act 1973 or the Life

Insurance Act 1995 (as the case requires); and

(b) the applicable prudential standards made under that Act.

(7) This subsection is satisfied if:

(a) arrangements are in place to ensure that the entity performs

all its obligations under:

(i) close-out netting contracts to which it is a party; and

(ii) securities given over financial property in respect of

obligations of the entity under those contracts;

as and when they are due to be performed; and

(b) those arrangements will remain in place until at least the

earliest day on which one or more of the following occurs:

(i) subsection (6) is satisfied;

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

entity's business--APRA makes an ultimate

termination of control under subsection 13C(3) of the

Banking Act 1959;

(iii) if an Insurance Act statutory manager is in control of the

entity's business--APRA makes an ultimate

termination of control under subsection 62ZOC(3) of

the Insurance Act 1973;

(iv) if a Life Insurance Act statutory manager is in control of

the entity's business--APRA makes an ultimate

termination of control under subsection 179AC(3) of the

Life Insurance Act 1995;

(v) if the entity is under judicial management under the

Insurance Act 1973--an order under section 62ZF of

that Act cancelling the judicial management comes into

force;

(vi) if the entity is under judicial management under the Life

Insurance Act 1995--an order under section 172 of that

Act cancelling the judicial management comes into

force.

(8) A declaration under subsection (3) cannot be varied or revoked.

(9) A declaration under this section is not a legislative instrument.

(10) The regulations may do any of the following:

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(a) prescribe requirements relating to how declarations under

subsection (3) are to be made (including requirements

relating to the content or form of declarations);

(b) prescribe requirements relating to the notification or

publication of declarations under subsection (3);

or for a particular purpose, the time when declarations under

subsection (3) are taken to be made.

Note:

Regulations under paragraph (c) may (for example) provide that, for

the purpose of this section, a declaration is taken not to have been

made until certain requirements of regulations under paragraph (b)

have been complied with.

15E Declaration under subsection 15D(3)--total or partial transfer

of business

(1) This section applies if:

(a) the requirement in paragraph 15D(1)(a) is satisfied in relation

to a trigger event; and

(b) a certificate of transfer will come into force under the

Business Transfer Act for:

(i) a total transfer of business from the trigger body to a

receiving body; or

(ii) a partial transfer of business from the trigger body to a

receiving body.

(2) APRA must not make a declaration under subsection 15D(3) in

relation to the trigger event unless APRA is satisfied that the

declaration will not have a detrimental effect on any counterparty

to a close-out netting contract to which the declaration would

apply.

(3) For the purposes of subparagraph 15D(2)(b)(ii), APRA may make

a written determination specifying either or both of the following:

(a) the trigger body;

(b) the receiving body.

(4) A determination under subsection (3) cannot be varied or revoked.

(5) A determination under subsection (3) is not a legislative

instrument.

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(6) The regulations may do any of the following:

(a) prescribe requirements relating to how determinations under

subsection (3) are to be made (including requirements

relating to the content or form of declarations);

(b) prescribe requirements relating to the notification or

publication of determinations under subsection (3);

or for a particular purpose, the time when determinations

under subsection (3) are taken to be made.

Note:

Regulations under paragraph (c) may (for example) provide that, for

the purpose of this section, a determination is taken not to have been

made until certain requirements of regulations under paragraph (b)

have been complied with.

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Part 2--Application provisions

30 Interpretation

In this Part:

commencement time means the time when this item commences.

31 Application

--ceasing non-direction stays for derivatives

contracts

The amendments made by items 18 to 29 of this Schedule apply in

relation to trigger events that happen on or after the commencement

time.

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Schedule 6--Amendment of the Australian

Prudential Regulation Authority Act

1998

Australian Prudential Regulation Authority Act 1998

1 Subsection 3(1) (paragraph (f) of the definition of prudential

regulation framework law)

Repeal the paragraph, substitute:

(f) the Financial Sector (Transfer and Restructure) Act 1999;

2 Section 48

After "investigators and administrators under Division 2 of Part II of the

Banking Act 1959", insert ", Division 1A of Part VB of the Insurance

Act 1973 or Division 1AA of Part 8 of the Life Insurance Act 1995.

3 After subparagraph 54C(a)(i)

Insert:

(ia) meeting the entitlement of a receiving body under

subsection 16AIC(2) of that Act (Payment of receiving

body under transferred liabilities determination), to the

extent that the entitlement is comprised of the FCS

payment amount mentioned in paragraph 16AIB(1)(a)

of that Act; or

4 After subparagraph 54C(b)(i)

Insert:

(ia) meeting the entitlement of a receiving body under

subsection 62ZZMC(2) of that Act (Payment of

receiving body under transferred liabilities

determination), to the extent that the entitlement is

comprised of the FCS payment amount mentioned in

paragraph 62ZZMB(1)(a) of that Act; or

5 At the end of section 58

Add:

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(4) Subsection (1) does not limit, and is not limited by, any of the

following provisions:

(a) section 14C, 52A, 52B, 70A or 70AA of the Banking Act

1959;

(b) section 62ZOK, 38A, 38B, 127B or 127C of the Insurance

Act 1973;

Insurance Act 1995.

6 Subparagraph 59(2)(a)(i)

Repeal the subparagraph, substitute:

(i) the activities of persons conducting investigations under

Division 2 of Part II of the Banking Act 1959;

7 After paragraph 59(2)(a)

Insert:

(aaa) information on the following matters:

(i) the activities of Banking Act statutory managers (within

the meaning of the Banking Act 1959);

(ii) the activities of Insurance Act statutory managers

(within the meaning of the Insurance Act 1973);

(iii) the activities of Life Insurance Act statutory managers

(within the meaning of the Life Insurance Act 1995);

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Schedule 7--Amendments of other Acts

Corporations Act 2001

1 At the end of subsection 256B(1)

Add:

Note 5:

A company may reduce its share capital for the purposes of the

conversion and write-off provisions determined by APRA despite this

Division (see Subdivision B of Division 1A of Part II of the Banking

Act 1959, Division 2 of Part IIIA of the Insurance Act 1973 and

Division 1A of Part 10A of the Life Insurance Act 1995).

2 At the end of subsection 437F(8)

Add:

Note:

An alteration in the status of members of a company that is made

during the administration of the company may not be void if it is made

for the purposes of the conversion and write-off provisions determined

by APRA (see Subdivision B of Division 1A of Part II of the Banking

Act 1959, Division 2 of Part IIIA of the Insurance Act 1973 and

Division 1A of Part 10A of the Life Insurance Act 1995).

3 At the end of subsection 468A(8)

Add:

Note:

An alteration in the status of members of a company that is made after

the commencement of the winding up by the Court may not be void if

it is made for the purposes of the conversion and write-off provisions

(see Subdivision B of Division 1A of Part II of the Banking Act 1959,

Division 2 of Part IIIA of the Insurance Act 1973 and Division 1A of

Part 10A of the Life Insurance Act 1995).

Income Tax Assessment Act 1997

4 Paragraph 202-47(1)(a)

Omit "Financial Sector (Business Transfer and Group Restructure) Act

1999", substitute "Financial Sector (Transfer and Restructure) Act

1999".

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5 Section 320-300

Omit "Financial Sector (Business Transfer and Group Restructure) Act

1999", substitute "Financial Sector (Transfer and Restructure) Act

1999".

6 Paragraph 320-305(b)

Omit "Financial Sector (Business Transfer and Group Restructure) Act

1999", substitute "Financial Sector (Transfer and Restructure) Act

1999".

7 Paragraph 322-30(b)

Omit "Division 3 of Part VC", substitute "section 62ZZF, 62ZZFA,

62ZZG or 62ZZGA".

8 Section 322-30 (note 2)

Omit "Division 3 of Part VC of the Insurance Act 1973 entitles",

substitute "Sections 62ZZF, 62ZZFA, 62ZZG and 62ZZGA of the

Insurance Act 1973 entitle".

9 Paragraph 615-35(a)

Omit "Financial Sector (Business Transfer and Group Restructure) Act

1999", substitute "Financial Sector (Transfer and Restructure) Act

1999".

10 Subsection 703-37(1)

Omit "Financial Sector (Business Transfer and Group Restructure) Act

1999", substitute "Financial Sector (Transfer and Restructure) Act

1999".

11 Paragraph 703-37(4)(a)

Omit "Financial Sector (Business Transfer and Group Restructure) Act

1999", substitute "Financial Sector (Transfer and Restructure) Act

1999".

Commonwealth of Australia Bills

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