Regulatory approval is required before a change in a superannuation licensee’s ownership occurs. Noncompliance may attract “severe penalties”.
APRA (Australian Prudential Regulation Authority) has warned that owning a controlling stake in a superannuation licensees before obtain regulatory approval is a “strict liability offence” under of the Superannuation Industry (Supervision) Act which may attract “severe penalties”.
The Act came into force on 5 July 2019, imposing requirements for superannuation licensees to seek regulatory approval before a change of ownership occurs.
According to APRA, a review of implementation by licensees has revealed that relevant persons acquiring controlling stakes may not have always considered the application of the pre-approval requirement to their particular circumstances.
“For example, APRA is aware that some RSE licensee directors hold shares in an RSE licensee. Where this is the case, it may be that the appointment of a new director or removal of an existing director has triggered the controlling stake requirement,” APRA says in a letter to industry.
“An application for approval to hold a controlling stake in an RSE licensee needs to be considered whenever there are changes to the ownership of shares in an RSE licensee.”
This includes changes in shareholdings, restructuring of a corporate group, an acquisition of shares in a superannuation licensee or its holding company, and where successor fund transfers result in the issue or transfer of shares to a director, employer organisation or employee organisation.
Superannuation licensees are instructed to identify whether there have been any ownership changes since 5 July 2019 where APRA’s approval has not been obtained, and if so, contact their supervisor within 30 days.
Licensees should also review their constitution, shareholder deed and/or risk management framework to ensure the controlling stake requirements are incorporated and the requirement to seek APRA approval is included as required.
If required, licensees should lodge a controlling stake application using APRA’s application form and instruction guide.
APRA has updated the application form and instruction guide to make the application process more flexible, particularly for multiple applicants and multiple licensees, and to provide a streamlined process for circumstances where there is a simple change of director who is also a shareholder.
It also provides additional guidance on how to identify all relevant applicants and clarifies the type of documentation to be provided where foreign applicants are involved.