Document ID: chunk:federal_register_of_legislation:C2007A00117:clause:2_3
Version: federal_register_of_legislation:C2007A00117
Segment Type: clause
Provision Reference: sch 2 cl 3
Character Range: 26334–29016

3  After section 703‑35
Insert:

703‑37  Disregarding certain preference shares following an ADI restructure

 (1) The object of this section is to ensure that, following an *ADI restructure to which Part 4A of the Financial Sector (Business Transfer and Group Restructure) Act 1999 applies, a body corporate is not prevented from being a *subsidiary member of a *consolidated group or *consolidatable group just because the body (or another body corporate) has issued, or issues, certain preference *shares.

 (2) This Part (except Division 719) operates as if a body corporate that meets the requirement of subsection (3) at a particular time were a *wholly‑owned subsidiary of another body corporate (the holding body) at the time.

 (3) The body corporate (the preference‑share issuing body) must be one that would be a *wholly‑owned subsidiary of the holding body at the time if the *shares in the preference share‑issuing body that are to be disregarded under subsection (4) did not exist.

 (4) Disregard a *share in the preference‑share issuing body if:
 (a) a restructure instrument under Part 4A of the Financial Sector (Business Transfer and Group Restructure) Act 1999 is in force in relation to a non‑operating holding company within the meaning of that Act; and
 (b) because of the restructure to which the instrument relates, an *ADI becomes a subsidiary (within the meaning of that Act) of the non‑operating holding company; and
 (c) the preference share‑issuing body is:
 (i) the ADI; or
 (ii) part of an extended licensed entity (within the meaning of the *prudential standards) that includes the ADI; and
 (d) the shares are covered by subsection (5).

 (5) A *share is covered by this subsection if:
 (a) the share is a preference share; and
 (b) any *return on the share is fixed at the time of issue by reference to the amount subscribed; and
 (c) the share is not a *voting share; and
 (d) either:
 (i) the share is Tier 1 capital (within the meaning of the *prudential standards); or
 (ii) the share would be Tier 1 capital (within the meaning of the prudential standards) were it not for a limit, imposed by those standards, on the proportion of Tier 1 capital that can be made up of such shares.

 (6) Paragraph (5)(a) covers a preference share if it is issued:
 (a) by itself; or
 (b) in combination with one or more *schemes that are *related schemes in relation to a scheme under which a preference share is issued.

 (7) If subsection (5) has covered a *share, but would (apart from this subsection) stop covering the share from a particular time, then for a period of 180 days after that time the subsection is taken to continue to cover the share.