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State Financial Institutions and Metway Merger Facilitation
STATE FINANCIAL INSTITUTIONS AND
METWAY MERGER FACILITATION
BILL 1996
EXPLANATORY NOTE
Short Title
The short title of the Bill is the State Financial Institutions and Metway
Merger Facilitation Bill 1996.
Policy objectives of the Bill and the reasons for those objectives
The primary objective of the legislation is to facilitate the restructuring of
some or all of the State Financial Institutions ("SFIs") to enable them and
Metway Bank Limited to merge and become a major Queensland-based
financial institution.
The SFIs include the following financial entities owned or controlled by
the State:
· Queensland Industry Development Corporation (QIDC)
· SUNCORP Building Society (SBS)
· SUNCORP Finance Limited (SFL)
· SUNCORP Insurance and Finance (SIF).
The Government's current objectives in respect of both SUNCORP and
QIDC are fundamentally commercial in that each organisation is required to
provide an appropriate rate of return on the Government's equity, and there
is no clear or specific policy objective served through continuing to wholly
own and control these entities.
Merging these entities with a private sector financial institution is a
logical extension of the corporatisation process, exposing them more fully
to the rigours of the market and allowing them to access private capital
markets to fund growth and diversification. The merger also ensures that a
major financial institution remains headquartered in Queensland.
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State Financial Institutions and Metway Merger Facilitation
The way these policy objectives will be achieved by the Bill and why
this way of achieving the policy objectives is reasonable and
appropriate
The legislation provides for the restructuring of the SFIs prior to their
merger with Metway.
In particular, the legislation empowers QIDC and SIF to become
Company GOCs registered under the Corporations Law. SBS is
empowered either to become registered as a company under the
Corporations Law or to transfer all or part of its undertaking to QIDC.
Any two or more SFIs then are empowered to amalgamate some or all
of their assets by way of a scheme or schemes of amalgamation, with the
resulting amalgamated entity or entities enabled to merge with Metway by
way of a scheme or schemes of arrangement under the Corporations Law.
Alternative way of achieving the policy objectives
The alternatives for achieving the policy objectives could have included
sale of the entities by trade sale or individual share floats. It is expected that
these alternatives would not have maximised the value of these assets to the
Government or ensured the retention of a major financial institution
headquartered in Queensland.
Administrative costs for Government implementation of the Bill
Any costs associated with the implementation of the Bill will be
recovered from the proceeds of the public offering of the Government's
shares in the merged entity.
Consistency with fundamental legislative principles
Care has been taken in drafting this Bill to ensure that no aspects of the
Bill infringe upon fundamental legislative principles.
Consultation
Extensive consultation has taken place with the Reserve Bank of
Australia, Insurance and Superannuation Commission, Ministerial Council
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State Financial Institutions and Metway Merger Facilitation
for Financial Institutions, Commonwealth Treasury, all other State and
Territory Treasuries, Registrar of Titles, Department of Justice, Australian
Financial Institutions Commission, Queensland Office of Financial
Supervision, SUNCORP, QIDC and Metway.
PART 1--PRELIMINARY
Clause 1 specifies the short title.
Clause 2 provides for the commencement of the Act.
Clause 3 provides for a dictionary of particular words used in the Act.
PART 2--OBJECT AND BASIC CONCEPTS
Division 1--Object
Clause 4 sets out the object of the Act.
Division 2--Basic Concepts
Clause 5 provides for the particular meaning of "State financial
institution ("SFI")", where that term is used in this Act.
Clause 6 provides for the particular meaning of "Metway scheme of
arrangement", where that term is used in this Act.
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State Financial Institutions and Metway Merger Facilitation
PART 3--TRANSFER OF THE INCORPORATION OF
QIDC AND SIF TO CORPORATIONS LAW
Division 1--Definition
Clause 7 provides for the particular meaning of "candidate company",
where that term is used in this Part.
Division 2--QIDC not statutory GOC
Clause 8 provides for the Division to take effect from the day fixed by a
Treasurer's gazette notice.
Clause 9 provides that QIDC is no longer a statutory GOC.
Clause 10 provides for QIDC to have a share capital, which may be
varied under clause 16 of the Bill.
Clause 11 provides that QIDC continues to have the powers it had as a
statutory GOC until it becomes a company GOC, without limiting the
powers QIDC has under any other Act.
Division 3--Facilitative mechanisms
Clause 12 empowers a candidate company to transfer its incorporation to
and become registered under the Corporations Law, provided its members
first consent to the transfer of incorporation. It also provides that the
Treasurer is authorised to take action necessary to enable the candidate
company to become registered under the Corporations Law.
Clause 13 provides for the Treasurer to adopt and amend the
memorandum and articles of a candidate company, which must not be
inconsistent with this Act or the Corporations Law.
Clause 14 provides that the memorandum and articles of a candidate
company may change its name.
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State Financial Institutions and Metway Merger Facilitation
Clause 15 provides for a candidate company to be taken to have a share
capital if it does not already have one and for the application of part of its
capital to paying up in full, shares in itself, by a Treasurer's gazette notice.
Clause 16 provides that a Treasurer's gazette notice may vary (by way of
issue, cancellation, consolidation or division) the share capital of a candidate
company, but only until it becomes registered under the Corporations Law.
Clause 17 provides that shares in a candidate company are to be issued to
a Minister and held on behalf of the State.
Division 4--Miscellaneous
Clause 18 provides that the GOC Act does not apply to a candidate
company transferring its incorporation to the Corporations Law, but that
upon becoming registered under the Corporations Law, it becomes a
company GOC under the GOC Act and that Act applies with any necessary
changes. It also provides that on the Metway amalgamation day the
company GOC ceases to be a company GOC and the GOC Act no longer
applies to it.
Clause 19 provides that this Part overrides the Queensland Industry
Development Corporation Act 1994 and the SUNCORP Insurance and
Finance Act 1985.
Clause 20 provides for the Treasurer to notify by gazette, the day a
candidate company is registered under the Corporations Law.
PART 4--TRANSFER OF THE UNDERTAKING AND
INCORPORATION OF SBS
Division 1--Transfer of SBS's undertaking to QIDC
Clause 21 provides for certain definitions of terms used in this Division.
Clause 22 provides for the transfer of SBS's assets and liabilities to
QIDC.
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State Financial Institutions and Metway Merger Facilitation
Clause 23 provides that SBS's members do not become members of or
shareholders in QIDC upon the transfer.
Clause 24 provides that the Treasurer may by gazette notice exclude
assets and liabilities from transfer, other than the SBS pre-conversion
reserves.
Clause 25 provides that the Treasurer can, by gazette notice fix the terms
upon which SBS's undertaking is transferred.
Clause 26 provides for a number of transitional provisions on a range of
matters, including construction of instruments and substitution of references
to SBS with references to QIDC.
Clause 27 provides that instructions for payments to be made to accounts
at SBS are taken to be instructions to QIDC.
Clause 28 provides for the transfer of officers and employees of SBS to
QIDC and that such transfer does not affect their remuneration, prejudice
existing or accruing rights to recreation leave, sick leave, long service leave
or superannuation, or interrupt continuity of service or constitute a
retrenchment or redundancy.
Clause 29 provides that legal proceedings that might have been brought
against SBS in relation to a transferred asset or transferred liability may be
continued by or against QIDC.
Clause 30 provides for the establishment in QIDC on the transfer day of
an amount equal to the pre-conversion reserve of SBS established under
Rule 177(e) of SBS's rules.
Clause 31 provides that if QIDC is wound up, SBS's members'
entitlements under its rules to participate in pre-conversion reserves will be
recognised by QIDC.
Clause 32 provides that persons dealing with QIDC or SBS are not
obliged to inquire whether assets or liabilities are those of QIDC or SBS.
Clause 33 provides that if all of the assets and liabilities of SBS are
transferred, SBS's registration as a building society is cancelled under the
Financial Institutions (Queensland) Code.
Clause 34 provides that upon a cancellation of registration pursuant to
clause 33, SBS is dissolved without a winding up and there is no right to
damages or compensation because of the dissolution because all rights will
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have been transferred pursuant to clause 25, including the SBS pre-
conversion reserves under clause 30.
Division 2--Transfer of incorporation of SBS to Corporations Law
Clause 35 empowers SBS, if directed to do so by the Treasurer and with
the consent of the majority of its members entitled to vote under SBS's
rules, to transfer its incorporation to and become registered under the
Corporations Law.
Clause 36 provides for the Treasurer to adopt and amend the
memorandum and articles of SBS, which must not be inconsistent with this
Act or the Corporations Law.
Clause 37 provides that upon becoming registered under the
Corporations Law, SBS must change its name and that its memorandum
and articles must so provide, so that it will not contravene the Financial
Institutions (Queensland) Code.
Division 3--Provisions applying if SBS becomes registered under
Corporations Law
Subdivision 1--Application and expiry of division
Clause 38 provides that the Division is to apply if SBS becomes
registered under the Corporations Law.
Clause 39 provides that this Division and Schedule 1 expire 2 years after
the Metway amalgamation day.
Subdivision 2--SBS no longer building society
Clause 40 provides for SBS to cease to be a building society.
Clause 41 provides for the cancellation of SBS's registration as a
building society.
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State Financial Institutions and Metway Merger Facilitation
Subdivision 3--Application of Financial Institutions (Queensland) Code
Clause 42 provides that this subdivision has effect while a regulation
declares it has effect.
Clause 43 provides for the prudential supervision of SBS in the same
manner as under the Financial Institutions (Queensland) Code, with
consequential changes outlined in that clause and in Schedule 1, Part 1 of
this Act.
Clause 44 provides that the Financial Institutions (Queensland) Code
applied pursuant to clause 43, does not form part of the financial institutions
legislation under the AFIC (Queensland) Code and that QOFS when acting
does not act as the State supervisory authority.
Clause 45 provides for the Board of QOFS to make standards whether
prudential or otherwise with respect to the matters listed in that clause.
Clause 46 provides for the making of transitional arrangements for the
purpose of allowing additional time to comply with standards prescribed by
QOFS.
Clause 47 provides that QOFS must publish its standards in the gazette.
Clause 48 provides that SBS's auditor is to give to QOFS the same
information as is given to the ASC.
Clause 49 provides that QOFS may obtain copies of accounts from SBS
in certain circumstances.
Subdivision 4--SBS as State instrumentality
Clause 50 provides that until the Metway amalgamation day, SBS is an
instrumentality of the Crown in right of the State.
Division 4--Relationship of pt 4 to financial institutions legislation
Clause 51 provides that this Part applies despite the financial institutions
legislation under the AFIC Code.
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State Financial Institutions and Metway Merger Facilitation
PART 5--AMALGAMATION OF CERTAIN STATE
FINANCIAL INSTITUTIONS
Clause 52 provides for the object of the Part to provide for schemes of
arrangement under which SFIs may be amalgamated.
Clause 53 provides for certain definitions of terms used in this Part.
Clause 54 provides that the Treasurer may cause the preparation of
schemes of amalgamation.
Clause 55 provides that the Treasurer may by gazette notice approve a
scheme of amalgamation which then has effect by force of this section.
Clause 56 provides for the matters a scheme of arrangement may
provide for in order to facilitate the transfer of the undertakings of the SFIs.
Clause 57 provides that an asset transferred under a scheme of
amalgamation may be transferred free from any charge (as defined in the
Corporations Law).
Clause 58 provides for a number of transitional provisions on a range of
matters, including construction of instruments and substitution of references
to transferors with references to transferees.
Clause 59 excuses a person from having to inquire into the title to an
asset or liability of a participating entity.
Clause 60 provides for the transfer of officers and employees between
SFIs and provides for the same matters as clause 28.
Clause 61 provides that legal proceedings that might have been brought
against a transferor SFI in relation to a transferred asset or transferred
liability may be continued by or against the transferee SFI.
Clause 62 provides that this Part has effect despite the Corporations
Law, the AFIC (Queensland) Code , the Queensland Industry Development
Corporation Act 1994 and the SUNCORP Insurance and Finance Act
1985.
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State Financial Institutions and Metway Merger Facilitation
PART 6--MANDATORY REQUIREMENTS
REGARDING METWAY GROUP COMPANIES'
ARTICLES
Clause 63 provides the date from which this Part is to apply being the
Metway amalgamation day.
Clause 64 provides for the articles of association of each Metway Group
company to include provisions requiring the head office of the company to
be located in Queensland.
Clause 65 provides that any inconsistent alteration to a Metway Group
company's articles do not have effect.
Clause 66 provides that the Treasurer may obtain an injunction to restrain
a contravention by the Metway Group companies of the provisions of the
articles requiring the headquarters of the bank to be located in Queensland.
Clause 67 provides that the Treasurer's power to obtain an injunction
may be delegated to the chief executive of the Department.
Clause 68 provide that the Supreme Court of Queensland has jurisdiction
in relation to the obtaining of the injunctions exclusive of the jurisdiction of
other courts other than the High Court.
Clause 69 provides that this Part has effect despite the Corporations
Law. It also provides that if there is any conflict or inconsistency between
this Part and a Metway Group company's memorandum or articles this
Part prevails.
PART 7--GUARANTEE OF EXISTING
OBLIGATIONS
Clause 70 preserves the State guarantee for QIDC obligations undertaken
before the Metway amalgamation day.
Clause 71 preserves the State guarantee in relation to policies or contracts
of insurance or indemnity entered into before the Metway amalgamation
day by SIF or its wholly owned subsidiaries.
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State Financial Institutions and Metway Merger Facilitation
Clause 72 provides that if the State has an obligation mentioned under
clauses 70 or 71, that obligation continues under those sections despite the
fact that the liability in relation to which the obligation arises has been
transferred from QIDC, SIF or a wholly owned subsidiary of SIF on or
before the Metway amalgamation day.
Clause 73 provides that on and from the Metway amalgamation day the
State does not guarantee payment of an amount other than one mentioned in
clauses 70, 71 or 72.
Clause 74 provides that if an amount becomes payable by the State under
clauses 70, 71 or 72 the Treasurer may pay the amount from the
consolidated fund without further appropriation.
Clause 75 provides that the Treasurer may require guarantee fees to be
paid to the State in relation to the State's obligations under clauses 70 or
72(2)(a) as set out in that clause. It also provides that the Treasurer may
require a fee to be paid in relation to debts owed to Queensland Treasury
Corporation as set out in that clause.
PART 8--MISCELLANEOUS
Clause 76 provides that no State tax is payable in relation to any
transaction connected with or arising out of this Act, or in relation to the
transfer of an asset or liability held at the Metway amalgamation day by an
SFI, Metway or their related bodies corporate, which is declared by
regulation, within 2 years after that date, to be exempt. It also provides that
to the extent it is empowered to do so such tax includes one imposed under
an Act of another State.
Clause 77 provides that assets and liabilities of an SFI may, by
regulation before the Metway amalgamation day, be transferred from the
SFI to another government entity specified in the regulation.
Clause 78 provides that within six months of the Metway amalgamation
day, certain assets and liabilities of Metway or a related body corporate of
Metway held before that day by an SFI, which have been transferred to
Metway or a related body corporate of Metway may, if the Treasurer and
Metway agree, be re-transferred by regulation to a government entity.
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State Financial Institutions and Metway Merger Facilitation
Clause 79 provides for the transfer of officers and employees from an
SFI to Metway and provides for the same matters as clauses 28 and 60.
Clause 80 provides that entities which transfer their incorporation to the
Corporations Law retain their legal personality at law.
Clause 81 directs the Registrar of Titles to note transfers resulting from
transactions contemplated under this Act.
Clause 82 provides that the Treasurer may direct the State financial
institutions to facilitate the matters in Parts 3, 4 and 5 of this Act and under
the Metway scheme of arrangement.
Clause 83 provides for the standard of care and diligence expected of
directors of an SFI.
Clause 84 provides that despite anything in any instrument, this Act does
not affect existing legal relationships or place the entity or the State,
amongst other things, in breach of a contract, trust, or other instrument.
Clause 85 provides that this Act is facilitative and does not prevent things
being done otherwise than under this Act.
Clause 86 provides that certain dealings with shares under the schemes
of amalgamation or Metway scheme of arrangement in so far as they relate
to SIF or QIDC, prevail if inconsistent with the GOC Act.
Clause 87 provides that protected information under the Financial
Administration and Audit Act 1977 may be disclosed for the purposes of the
Act as set out in that section.
Clause 88 provides that Chapter 7 of the Corporations Law applies to a
unit trust which may be promoted by or on behalf of the State to hold
ordinary shares in Metway.
Clause 89 provides that a transfer of assets or liabilities under the
Metway scheme of arrangement takes effect under the Corporations Law.
Clause 90 provides that a certificate purporting to be issued by the
Treasurer is evidence that assets or liabilities have been transferred from one
entity to another.
Clause 91 provides that it is Parliament's intent that this Act should as
far as possible, apply extraterritorially.
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State Financial Institutions and Metway Merger Facilitation
Clause 92 provides that if an entity changes its name, references in an
Act or other document to its former name are taken to include the entity by
its new name.
Clause 93 provides that the Governor in Council may make regulations
under this Act.
PART 9--TRANSITIONAL, REPEALS AND
AMENDMENTS
Clause 94 provides for the making of regulations for the purposes of this
Act.
Clause 95 provides for the repeal of some of the provisions of the
Queensland Industry Development Corporation Act 1994 before the
Metway amalgamation day, and for the repeal of the Act on that day.
Clause 96 provides for the repeal of some of the provisions of the
SUNCORP Insurance and Finance Act 1985 before the Metway
amalgamation day and for the repeal of the Act on that day.
Clause 97 provides for the amendment of the Acts listed in Schedule 2.
SCHEDULE 1
PART 1--CHANGES TO THE APPLIED FINANCIAL
INSTITUTIONS (QUEENSLAND) CODE
This Part provides for the application of the Financial Institutions
(Queensland) Code to SBS as provided in clauses 43(3) and (5) of the Bill.
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State Financial Institutions and Metway Merger Facilitation
PART 2--CHANGES TO BOOK 3, PRUDENTIAL
STANDARDS FOR BUILDING SOCIETIES
This Part provides for changes to the Prudential Standards, consequent
upon the modifications in Part 1.
SCHEDULE 2
AMENDMENTS
This Schedule provides for the amendment of the Queensland Industry
Development Corporation Act 1994, the Queensland Office of Financial
Supervision Act 1992 and the SUNCORP Insurance and Finance Act 1985.
It also provides for the amendment of the Freedom of Information Act 1992
and the Judicial Review Act 1991, to omit references in those Acts to SIF
and QIDC after the Metway amalgamation day.
SCHEDULE 3
DICTIONARY
This Schedule provides the dictionary, defining particular words used in
the Act, referred to in clause 3 of the Bill.
© The State of Queensland 1996