The Australian Prudential Regulation Authority (APRA) has begun a consultation on draft Financial Sector (Shareholdings) Rules 2019 which prescribe the matters that must be considered by owners of new entrant financial sector companies that wish to be approved under the Financial Sector (Shareholdings) Act 1998 (FSSA) to hold a stake of more than 20 per cent in the financial sector company. Background.

The Treasury Laws Amendment (Financial Sector Regulation) Act 2018 amended the Financial Sector (Shareholdings) Act 1998 from 1 April 2019 to introduce a streamlined approval path for applications to hold a stake of more than 20 per cent in a new or recently established domestically-incorporated financial sector company with assets below the relevant threshold

The FSSA has a new streamlined “fit and proper” test for shareholders of new or recently established authorised deposit-taking institutions and life insurers with assets below $200 million, and general insurers with assets below $50 million.

The Financial Sector (Shareholdings) Rules 2019 set out the matters that must be considered in determining if a person is “fit and proper” for the purposes of the FSSA; the calculation used to determine if an entity’s assets are within the relevant threshold; and the information to be reported to APRA annually if an application under the “fit and proper” test is approved.