An Act relating to life insurance, and for related purposes
Part 1—Preliminary
1
Short title [see Note 1]
This Act may be cited as the Life
Insurance Act 1995.
2
Commencement [see Note 1]
(1) Subject to subsection (2), this Act
commences on a day to be fixed by Proclamation.
(2) If this Act does not commence under subsection (1)
within the period of 6 months beginning on the day on which this Act receives
the Royal Assent, it commences on the first day after the end of that period.
3
Objects of Act
(1) The principal object of this Act is to
protect the interests of the owners and prospective owners of life insurance
policies in a manner consistent with the continued development of a viable,
competitive and innovative life insurance industry.
(1A) An additional object of this Act is to
protect the interests of persons entitled to other kinds of benefits provided
in the course of carrying on life insurance business (including business that
is declared to be life insurance business).
(2) The principal means adopted for the
achievement of these objects are the following:
(a) restricting the conduct of life
insurance business to companies that are able to meet certain requirements as
to suitability;
(b) imposing on life companies
requirements designed to promote prudent management of the life insurance
business of such companies, including requirements designed to ensure the
solvency and capital adequacy of statutory funds;
(c) providing for the supervision of
life companies by APRA and ASIC;
(d) providing for judicial management
of life companies whose continuance may be threatened by unsatisfactory
management or an unsatisfactory financial position, so as to protect the
interests of policyholders and financial system stability in Australia;
(e) making provision to ensure that,
in the winding‑up of a life company, the interests of policy owners are adequately
protected;
(f) providing for the supervision of
transfers and amalgamations of life insurance business by the Court.
(3) Generally, this Act achieves these
objects by provisions applying to all life companies. However, there are a
number of special provisions that apply only to friendly societies (see in
particular Part 2A).
4
Additional operation of Act
Without prejudice to its effect apart
from this section, this Act also has the effect it would have if each reference
to a company were, by express provision, confined to a company that is a
corporation to which paragraph 51(xx) of the Constitution applies.
5
Exclusion of certain State insurance
This Act does not apply with respect to
State insurance that does not extend beyond the limits of the State concerned.
6
Extension of Act to Norfolk Island
This Act extends to the Territory of Norfolk
Island.
7
General administration of Act
(1) Subject to subsection (3):
(a) APRA has the general
administration of:
(i) Parts 3 to 6; and
(ii) Parts 8
to 9; and
(iii) sections 206 to
210; and
(iv) Part 12; and
(b) ASIC has the general
administration of Part 10 (other than sections 206 to 210).
(2) Parts 1 to 2, 7 and 11 confer powers
and duties on APRA for the purposes of APRA’s administration of its provisions
and powers and duties on ASIC for the purposes of its administration of its
provisions.
Note: Generally neither APRA nor ASIC is referred to
in these provisions. Regulator is used instead. See the definition of Regulator
in the Dictionary in the Schedule.
(3) The Minister may give APRA or ASIC
directions about the performance or exercise of its functions or powers under
this Act.
7A
Determination that certain provisions do not apply
(1) APRA may, in writing, determine that any
or all of the following provisions of this Act do not apply to a person while
the determination is in force:
(a) a provision of Part 2, 2A, 2B
or 3;
(b) a provision of Division 1, 3,
4, 5 or 6 of Part 4;
(c) section 75;
(d) section 76;
(e) section 78;
(f) section 79;
(g) section 80;
(h) section 81.
(2) The determination:
(a) may be expressed to apply to a
particular person or to a class of persons; and
(b) may specify the period during
which the determination is in force; and
(c) may be made subject to specified
conditions.
(3) If APRA makes a determination that
applies to a particular person, APRA must also give the person written notice
of the determination.
(4) APRA may, in writing, vary or revoke a
determination under this section.
(5) The following instruments made under this
section are not legislative instruments:
(a) a determination that applies to a
particular person;
(b) an instrument varying or revoking
a determination that applies to a particular person.
(6) Otherwise, an instrument made under this
section is a legislative instrument.
7B
Breach of condition of a determination under section 7A
(1) A person commits an offence if:
(a) a determination under
section 7A applies to a person; and
(b) the person does or fails to do an
act; and
(c) doing or failing to do the act
results in a breach of a condition to which the determination is subject.
Penalty: 60 penalty units.
(2) Strict liability applies to
subsection (1).
Note: For strict liability, see
section 6.1 of the Criminal Code.
8 Dictionary
(1) A dictionary of expressions used in the
Act is contained in the Schedule.
(2) Unless the contrary intention appears, an
expression defined in the dictionary has the meaning there set out.
Part 2—Explanation of key concepts
9 Life
policy
(1) Subject to subsection (2), each of
the following constitutes a life policy for the purposes of this Act:
(a) a contract of insurance that
provides for the payment of money on the death of a person or on the happening
of a contingency dependent on the termination or continuance of human life;
(b) a contract of insurance that is
subject to payment of premiums for a term dependent on the termination or
continuance of human life;
(c) a contract of insurance that
provides for the payment of an annuity for a term dependent on the continuance
of human life;
(d) a contract that provides for the
payment of an annuity for a term not dependent on the continuance of human life
but exceeding the term prescribed by the regulations for the purposes of this
paragraph;
(e) a continuous disability policy;
(f) a contract (whether or not it is
a contract of insurance) that constitutes an investment account contract;
(g) a contract (whether or not it is a
contract of insurance) that constitutes an investment‑linked contract.
(2) A contract that provides for the payment
of money on the death of a person is not a life policy if:
(a) by the terms of the contract, the
duration of the contract is to be not more than one year; and
(b) payment is only to be made in the
event of:
(i) death by accident; or
(ii) death resulting from a
specified sickness.
9A
Continuous disability policy
(1) Subject to
this section, a continuous disability policy is a contract of insurance:
(a) that is, by its terms, to be of
more than 3 years’ duration; and
(b) under which a benefit is payable
in the event of:
(i) the death, by accident
or by some other cause stated in the contract, of the person whose life is
insured (the insured); or
(ii) injury to, or
disability of, the insured as a result of accident or sickness; or
(iii) the insured being
found to have a stated condition or disease.
(2) A contract of insurance that is, by its
terms, to be of a duration of not more than 3 years is taken to comply with paragraph (1)(a)
if:
(a) contracts of insurance of the same
kind as the contract are usually of more than 3 years’ duration; and
(b) the contract is of a lesser
duration only because of the age of the owner of the policy at the time when it
was entered into.
(3) A contract of insurance is not a
continuous disability policy if the terms of the contract permit alteration, at
the instance of the life company concerned, of the benefits provided for by the
contract or the premiums payable under the contract.
(4) A contract of insurance the terms of
which permit alteration, at the instance of the life company concerned, of the
benefits provided for by the contract is not thereby excluded by subsection (3)
from being a continuous disability policy if, by those terms, the only
alterations that are permitted to be made are alterations that improve the
benefits and are made following an offer made by the life company and accepted
by the owner of the policy.
(5) A contract of insurance the terms of
which permit alteration, at the instance of the life company concerned, of the
premiums payable under the contract is not thereby excluded by subsection (3)
from being a continuous disability policy if the terms of all contracts of the
same kind as the contract only permit such alterations if they are made on a
simultaneous and consistent basis.
(6) A contract of consumer credit insurance
within the meaning of the Insurance Contracts Act 1984 is not a
continuous disability policy.
(7) A contract of insurance entered into in
the course of carrying on health insurance business is not a continuous
disability policy.
10
Issue and ownership of policies
(1) For the purposes of this Act:
(a) a life company issues a policy
when the company enters into the contract that constitutes the policy; and
(b) a policy is issued to the person
with whom the life company enters into the contract.
(2) For the purposes of this Act, the owner
of a policy is:
(a) the person to whom the policy is
issued; or
(b) if the rights of that person under
the policy have been assigned under this Act or transferred by the operation of
the policy, the person who has those rights.
11
Life insurance business
(1) A reference in this Act to life insurance
business is a reference to:
(a) business that consists of any or
all of the following:
(i) the issuing of life
policies;
(ii) the issuing of sinking
fund policies;
(iii) the undertaking of
liability under life policies;
(iv) the undertaking of
liability under sinking fund policies; and
(b) any business that relates to
business referred to in paragraph (a).
Note: Declarations under sections 12A and 12B
have the effect of extending the kinds of business that are life insurance
business for the purposes of this Act.
(2) In order to avoid doubt and without
limiting paragraph (1)(b), it is declared that the reference in that
paragraph to business that relates to business referred to in paragraph (1)(a)
includes business relating to the investment, administration and management of
the assets of a statutory fund.
(3) For the purposes of this Act, the
following do not constitute life insurance business:
(a) business in relation to benefits
provided by a trade union for its members or their dependants;
(b) business in relation to the
benefits provided for its members or their dependants by an association of
employees that is:
(i) an organisation within
the meaning of Schedule 1 to the Workplace Relations Act 1996; or
(ii) a transitionally
registered association within the meaning of Schedule 10 to the Workplace
Relations Act 1996;
(c) business in relation to any scheme
or arrangement under which superannuation benefits, pensions or payments to
employees or their dependants (and not to any other persons) on retirement,
disability or death are provided by an employer or by employees, or by both,
wholly through an organisation established by the employer or employees or by
both;
(d) in the case of a person who issues
policies to his or her employees, and not to any other persons, in Australia,
the business that consists of the issue of those policies or the undertaking of
liability under those policies;
(e) business in relation to a scheme
or arrangement for the provision, by a person other than a life company, of
benefits consisting of:
(i) the provision of
funeral, burial or cremation services, with or without the supply of goods
connected with such services; or
(ii) the payment of money,
on the death of a person, for the purpose of meeting the whole or a part of the
expenses of and incidental to the funeral, burial or cremation of the person;
and no other benefits, except
benefits incidental to the scheme or arrangement.
Note: This subsection has effect subject to sections 12A
and 12B (under which certain business may be declared to be life insurance
business for the purposes of this Act).
12
Classes of life insurance business
(1) For the purposes of this Act, the
following are the classes of life insurance business:
(a) ordinary business;
(b) superannuation business.
The expressions “ordinary business” and “superannuation
business” are defined in the Dictionary.
(2) APRA may, at the request of a life
company, declare, in writing, that life insurance business carried on by the
life company and included in one class of life insurance business is to be
treated, for the purposes of this Act, as if it were included in the other
class of life insurance business.
(3) If APRA makes a declaration:
(a) this Act has effect accordingly;
and
(b) APRA must give a copy of the
declaration to the life company at whose request the declaration was made.
12A
Declarations that insurance or annuity business is life insurance business
(1) APRA may, on the application of a
company, declare, in writing, that insurance business (other than health
insurance business or business of insurance against loss of, or damage to,
property) or business relating to the payment of annuities:
(a) that is carried on by the company;
or
(b) that the company proposes to carry
on;
is to be treated, for the purposes of this Act, as if it
were life insurance business.
(2) The application must comply with any
applicable requirements in Prudential Rules or in the prudential standards.
(3) APRA must only make the declaration if it
is satisfied that:
(a) the company is a life company; or
(b) the company is not currently a
life company, but the only business it proposes to carry on if the declaration
is made is:
(i) the business in
respect of which the declaration is sought; or
(ii) that business and
other business that will be, or is likely to be declared to be, life insurance
business.
(4) In
deciding whether to make the declaration, APRA may also have regard to the
following matters:
(a) whether the business in respect of
which the declaration is sought is similar in nature to other life insurance
business;
(b) whether it would be appropriate
for the business to be regulated under this Act;
(c) whether it would be more
appropriate for the business to be regulated under some other law (for example,
the Insurance Act 1973);
(d) the tax treatment of benefits
provided in the course of the business;
(e) if the company is not registered
under this Act—whether the company would be able to be registered under this
Act;
(f) any other matter that APRA
considers is relevant.
(5) The declaration must also state the class
of life insurance business in which the business is to be treated as being
included.
(6) If APRA makes a declaration:
(a) this Act has effect accordingly;
and
(b) APRA must give a copy of the
declaration to the company.
12B
Declarations that other financial business is life insurance business
(1) This section applies to business
consisting of the provision of eligible financial benefits. For this purpose,
an eligible financial benefit is a benefit in relation to which
the following conditions are satisfied:
(a) the benefit is to be provided by a
company to a person in accordance with a contract;
(b) the person’s entitlement to the
benefit is conditional on amounts being paid in accordance with the contract;
(c) the benefit is an amount of money
(and is not, for example, the provision of a service or facility);
(d) the
benefit is not an excluded benefit under any of the following subparagraphs:
(i) the benefit is an
excluded benefit if the contract is entered into in the course of banking
business, as defined in section 5 of the Banking Act 1959, carried
on by the company;
(ii) the benefit is an
excluded benefit if the right to the benefit constitutes an interest in a
registered scheme, as defined in section 9 of the Corporations Act 2001;
(iii) the benefit is an
excluded benefit if the right to the benefit constitutes an interest in a
regulated superannuation fund, an approved deposit fund, a pooled
superannuation trust or a public sector superannuation scheme, as defined in
section 10 of the Superannuation Industry (Supervision) Act 1993;
(iv) the benefit is an
excluded benefit if it is provided under a contract of insurance entered into
in the course of carrying on health insurance business;
(v) the benefit is an
excluded benefit if it is a benefit of a kind specified in regulations for the
purposes of this subparagraph.
(2) APRA may, on the application of a
company, declare, in writing, that business:
(a) that:
(i) is carried on by the
company; and
(ii) is business to which
this section applies; or
(b) that:
(i) the company proposes
to carry on; and
(ii) will, when it is
carried on, be business to which this section applies;
is to be treated, for the purposes of this Act, as if it
were life insurance business.
(3) The application must comply with any
applicable requirements in Prudential Rules or in the prudential standards.
(4) APRA must only make the declaration if it
is satisfied that:
(a) the company is a life company; or
(b) the
company is not currently a life company, but the only business it proposes to
carry on if the declaration is made is:
(i) the business in
respect of which the declaration is sought; or
(ii) that business and
other business that will be, or is likely to be declared to be, life insurance
business.
(5) In deciding whether to make the
declaration, APRA may also have regard to the following matters:
(a) whether the business in respect of
which the declaration is sought is similar in nature to other life insurance
business;
(b) whether it would be appropriate for
the business to be regulated under this Act;
(c) whether it would be more
appropriate for the business to be regulated under some other law (for example,
Chapter 5C of the Corporations Act 2001);
(d) the tax treatment of benefits
provided in the course of the business;
(e) if the company is not registered
under this Act—whether the company would be able to be registered under this
Act;
(f) any other matter that APRA
considers is relevant.
(6) The declaration must also state the class
of life insurance business in which the business is to be treated as being
included.
(7) If APRA makes a declaration:
(a) this Act has effect accordingly;
and
(b) APRA must give a copy of the
declaration to the company.
13
Business of a statutory fund
(1) A reference in this Act to the business
of a statutory fund of a life company is a reference to the life insurance
business to which the fund relates.
(2) For the purposes of this Act:
(a) a liability (including a policy
liability) is taken to be referable to the business of a statutory fund if the
liability is of a kind that, under Part 4, may be discharged out of the
assets of the fund; and
(b) an expense is taken to be
referable to the business of a statutory fund if the expense is of a kind that,
under Part 4, may be met out of the assets of the fund.
14
Investment account benefits, investment‑linked benefits
(1) In this
Act:
(a) the expression “investment account
benefits” refers to benefits payable under an investment account contract; and
(b) the expression “investment‑linked
benefits” refers to benefits payable under an investment‑linked contract.
(2) An investment account contract is a
contract that:
(a) provides for benefits to be paid:
(i) on death; or
(ii) on a specified date or
specified dates or on death before the specified date, or the last of the
specified dates, as the case may be; or
(iii) in accordance with
section 31 of the First Home Saver Accounts Act 2008; and
(b) provides for the benefits to be
calculated by reference to:
(i) a running account
under the contract; or
(ii) units the value of
which are guaranteed by the contract not to be reduced; and
(c) provides for the account to be
increased (for example, by the amounts of premiums paid or interest payable).
(3) In spite of subsection (2), a
contract is not an investment account contract if it provides for the account
to be reduced otherwise than by the amounts of withdrawals by the person
responsible for the payment of premiums or by the amounts of charges payable
under the contract.
(4) An investment‑linked contract is a
contract:
(a) the principal object of which is
the provision of benefits calculated by reference to units the value of which
is related to the market value of a specified class or group of assets of the
party by whom the benefits are to be provided; and
(b) that provides for benefits to be
paid:
(i) on death; or
(ii) on a specified date or
specified dates or on death before the specified date, or the last of the
specified dates, as the case may be; or
(iii) in accordance with
section 31 of the First Home Saver Accounts Act 2008.
(5) APRA, at
the request of a life company, may make a written declaration:
(a) that contracts of a kind specified
in the declaration and entered into by the company are, or would be, investment
account contracts; or
(b) that contracts of a kind specified
in the declaration and entered into by the company are, or would be, investment‑linked
contracts.
(6) If APRA makes a declaration:
(a) this Act has effect accordingly;
and
(b) APRA must give a copy of the
declaration to the life company at whose request the declaration was made.
15
Participating, non‑participating benefits
(1) Subject to this section, a participating
benefit is any benefit other than a non‑participating benefit.
(2) Subject to this section, a non‑participating
benefit is a benefit that has the following features:
(a) the benefit does not include any
entitlement to share in any distribution by the life company of profits or
surplus;
(b) the amount of the benefit is
specified in the policy document or is to be calculated according to a formula
that:
(i) is set out in the
policy document; and
(ii) does not include any
element that is in any way dependent on, or to be ascertained according to, a
decision of the life company concerned.
(3) A benefit is a non‑participating
benefit if it is declared by Prudential Rules or the prudential standards to be
a non‑participating benefit.
(4) APRA, at the request of a life company,
may make a written declaration:
(a) that benefits of a specified kind,
when provided for by policies issued by the company, are, or would be,
participating benefits; or
(b) that benefits of a specified kind,
when provided for by policies issued by the company, are, or would be, non‑participating
benefits.
(5) If APRA
makes a declaration:
(a) this Act has effect accordingly;
and
(b) APRA must give a copy of the
declaration to the life company at whose request the declaration was made.
16
Related companies
Except for the purposes of Part 7,
the question whether:
(a) one company is a subsidiary of
another; or
(b) one
company is related to another;
is to be determined, in the same way as it would be
determined under the Corporations Act 2001.
Part 2A—Special provisions relating to life companies that are
friendly societies
Division 1—Preliminary
16A
Overview
(1) The concept of a friendly society is
defined for the purposes of this Act in section 16C.
(2) A friendly society will be a life company
if it carries on life insurance business in Australia.
(3) In working out whether a friendly society
does carry on life insurance business (within the meaning of section 11),
the effect of Division 3 must be taken into account. The effect of any
relevant declarations under section 12A or 12B must also be taken into
account.
(4) This Act applies to life companies that
are friendly societies subject to:
(a) the modified operation of key
concepts set out in Division 3; and
(b) the modifications relating to
statutory funds set out in Division 4; and
(c) any other modifications set out in
Division 5 or in regulations for the purposes of section 16ZC.
(5) In addition to the modifications set out
in this Part and in regulations for the purposes of section 16ZC, this Act
includes some other special provisions in relation to friendly societies. See
in particular various provisions in Division 2 of Part 8 about
winding up of friendly societies.
(6) Unless a
contrary intention appears, a reference in this Act to a particular provision
of this Act also includes, if that provision has been modified as mentioned in subsection (4),
a reference to that provision as so modified.
Note: So, for example, if a provision referred to in
subsection 7A(1) has been modified, a determination under that section may be
made in relation to the provision as so modified.
16B
Definitions
(1) For the purposes of this Act:
adequately adopted, in relation to benefit
fund rules or an amendment of benefit fund rules, has the meaning given by subsection (2).
approved benefit fund means a benefit fund
for which there are approved benefit fund rules.
approved benefit fund rules means rules (as
amended from time to time by amendments in force under section 16T) in
relation to which the following conditions are satisfied:
(a) an approval under section 16L
is in force in relation to the rules; and
(b) the rules are in force under
section 16N.
benefit fund means a fund:
(a) that is established to provide
benefits in accordance with rules of a friendly society; and
(b) that is established in the records
of the friendly society.
benefit fund rules, in relation to a benefit
fund, means the rules referred to in paragraph (a) of the definition of benefit
fund.
friendly society has the meaning given by
section 16C.
jointly regulated friendly society has the
meaning given by subsection 16ZB(2).
(2) For the
purposes of this Act, benefit fund rules of a company have, or an amendment of
benefit fund rules of a company has, been adequately adopted if:
(a) the rules have, or the amendment
has, been adopted by or on behalf of the company, or by or on behalf of the
members or a class of the members of the company, in a way set out in
Prudential Rules or in the prudential standards for the purposes of this
subsection; and
(b) APRA
considers that adoption of the rules or the amendment in that way adequately
takes into account the interests of members of the company.
APRA may consult ASIC in considering the matters referred
to in paragraph (b).
Division 2—Friendly societies and how this Act applies to them
16C
What is a friendly society?
(1) For the purposes of this Act, a friendly
society is a body:
(a) that is registered as a company
under the Corporations Act 2001; and
(b) that is either:
(i) taken to be registered
under this Act because of item 11 of Schedule 8 to the Financial
Sector Reform (Amendments and Transitional Provisions) Act (No. 1) 1999;
or
(ii) covered by a
determination under subsection (2).
(2) APRA may, in writing, determine that a
specified body that is registered as a company under the Corporations Act
2001 is a friendly society for the purposes of this Act.
Note: A company may be specified by name, by
inclusion in a specified class or in some other way.
(3) APRA may, in writing, vary or revoke a
determination made under subsection (2).
(4) APRA must comply with any applicable
requirements in Prudential Rules or in the prudential standards relating to the
circumstances in which the powers under subsections (2) and (3) may be
exercised.
(5) If APRA:
(a) makes a determination under subsection (2);
or
(b) varies or revokes a determination
under subsection (3);
APRA must cause notice of that action to be published in
the Gazette. If the action relates to a particular company, otherwise
than because the company is included in a specified class of companies, APRA
must also give the company written notice of the action.
(6) If APRA:
(a) makes a determination under subsection (2);
or
(b) varies
or revokes a determination under subsection (3);
APRA must also give notice of that action to ASIC.
16D
Act applies to friendly societies in accordance with this Part
This Act applies to a friendly society
subject to the provisions of this Part.
Note: As noted in subsection 16A(5), this Act also
contains some other special provisions in relation to friendly societies.
16E
Restriction on use of expression friendly society
(1) A body corporate is guilty of an offence
if:
(a) it assumes or uses, in Australia,
the expression friendly society in relation to a financial
business carried on by the body corporate (whether or not in Australia); and
(b) it is not a friendly society; and
(c) APRA did not consent to that
assumption or use of that expression.
Maximum penalty: 50 penalty units.
Note: 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 penalty stated above.
(1A) Subsection (1) is an offence of strict
liability.
Note 1: Chapter 2 of the Criminal Code sets
out the general principles of criminal responsibility.
Note 2: For strict liability, see section 6.1
of the Criminal Code.
(2) If a body corporate assumes or uses the
expression friendly society in circumstances that give rise to
the body corporate committing an offence against subsection (1), the body
corporate is guilty of an offence against that subsection in respect of:
(a) the first day on which the offence
is committed; and
(b) each subsequent day (if any) on
which the circumstances that gave rise to the body corporate committing the
offence continue (including the day of conviction for any such offence or any
later day).
Note: This subsection is not intended to imply that
section 4K of the Crimes Act 1914 does not apply to offences
against this Act or the regulations.
(3) A consent may be expressed to apply to a
particular body corporate or to bodies corporate included in a class of bodies
corporate.
(4) APRA may, at any time:
(a) impose conditions, or additional
conditions, on a consent; or
(b) vary or revoke conditions imposed
on a consent; or
(c) revoke a consent.
(5) The form of the granting of a consent, or
the taking of action under subsection (4) in relation to a consent, is to
be as follows:
(a) if the consent applies to a
particular body corporate—notice in writing served on the body corporate;
(b) if the consent applies to a class
of bodies corporate—notice in writing published in the Gazette.
(6) If APRA:
(a) grants a consent; or
(b) takes action under subsection (4)
in relation to a consent;
APRA must also give ASIC notice of the granting of the
consent or the taking of that action.
(7) A body corporate is guilty of an offence
if:
(a) it has been given a consent under
this section; and
(b) it contravenes a condition to
which the consent is subject.
Maximum penalty: 50 penalty units.
Note: 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 penalty stated above.
(7A) Subsection (7) is an offence of strict
liability.
Note 1: Chapter 2 of the Criminal Code sets
out the general principles of criminal responsibility.
Note 2: For strict liability, see section 6.1
of the Criminal Code.
(8) If a body corporate does or fails to do
an act in circumstances that give rise to the body corporate committing an
offence against subsection (7), the body corporate is guilty of an offence
against that subsection in respect of:
(a) the first day on which the offence
is committed; and
(b) each
subsequent day (if any) on which the circumstances that gave rise to the body
corporate committing the offence continue (including the day of conviction for
any such offence or any later day).
Note: This subsection is not intended to imply that
section 4K of the Crimes Act 1914 does not apply to offences
against this Act or the regulations.
(9) In this section:
financial business means a business that:
(a) consists of, or includes, the
provision of financial services; or
(b) relates, in whole or in part, to
the provision of financial services.
Division 3—Modified operation of key concepts
16F
Issue, ownership etc. of policies
New interests in benefit funds
(1) A friendly society is taken to issue a
policy to a person when it accepts an application by the person for an interest
in a benefit fund of the friendly society in accordance with the benefit fund
rules. However, acceptance of an application for an increase to, or a
continuation of, an existing interest in a benefit fund does not constitute the
issue of a policy.
Interests in benefit funds existing as at the transfer
date
(2) An interest that a person holds in a
benefit fund of a friendly society on the date that is the transfer date for
the purposes of the Financial Sector Reform (Amendments and Transitional
Provisions) Act (No. 1) 1999 is taken to be a policy issued to the
person by the friendly society.
Terms etc. of the policy
(3) If subsection (1) or (2) applies,
then:
(a) the benefit fund rules are taken
to be the terms of the policy referred to in that subsection; and
(b) the owner of the policy is taken
to be:
(i) the person referred to
in that subsection; or
(ii) if that person’s
rights to the interest in the benefit fund have been assigned under this Act or
transferred by the operation of the benefit fund rules—the person who has those
rights; and
(c) an amount that is required or
permitted, by the benefit fund rules, to be paid in respect of those rights is
taken to be a premium in respect of the policy; and
(d) the policy is taken to be referable
to the benefit fund.
Note 1: Approved benefit fund rules have effect as a
contract (see section 16Z).
Note 2: The policy that a friendly society is taken by subsection (1)
or (2) to issue or to have issued will, depending on the terms of the benefit
fund rules, be:
(a) a life policy (see section 9); or
(b) a sinking fund policy (see the definition in
the Schedule); or
(c) a section 12A or 12B policy (see the
definition in the Schedule); or
(d) some other kind of policy.
(4) Subsections (1), (2) and (3) have
effect:
(a) for the purposes of this Act; and
(b) for the purposes of all other laws
of the Commonwealth, subject to the expression of a contrary intention.
(5) In this section:
policy is not limited to a life policy, a
sinking fund policy or a section 12A or 12B policy.
Division 4—Modified operation of provisions relating to statutory funds
Subdivision 1—Modifications
16G
Act generally applies as if references to a statutory fund were references to
an approved benefit fund
(1) Subject to subsection (2), this Act
applies to a friendly society as if each reference to a statutory fund were
instead a reference to an approved benefit fund.
Note: An approved benefit fund is a
benefit fund for which there are approved benefit fund rules (see the definition
in section 16B). Benefit fund rules are approved benefit fund rules if
an approval under section 16L is in force in relation to the rules and the
rules are in force under section 16N.
(2) Subsection (1) has effect subject
to:
(a) the other provisions of this
Subdivision; and
(b) the expression of a contrary
intention in a particular provision; and
(c) the expression of a contrary
intention in a particular provision of regulations for the purposes of section 16ZC.
(3) Other laws of the Commonwealth have
effect in relation to friendly societies as if any reference in such a law to a
statutory fund of a life company also included a reference to an approved
benefit fund of a friendly society, subject to the expression of a contrary
intention.
16H
Modification of section 34
Section 34 has effect in relation
to a friendly society as if subsections (2), (3) and (4) were omitted and
the following subsections were substituted:
(2) Assets or investments obtained by the
application of assets (other than money) of an approved benefit fund are
themselves assets of the fund. If an investment is a joint investment (see subsection (4A)),
the asset is an asset of each of the contributing funds in proportion to their
respective contributions.
(3) Subject to subsections (4) and (4A),
a friendly society must keep assets of an approved benefit fund distinct and
separate from assets of other approved benefit funds and from all other money,
assets or investments of the friendly society.
(4) A friendly society may maintain a single
bank account for money that constitutes assets of 2 or more approved benefit
funds if the account is maintained in accordance with Prudential Rules or the
prudential standards.
(4A) A friendly society may invest assets of 2
or more approved benefit funds in a single investment if:
(a) the approved benefit fund rules of
each of those funds provide for the assets of the fund to be invested together
with the assets of the other fund or funds; and
(b) the investment complies with the
applicable requirements (if any) in Prudential Rules or the prudential
standards relating to assets of one fund being invested together with assets of
another fund or funds.
The investment is referred to as a joint investment,
each of the funds is referred to as a contributing fund and the
assets of a fund that are invested in the investment are referred to as the
fund’s contribution.
16I
Modification of section 38
Section 38 has effect in relation
to a friendly society as if the following subsection were added at the end of
the section:
(8) Nothing in this section authorises a
friendly society to apply assets of an approved benefit fund, or to mortgage or
charge such assets, otherwise than as provided by the approved benefit fund
rules.
16J
Modification of section 43
Section 43 has effect in relation
to a friendly society as if the following paragraph were inserted after paragraph (3)(b):
(ba) nothing in this Act authorises a
friendly society to make an investment of assets of an approved benefit fund unless:
(i) the investment is of a
kind provided for by the approved benefit fund rules; and
(ii) the investment
complies with the requirements (if any) in Prudential Rules or the prudential
standards;
16K
Modification of section 45
Section 45 has effect in relation
to a friendly society as if the following subsection were added at the end of
the section:
(5) In this section as it applies to a
company that is a friendly society, a reference to an approved benefit fund
includes a reference to the management fund of the society. The management
fund of the society is the fund of the society that consists of the
assets and liabilities of the society that do not form part of an approved
benefit fund of the society.
Subdivision 2—Approved benefit fund rules
16L
Approval of benefit fund rules
(1) A body that is registered as a company
under the Corporations Act 2001 may apply in writing to APRA for
approval of benefit fund rules for a benefit fund operated or to be operated by
the company.
Note 1: The application may also include an application
for approval of consequential amendments of the company’s constitution (see
section 16U).
Note 2: Rules of a jointly regulated friendly society
relating to its health insurance business are not covered by this Subdivision.
(2) The application must be accompanied by a
copy of the benefit fund rules and must comply with any applicable requirements
in Prudential Rules or the prudential standards.
(3) APRA must, in writing, approve the
benefit fund rules if:
(a) application has been made for
approval of the rules in accordance with subsection (2); and
(b) APRA is satisfied that:
(i) the carrying on of the
activities to which the rules relate constitutes the carrying on of life
insurance business; and
(ii) the rules are consistent
with this Act; and
(c) APRA
is satisfied that the rules have been adequately adopted.
APRA must give the company written notice of its decision
whether to approve the rules.
(4) The
company is guilty of an offence if:
(a) APRA has approved the benefit fund
rules; and
(b) Prudential Rules or the prudential
standards require the company to notify some or all of its members of the
rules; and
(c) the company does not notify those
members of the rules in accordance with that requirement.
Maximum penalty for contravention of this subsection: 50
penalty units.
Note: 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 penalty stated above.
(5) Subsection (4) is an offence of
strict liability.
Note 1: Chapter 2 of the Criminal Code sets
out the general principles of criminal responsibility.
Note 2: For strict liability, see section 6.1
of the Criminal Code.
16N
When benefit fund rules approved by APRA come into force
Benefit fund rules approved by APRA
under section 16L come into force on the later of the following days:
(a) the day on which APRA approved the
rules;
(b) the day (if any) specified in the
rules as the day on which they are to come into force;
(c) if the company that applied for
approval of the rules was not a friendly society on the day on which the
application was made—the day on which the company becomes a friendly society.
16O
Benefit fund rules approved by APRA and in force form part of company’s
constitution
Benefit fund rules that:
(a) have been approved by APRA under
section 16L; and
(b) have come into force under section 16N;
are, by force of this section, part of the constitution of
the company that applied for approval of the rules.
16P
Amendment of approved benefit fund rules not effective unless approved by APRA
(1) An amendment of approved benefit fund
rules of a friendly society is effective if, and only if:
(a) the amendment has been approved by
APRA under subsection 16Q(3) and is in force under section 16T; or
(b) the amendment is determined by
APRA under subsection 16R(4) and is in force under section 16T.
(2) Without
limiting subsection (1), an amendment of approved benefit fund rules that
is in force under section 16T takes effect, by force of this section, as
an amendment of the constitution of the friendly society.
16Q
Amendment of approved benefit fund rules on initiative of friendly society
(1) A friendly society may apply in writing
for approval of a proposed amendment of approved benefit fund rules of the
friendly society.
Note: The application may also include an
application for approval of consequential amendments of the company’s
constitution (see section 16U).
(2) The application must be accompanied by a
copy of the amendment and must comply with any applicable requirements in
Prudential Rules or the prudential standards.
(3) APRA must, in writing, approve the
amendment if:
(a) application has been made for
approval of the amendment in accordance with subsection (2); and
(b) APRA is satisfied that the rules,
as proposed to be amended, will satisfy the requirements of paragraph
16L(3)(b); and
(c) APRA is satisfied that the
amendment has been adequately adopted.
APRA must give the friendly society written notice of its
decision whether to approve the amendment.
(4) The
friendly society is guilty of an offence if:
(a) APRA has approved the amendment;
and
(b) Prudential Rules or the prudential
standards require the friendly society to notify some or all of its members of
the amendment; and
(c) the friendly society does not
notify those members of the amendment in accordance with that requirement.
Maximum penalty for contravention of this subsection: 50
penalty units.
Note: 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 penalty stated above.
(5) Subsection (4)
is an offence of strict liability.
Note 1: Chapter 2 of the Criminal Code sets
out the general principles of criminal responsibility.
Note 2: For strict liability, see section 6.1
of the Criminal Code.
16R
Amendment of approved benefit fund rules as required by APRA
When this section applies
(1) This section applies if APRA considers
that approved benefit fund rules of a friendly society are deficient because
they are inconsistent with this Act.
APRA may give notice requiring amendment
(2) APRA may, by written notice given to the
friendly society, require the friendly society:
(a) to propose an amendment of the
approved benefit fund rules, to rectify the deficiency, in accordance with
requirements specified in, or determined in accordance with, the notice; and
(b) to submit the amendment for APRA’s
approval.
The notice must specify a reasonable period for the
submission of the amendment.
Compliance with notice—submission of amendment for
approval under section 16Q
(3) To submit an amendment for APRA’s
approval, the friendly society must apply in writing to APRA for approval of
the amendment under section 16Q.
Non‑compliance with notice—APRA’s power to
determine amendment
(4) If:
(a) the friendly society submits an
amendment for APRA’s approval before the end of the period specified in the
notice, but APRA refuses to approve the amendment under section 16Q; or
(b) the friendly society fails to
submit an amendment for APRA’s approval before the end of that period;
APRA may, in writing, determine an amendment of the rules
to rectify the deficiency.
Non‑compliance with notice—notifying friendly
society of amendment determined
(5) If APRA determines an amendment of the
approved benefit fund rules under subsection (4), APRA must immediately
give the friendly society written notice of the amendment.
Non‑compliance with notice—notifying members of
amendment
(6) The friendly society is guilty of an
offence if:
(a) APRA gives the friendly society
notice of an amendment of the benefit fund rules that APRA has determined; and
(b) Prudential Rules or the prudential
standards require the friendly society to notify some or all of its members of
the amendment; and
(c) the friendly society does not
notify those members of the amendment in accordance with that requirement.
Maximum penalty for contravention of this subsection: 50
penalty units.
Note: 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 penalty stated above.
(7) Subsection (6) is an offence of
strict liability.
Note 1: Chapter 2 of the Criminal Code sets
out the general principles of criminal responsibility.
Note 2: For strict liability, see section 6.1
of the Criminal Code.
16T
When amendment of benefit fund rules approved or determined by APRA come into
force
An amendment of approved benefit fund
rules:
(a) approved by APRA under section 16Q;
or
(b) determined by APRA under section 16R;
comes into force on the later of the following days:
(c) the day on which APRA approved or
determined the amendment;
(d) the day (if any) specified in the
amendment as the day on which it is to come into force.
16U
Approval of consequential amendments of company’s constitution
(1) An application:
(a) by a company under section 16L
for approval of benefit fund rules; or
(b) by a company under section 16Q
for approval of a proposed amendment of approved benefit fund rules;
may also include an application for approval of proposed
amendments (the consequential amendments) of the constitution of
the company that are consequential on the proposed benefit fund rules or
amendment of benefit fund rules.
Note: This covers applications by friendly
societies, all of which are companies.
(2) The application for approval of the
consequential amendments must be accompanied by a copy of the consequential
amendments and must comply with any applicable requirements in Prudential Rules
or the prudential standards.
(3) APRA may
approve the consequential amendments if APRA is satisfied that the changes
proposed to be made by the consequential amendments:
(a) are consequential on the proposed
benefit fund rules or amendment of benefit fund rules; and
(b) do not also deal with other
matters.
APRA may consult ASIC in considering the matters referred
to in paragraphs (a) and (b). APRA must give the company written notice of
its decision whether to approve the consequential amendments.
(4) The company is guilty of an offence if:
(a) APRA has approved the
consequential amendments; and
(b) Prudential Rules or the prudential
standards require the company to notify some or all of its members of the
consequential amendments; and
(c) the company does not notify those
members of the consequential amendments in accordance with that requirement.
Maximum penalty for contravention of this subsection: 50
penalty units.
Note: 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 penalty stated above.
(5) Subsection (4) is an offence of
strict liability.
Note 1: Chapter 2 of the Criminal Code sets
out the general principles of criminal responsibility.
Note 2: For strict liability, see section 6.1
of the Criminal Code.
16V
Consequential amendments of constitution as required by APRA
When this section applies
(1) This section applies if APRA considers
that the constitution of a company is deficient because, as a result of the
adoption or amendment of approved benefit fund rules of the company, the
constitution is inconsistent with those rules.
APRA may give notice requiring amendments
(2) APRA may,
by written notice given to the company, require the company:
(a) to
propose consequential amendments to its constitution, to rectify the
deficiency, in accordance with requirements specified in, or determined in
accordance with, the notice; and
(b) to submit the amendments for
APRA’s approval.
The notice must specify a reasonable period for the
submission of the amendments.
Compliance with notice—submission of amendments for
approval
(3) To submit consequential amendments for
APRA’s approval, the company must apply in writing to APRA for approval of the
amendments under this subsection. The application must be accompanied by a copy
of the amendments and must comply with any applicable requirements in
Prudential Rules or the prudential standards.
Approval of submitted amendments
(4) APRA may approve the consequential
amendments if APRA is satisfied that:
(a) an application has been made for
approval of the amendments in accordance with subsection (3); and
(b) the amendments rectify the
deficiency referred to in subsection (1).
APRA must give the company written notice of its decision
whether to approve the consequential amendments.
Non‑compliance with notice—APRA’s power to
determine amendments
(5) If:
(a) the company submits consequential
amendments for APRA’s approval before the end of the period specified in the
notice, but APRA refuses to approve the amendments under subsection (4);
or
(b) the
company fails to submit consequential amendments for APRA’s approval before the
end of that period;
APRA may, in writing, determine consequential amendments
of the constitution to rectify the deficiency.
Non‑compliance with notice—notifying company of
amendments determined
(6) If APRA determines consequential
amendments of the constitution under subsection (5), APRA must immediately
give the company written notice of the amendments.
Notifying members of amendments
(7) The company is guilty of an offence if:
(a) APRA has either:
(i) approved consequential
amendments under subsection (4); or
(ii) given the company
notice of consequential amendments that APRA has determined under subsection (5);
and
(b) Prudential Rules or the prudential
standards require the company to notify some or all of its members of the
consequential amendments; and
(c) the company does not notify those
members of the consequential amendments in accordance with that requirement.
Maximum penalty for contravention of this subsection: 50
penalty units.
Note: 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 penalty stated above.
(8) Subsection (7)
is an offence of strict liability.
Note 1: Chapter 2 of the Criminal Code sets
out the general principles of criminal responsibility.
Note 2: For strict liability, see section 6.1
of the Criminal Code.
16X
When consequential amendments approved or determined by APRA come into force
Consequential
amendments:
(a) approved by APRA under subsection
16U(3) or subsection 16V(4); or
(b) determined by APRA under
subsection 16V(5);
come into force on the later of the following days:
(c) the day on which APRA approved or
determined the amendments;
(d) the day (if any) specified in the
amendments as the day on which they are to come into force.
16Y
Consequential amendments approved by APRA and in force take effect as
amendments of company’s constitution
A consequential amendment of a company’s
constitution that is in force under section 16X takes effect, by force of
this section, as an amendment of the constitution of the company.
16Z
Contractual effect of approved benefit fund rules and policies
(1) Approved benefit fund rules of a friendly
society have effect as a contract between the friendly society and each person
who is, because of section 16F, taken to be the owner of a policy
referable to the benefit fund.
(2) Without limiting the generality of subsection (1),
a policy that is, because of section 16F, taken to be issued by a friendly
society has effect, and may be enforced, as a contract between:
(a) the person who is, because of that
section, taken to be the owner of the policy; and
(b) either:
(i) the friendly society
that is taken to have issued the policy; or
(ii) if that friendly
society’s liabilities under the policy have been transferred or assigned to
another company—that other company.
Division 5—Other modifications
16ZA
Assignment of an interest in a benefit fund that is, because of section 16F,
taken to be a policy
An assignment of an interest in a
benefit fund that is, because of section 16F, taken to be a policy is
taken to satisfy the requirements of subsection 200(2) if the following
requirements have been satisfied:
(a) the assignment must be by
memorandum of transfer in accordance with, or substantially in accordance with,
the form set out in the relevant benefit fund rules;
(b) the memorandum must be signed by
the transferor and the transferee;
(c) the transferor must give 2 copies
of the signed memorandum to the friendly society concerned;
(d) the assignment must be registered
in a register of assignments kept by the friendly society concerned;
(e) the date of registration must be
inserted in the memorandum;
(f) the memorandum must be signed by
an officer of the friendly society concerned who is authorised to do so by the
friendly society.
16ZB
Certain friendly societies may continue to carry on health insurance
business—modified operation of this Act
(1) A friendly society:
(a) that is taken to be registered
under this Act because of item 11 of Schedule 8 to the Financial
Sector Reform (Amendments and Transitional Provisions) Act (No. 1) 1999;
and
(b) that was carrying on health
insurance business immediately before being taken to be so registered;
may continue to carry on that health insurance business
after being taken to be so registered.
(2) A
reference in this Act to a jointly regulated friendly society is
a reference to a friendly society that carries on life insurance business and
that also carries on health insurance business in accordance with subsection (1).
Note: The society’s life insurance business is
regulated under this Act, while its health insurance business is regulated
under the Private Health Insurance Act 2007.
(3) Section 234 has effect subject to subsection (1)
of this section.
(4) Without limiting the matters that may be
dealt with in regulations under section 16ZC, regulations under that
section may set out modifications of this Act as it applies in relation to
jointly regulated friendly societies.
16ZC
Other modifications
(1) The regulations may set out modifications
of this Act that are to apply in relation to friendly societies (in addition to
the modifications set out in the other provisions of this Part).
(2) Modifications set out in regulations for
the purposes of subsection (1) cannot:
(a) modify a provision of this Act
that creates an offence; or
(b) include new provisions that create
offences.
(3) This Act applies to a friendly society
subject to any modifications set out in regulations for the purposes of subsection (1).
(4) In this section:
modifications includes omissions, additions
and substitutions.
Part 2B—Special provisions relating to Australian branches of
foreign life insurance companies
16ZD
Eligible foreign life insurance company
(1) A body corporate is an eligible
foreign life insurance company if:
(a) it is a foreign corporation within
the meaning of paragraph 51(xx) of the Constitution; and
(b) it is authorised in a foreign
country, or part of a foreign country, to carry on life insurance business; and
(c) it has established, or proposes to
establish, an Australian branch; and
(d) it is not an existing life company
that is registered under this Act; and
(e) the conditions specified in the
regulations are satisfied in relation to the body corporate.
(2) The conditions specified in the
regulations for the purposes of paragraph (1)(e) may include either or
both of the following kinds of conditions:
(a) a condition that the body
corporate be authorised to carry on life insurance business in a specified
country, or a specified part of a foreign country;
(b) a condition that the body
corporate be incorporated in a specified country, or a specified part of a
foreign country.
Note: For specification by class, see subsection
13(3) of the Legislative Instruments Act 2003.
(3) Subsection (2) does not limit the
regulations that may be made for the purposes of paragraph (1)(e).
(4) In this section:
Australian branch, in relation to a body
corporate, means a permanent establishment (as defined in subsection 6(1) of
the Income Tax Assessment Act 1936) in Australia through which the body
corporate carries on or proposes to carry on life insurance business.
16ZE
Act does not apply to foreign life insurance business of eligible foreign life
insurance company
This Act does not apply in relation to
life insurance business carried on outside Australia by an eligible foreign
life insurance company.
16ZF
Compliance Committee of eligible foreign life insurance company
(1) A committee is the Compliance
Committee of an eligible foreign life insurance company if:
(a) the members of the committee have
powers of management in relation to the Australian branch of the company that
carries out life insurance business in Australia; and
(b) those powers of management are
sufficient to enable those members to ensure that the company complies with
this Act; and
(c) the committee is established and
operated in accordance with requirements set out in the prudential standards.
(2) The prudential standards may set out the
following requirements in relation to the establishment and operation of
Compliance Committees:
(a) requirements relating to the
composition of Compliance Committees;
(b) requirements relating to the
resignation of members of Compliance Committees;
(c) requirements relating to the
disclosure of interests of members of Compliance Committees;
(d) requirements relating to the
termination of appointment of members of Compliance Committees;
(e) requirements relating to the
residency in Australia of members of Compliance Committees.
(3) Subsection (2) does not limit the
requirements that may be set out in the prudential standards for the purposes
of paragraph (1)(c).
(4) An eligible foreign life insurance
company that is a life company must establish and operate a Compliance
Committee.
16ZG
Address for service of eligible foreign life insurance companies
(1) A document or notice required or
permitted to be served on, or given to, an eligible foreign life insurance
company for the purposes of this Act may be served or given by:
(a) leaving it at its address for
service (see subsection (2)); or
(b) sending it by registered post to
that address.
(2) An address becomes the address for service
for the eligible foreign life insurance company when written notice of the
address is given to APRA. (The address continues to be the address for service
until APRA is given written notice of another address.)
Part 3—Registration of life companies
17
When registration is required
(1) A person other than a company registered
under this Act must not intentionally:
(a) issue a life policy; or
(b) undertake liability under a life
policy.
(2) Subsection (1) does not prohibit a
person from:
(a) acting as agent of a company
registered under this Act; or
(b) entering into, or undertaking
liability under, a contract referred to in subsection (3) if the
particular contract is not a contract of insurance.
(3) Paragraph (2)(b) applies to the
following contracts:
(a) an investment account contract;
(b) an investment‑linked
contract.
(4) If a declaration is in force under
section 12A or 12B in relation to business carried on or proposed to be
carried on by a company, the company must not intentionally carry on that
business unless the company is registered under this Act.
18
Certain activities not regarded as carrying on life business
A person is not taken to be carrying on
life business merely because the person:
(a) collects premiums under a policy
issued outside Australia to a person who was resident outside Australia at the
time of issue of the policy; or
(b) makes payments due under such a
policy.
19
Certain persons taken to carry on life business etc.
(1) For the purposes of this Part, a person
who publishes or distributes, or procures the publication or distribution of, a
statement relating to the willingness of the person to do something that
constitutes the carrying on of life business is taken to carry on that
business.
(2) For the purposes of this Part, a person
is taken to carry on life business in Australia if:
(a) business that, under this Act,
would constitute life business is carried on by another person outside Australia;
and
(b) the first‑mentioned person
acts, in Australia, as the agent of that other person in relation to the
business carried on outside Australia.
20
Application for registration
(1) A company may apply in writing to APRA
for registration under this Act.
(2) The application must:
(a) be in the form (if any) approved
by APRA; and
(b) be accompanied by any information
requested by APRA; and
(c) nominate for the purposes of this
Act:
(i) the person who is to
be the principal executive officer of the life company; and
(ii) the period that is to
be the financial year of the life company.
(3) For the purposes of determining an
application, APRA may by written notice require an applicant to provide
information specified in the notice, before the end of the period specified in
the notice.
(4) If the applicant does not provide the
specified information before the end of the specified period or any longer
period agreed to in writing by APRA, the application is taken to be withdrawn.
(5) A notice under subsection (3) must
include a statement about the effect of subsection (4).
21
Decision on application for registration
(1) APRA must, in writing, register a company
that applies for registration under section 20, unless APRA is satisfied
that a ground for refusal specified in subsection (3) exists.
(3) The following are the grounds on which
APRA may refuse to register a company:
(d) that the company is not able, or
is unlikely to be able, to meet its obligations, including obligations in
respect of business other than life insurance business;
(e) that the company is not able, or
is unlikely to be able, to comply with the provisions of this Act or the Financial
Sector (Collection of Data) Act 2001;
(f) that the name of the company so
closely resembles the name of a company already registered under this Act as to
be likely to deceive;
(g) in the case of a company that
carries on, or proposes to carry on, some other form of business in addition to
life insurance business, that the carrying on of that other form of business in
addition to insurance business would be contrary to the public interest.
22
Conditions of registration
(1) APRA may, at any time, impose conditions
on the registration of a company.
(2) APRA imposes conditions by giving the
company concerned written notice of the imposition of the conditions and of
their terms.
(3) If APRA thinks that a particular
condition is no longer required or should be varied, APRA must, by written
notice given to the company, revoke or vary the condition.
(4) If a company asks APRA, in writing, to
revoke or vary a condition, APRA must act as follows:
(a) if APRA thinks the condition is no
longer necessary or should be varied, APRA must revoke or vary the condition
accordingly;
(b) in any other case, APRA must
refuse to revoke or vary the condition.
(5) APRA must give a company written notice
of a decision under subsection (4).
26
Cancellation of registration: defunct company
(1) If:
(a) a company has been registered
under this Act for at least 12 months; and
(b) there are reasonable grounds for
believing that the company is not carrying on life insurance business in Australia;
APRA may give the company a written notice requiring the
company, within one month after the notice is given, to satisfy APRA that the
company is carrying on life insurance business in Australia.
(2) If:
(a) APRA has given a notice to a
company under subsection (1); and
(b) a period of one month has elapsed
since the notice was given; and
(c) APRA is not satisfied that the
company is carrying on life insurance business in Australia;
APRA may cancel the registration of the company under this
Act by giving the company written notice of cancellation.
(3) Cancellation under this section of the
registration of a company takes effect at the end of 7 days after APRA gives
the company written notice of cancellation.
27
Voluntary deregistration
(1) If:
(a) a company gives APRA a written
request that its registration under this Act be cancelled; and
(b) APRA is satisfied that:
(i) no policies issued by
the company remain in force; and
(ii) the company is not
subject to any outstanding policy liabilities;
APRA may cancel the registration of the company under this
Act by giving the company written notice of cancellation.
(2) Cancellation under this section of the
registration of a company takes effect when APRA gives the company written
notice of cancellation.
Part 4—Statutory funds of life companies
Division 1—General requirements
29
What is a statutory fund?
A statutory fund is a fund that:
(a) is established in the records of a
life company; and
(b) relates solely to the life
insurance business of the company or a particular part of that business.
30
Outline of requirements regarding statutory funds
The principal requirements of this Part
in relation to statutory funds may be summarised as follows:
(a) all amounts received by a life
company in respect of the business of a fund must be credited to the fund;
(b) all assets and investments related
to the business of a fund must be included in the fund;
(c) all liabilities (including policy
liabilities) of the company arising out of the conduct of the business of a
fund must be treated as liabilities of the fund;
(d) the assets of a fund are only
available for expenditure related to the conduct of the business of the fund;
(e) statutory funds may not be
restructured or terminated without the approval of APRA;
(f) profits and losses of a statutory
fund may only be dealt with in accordance with Divisions 5 and 6 (the
object of those Divisions being to ensure that such profits and losses are
dealt with in a manner that protects the interests of policy owners and is
consistent with prudent management of the fund).
31
Requirement that company have statutory funds
A life
company must comply with the following requirements:
(a) a life company must at all times
have at least one statutory fund in respect of its life insurance business but
may have more statutory funds if it chooses to do so;
(b) a life company that carries on
life insurance business consisting of the provision of investment‑linked
benefits must maintain a statutory fund or statutory funds exclusively for that
business so far as it is carried on in Australia;
(c) except so far as paragraph (d)
applies or APRA approves otherwise, a life company that carries on life
insurance business outside Australia (other than an eligible foreign life
insurance company) must have a statutory fund or statutory funds exclusively in
respect of that business;
(d) a life company may only maintain a
statutory fund in respect of both life insurance business carried on outside
Australia and life insurance business carried on in Australia if:
(i) the statutory fund was
established before the commencement of this Act; and
(ii) so far as it relates
to business carried on outside Australia, the fund relates only to business
carried on in a country or countries in which the company was carrying on life
insurance business immediately before the commencement of this Act; and
(iii) the company is not an
eligible foreign life insurance company.
32
Duty of company in relation to statutory funds
(1) In the investment, administration and
management of the assets of a statutory fund, a life company:
(a) must comply with this Part; and
(b) must give priority to the
interests of owners and prospective owners of policies referable to the fund.
(2) An act or decision of a life company in
relation to a statutory fund does not contravene paragraph (1)(b) if,
having regard to the circumstances existing at the time of the act or decision,
it is reasonable to believe that the act or decision gives priority to the
interests of owners and prospective owners of policies referable to the fund.
(3) An investment by a life company is not
ineffective merely because it is made in contravention of paragraph (1)(b).
(4) A reference in subsection (1) or (2)
to the interests of owners of policies referable to a statutory fund is a
reference to the interests of such persons viewed as a group.
(5) Nothing in subsection (1) prevents a
life company doing anything that the company is permitted by this Part to do.
33
Notice to APRA when fund established
(1) Whenever a life company establishes a
statutory fund otherwise than under an approval given under section 52,
the company must give APRA written notice of:
(a) the establishment of the fund; and
(b) the date on which the fund was
established; and
(c) the nature of the life insurance
business of the company to which the fund relates; and
(d) such other matters as are
prescribed by the regulations.
(2) The notice must be given in accordance
with the regulations.
34
Assets of statutory fund
(1) For the purposes of this Act, the assets
of a statutory fund at a particular time are the following:
(a) the balance of money represented
by amounts credited to the fund in accordance with section 36;
(b) assets of the company obtained as
a result of the expenditure or application of money credited to the fund;
(c) investments held by the company as
a result of the expenditure or application of money credited to the fund;
(d) other money, assets or investments
of the company transferred to the fund, whether under this Act or otherwise.
(2) Assets or investments obtained by the
application of assets (other than money) of a statutory fund are themselves
assets of the fund.
(3) Subject to subsection (4), a life
company must keep assets of a statutory fund distinct and separate from assets
of other statutory funds and from all other money, assets or investments of the
company.
(4) A life company may maintain a single bank
account for money that constitutes assets of 2 or more statutory funds if the
account is maintained in accordance with Prudential Rules or the prudential
standards.
(5) In order to avoid doubt, it is declared
that nothing in this Act is intended to constitute a life company or the
directors of a life company a trustee or trustees of the assets of the
statutory funds of the company.
35
Identification of policies referable to statutory fund
(1) A policy document must specify the
statutory fund or statutory funds to which the policy is referable.
(2) A policy document must not make provision
inconsistent with section 31.
(3) A provision in a policy document that a
policy is referable to 2 or more statutory funds is not effective unless it
specifies:
(a) the benefits under the policy that
are to be provided out of each fund; and
(b) either:
(i) the proportion of the
premium that is related to the benefits to be provided out of each fund and is
to be credited to the fund; or
(ii) the way in which that
proportion is to be calculated.
(4) Subsection (1) does not prevent a
policy document being endorsed so as to change the statutory fund or funds to
which the policy is referable.
Note: If the fund or funds to which a policy is
referable is changed in this way, section 55 must be complied with.
(5) If:
(a) a policy was issued before the
commencement of this Act; and
(b) since that commencement, the
company that issued the policy has given the policy owner written notice of the
statutory fund or funds to which the policy is referable;
this Act has effect as if the notice were part of the
policy document relating to the policy.
(6) During the period of 15 months beginning
at the commencement of this Act, subsection (1) does not apply to the
policy document relating to a policy issued before the commencement of this
Act.
36
Payments to statutory fund
The following amounts must be credited
by a life company to a statutory fund:
(a) premiums payable under policies
referable solely to the fund;
(b) in the case of a policy that is
referable to the fund and one or more other statutory funds, the proportion of
the premium that, by virtue of a provision in the policy document, is to be
credited to the fund;
(c) amounts paid to the company in
relation to a liability under section 48 or 50 in relation to the fund;
(d) income from the investment of
assets of the fund;
(e) money paid to or by the company
under a judgment of a court relating to any matter concerning the business of
the fund or any failure to comply with this Part in relation to the fund;
(f) any other money received by the
life company in connection with its conduct of the business of the fund.
37
Capital payments to statutory funds
(1) Nothing in this Act prevents a life
company from making a capital payment to a statutory fund.
(2) For the purposes of this Part, a life
company makes a capital payment to a statutory fund if it credits to the fund
an amount that:
(a) is not required to be credited to
the fund; and
(b) does not represent any part of the
assets of another statutory fund.
38
Expenditure and application of statutory fund
(1) A life company must not apply, or deal
with, assets of a statutory fund, whether directly or indirectly, except in
accordance with this section.
(2) The assets
of a statutory fund may only be applied:
(a) to meet liabilities (including
policy liabilities) or expenses incurred for the purposes of the business of
the fund; or
(b) for the making of investments in
accordance with section 43; or
(c) for the purposes of a distribution
under Division 6.
(3) A life company must not mortgage or
charge any of the assets of a statutory fund except:
(a) to secure a bank overdraft; or
(b) in connection with the undertaking
of a major development project and in accordance with section 40; or
(c) for such other purposes, and
subject to such other conditions, as are prescribed by the regulations.
(4) A life company must not borrow money, for
the purposes of the business of a statutory fund, by means of an unsecured
borrowing if the result would be that the total amount of principal outstanding
under unsecured borrowings for the purposes of the business of the fund would
exceed an amount ascertained in accordance with the regulations.
(5) In subsection (4):
unsecured borrowing does not include:
(a) a borrowing of money by means of a
bank overdraft; or
(b) a borrowing of money by means of
an arrangement of a prescribed kind.
(6) The assets of a statutory fund are not
available to meet a liability of a life company under a contract of guarantee
unless:
(a) the contract of guarantee was
entered into by the company in connection with an investment by the company of
assets of the fund; and
(b) the
investment was made in accordance with this Part.
(7) Nothing in this section applies to the
transfer of assets from one statutory fund to another in accordance with
Division 3, 4 or 6.
39
Prohibition of reinsurance between funds
(1) In order to avoid doubt, it is declared
that a life company contravenes this Part if it engages in the practice of
reinsurance between statutory funds of the company.
(2) For the purposes of subsection (1),
the practice of reinsurance between statutory funds consists of the following
elements:
(a) part of the premium payable under
a policy referable to one statutory fund is credited to another statutory fund
to which the policy is not referable (the reinsuring fund);
(b) a corresponding proportion of the
liability under the policy is treated as a liability for the discharge of which
the assets of the reinsuring fund are available.
40
Mortgages etc. of assets
(1) A life company may mortgage or charge an
asset of a statutory fund, otherwise than for a purpose of the kind referred to
in paragraph 38(3)(a) or (c), if:
(a) the mortgage or charge is to be
given in connection with the undertaking of a major development project; and
(b) the giving of the mortgage or
charge has been approved by APRA.
(2) An approval under subsection (1)
must:
(a) be in writing; and
(b) include a statement that APRA is
satisfied that the mortgage or charge is to be given in connection with the
undertaking of a major development project; and
(c) specify any conditions to which
the approval is subject.
(4) An approval may be given subject to such
conditions (if any) as APRA thinks appropriate. The conditions that may be
imposed include conditions relating to the terms and conditions of the mortgage
or charge or of any other agreement or arrangement to be entered into by the
life company in relation to the project.
41
Effect of non‑compliance with section 38¾general
(1) Subject to subsection (2) and
subsection 32(3), a transaction (other than a transaction to which section 41A
applies) entered into in contravention of section 38 is of no effect.
(2) The Court, on application by a party to
the transaction, may make an order declaring that the transaction is effective,
and is to be taken always to have been effective, for all purposes.
(3) If the Court is satisfied that the
applicant entered into the transaction in good faith and without knowledge of
the contravention of section 38, as the case may be, the Court may have
regard to any hardship that would be caused to the applicant if an order were
not made under subsection (2).
(4) Subsection (3) is not intended to
limit the matters to which the Court may have regard on an application under subsection (2).
41A
Effect of non‑compliance with section 38¾certain classes of transactions
(1) Subject to this section, a transaction
that is included in a class of transactions declared by the regulations to be
transactions to which this section applies is not ineffective merely because it
was entered into in contravention of section 38.
(2) The Court, on application by APRA, may
make an order declaring that a particular transaction entered into in
contravention of section 38 is, and is to be taken always to have been, of
no effect for any purpose.
(3) The Court must not make an order under subsection (2)
if it is satisfied that the effect of the order (if made) would be to prejudice
rights of any person in respect of, or arising out of, the transaction that
have been acquired in good faith and without knowledge of the contravention.
42
Investment performance guarantee—limit of certain liabilities
(1) This section applies to a statutory fund
if:
(a) the business of the fund consists
of the provision of investment‑linked benefits; and
(b) any of the policies referable to
the fund includes an investment performance guarantee.
(2) A life company must at all times ensure
that the investment performance guarantee factor of a statutory fund to which
this section applies does not exceed 5%.
(3) The investment performance guarantee
factor of a statutory fund at a particular time is the proportion of the amount
of the current policy liabilities of the fund at that time that represents the
total cost, as at that time, of providing the investment performance guarantees
included in policies referable to the fund.
(4) For the purposes of this section:
(a) the amount of the current policy
liabilities of a statutory fund at a particular time is the amount that, in
accordance with the prudential standards, is to be taken to be the total value,
at that time, of all policy liabilities of the company in relation to policies
referable to the fund; and
(b) the total cost, as at a particular
time, of providing the investment performance guarantees included in policies
referable to a statutory fund is the amount calculated, as at that time, in
accordance with the prudential standards.
(5) In this section:
investment performance guarantee, in relation
to a policy, means a provision that the amount payable under the policy at a
particular time by way of investment‑linked benefits is not less than an
amount specified in, or calculated in accordance with, the policy.
43 Investment
of statutory funds
(1) In this section, listed corporation
has the same meaning as in the Corporations Act 2001.
(2) The general rule regarding investment of
assets of a statutory fund is that a life company may invest such assets in any
way that is likely to further the business of the fund.
(3) The
general rule stated in subsection (2) is subject to the following
qualifications:
(a) nothing
in this Act authorises a life company to make an investment the company would
otherwise be prohibited from making;
(b) nothing in this Act authorises a
life company to make an investment the company would not otherwise have power
to make;
(c) except with the approval of APRA,
a life company must not invest assets of a statutory fund in a related company
that is not a subsidiary of the life company;
(d) a life company must not invest
assets of a statutory fund, or keep such assets invested, in a subsidiary of
the life company if the investment, or the retention of the investment, as the
case requires, is prohibited by the regulations.
(4) Nothing in paragraph (3)(c) or (d)
prevents a life company investing assets of a statutory fund, or keeping such
assets invested, in ordinary voting shares of listed corporations related to
the life company (whether or not they are subsidiaries) if the total value of
the assets of the fund so invested does not exceed 2.5% of the total value of
all assets of the fund.
(5) A transaction is not ineffective merely
because it involves a contravention of paragraph (3)(c) or (d).
(6) Nothing in this section:
(a) prevents a life company from
investing money of a statutory fund by way of deposit with a bank; or
(b) requires the approval of APRA for
such an investment.
(7) For the purposes of this Part, an
investment by way of a loan is to be taken to be made when the loan agreement
is entered into.
44
Reporting of restricted investments
(1) This section is concerned with the
reporting of restricted investments.
(2) Subject to subsection (3), any
investment of assets of a statutory fund of a life company in a related company
(including a subsidiary) is a restricted investment.
(3) An investment of assets of a statutory
fund by way of deposit with a bank is not a restricted investment, even though
the bank is related to the life company concerned.
(4) Every life company must give APRA a
restricted investments return in relation to each half-year.
(5) A half-year, in relation to a life
company, is:
(a) a period of 6 months that
commences on the first day of a financial year of the company; or
(b) a period of 6 months that
immediately follows a period referred to in paragraph (a).
(6) A restricted investments return is a
return setting out the particulars required by Prudential Rules or by reporting
standards made under the Financial Sector (Collection of Data) Act 2001 of
each restricted investment:
(a) current at the end of the half-year
to which the return relates; or
(b) made by the company during that
half-year but not current at the end of the half-year.
(7) The return must:
(a) be in accordance with the form
prescribed by Prudential Rules or by reporting standards made under the Financial
Sector (Collection of Data) Act 2001; and
(b) be given to APRA within such time
as is fixed by Prudential Rules or by reporting standards made under the Financial
Sector (Collection of Data) Act 2001.
45
Transfer of assets between funds
(1) A life company must not transfer an asset
from one statutory fund to another statutory fund except in accordance with subsection (2)
or Division 3, 4 or 6.
(2) A life company may transfer an asset from
one statutory fund (the losing fund) to another statutory fund (the
gaining fund) if:
(a) the company transfers from the
gaining fund to the losing fund an amount equal to the fair value of the asset;
and
(b) in relation to the owners of
policies referable to the losing fund and the gaining fund, the transfer is
fair and reasonable in all the circumstances.
(3) For the purposes of subsection (2),
the fair value of an asset is the price a person could reasonably be expected
to pay for the asset on a sale in which the seller and buyer were dealing with
each other at arm’s length.
(4) Subsection (1) does not prevent a
liquidator doing anything authorised or required by or under this Act or any other
law of the Commonwealth or of a State or Territory.
46
Restriction on restructure or termination of statutory funds
(1) A life company must not:
(a) change the statutory fund or funds
to which a policy is referable; or
(b) terminate a statutory fund;
except in accordance with:
(c) subsection 35(4) and section 55;
or
(d) Division 3.
(2) Subsection (1) does not prevent a
liquidator doing anything authorised or required by or under this Act or any
other law of the Commonwealth or of a State or Territory.
47
Ascertainment of income and outgoings of a statutory fund
(1) The prudential standards may specify:
(a) what constitutes income of a
statutory fund; and
(b) what constitutes outgoings of a
statutory fund.
(2) If
prudential standards are made for the purposes of subsection (1), then,
for the purposes of this Act:
(a) what constitutes income of a
statutory fund must be determined in accordance with the prudential standards;
and
(b) what constitutes outgoings of a
statutory fund must be determined in accordance with the prudential standards.
Division 2—Duties and liabilities of directors etc.
48
Duty of directors in relation to statutory funds
(1) A director of a life company has a duty
to the owners of policies referable to a statutory fund of the company.
(2) The director’s duty is a duty to take
reasonable care, and use due diligence, to see that, in the investment,
administration and management of the assets of the fund, the life company:
(a) complies with this Part; and
(b) gives priority to the interests of
owners and prospective owners of policies referable to the fund.
(3) In order to avoid doubt, it is declared
that, in the event of conflict between the interests of owners and prospective
owners of policies referable to a statutory fund and the interests of
shareholders of a life company, a director’s duty is to take reasonable care,
and use due diligence, to see that the company gives priority to the interests
of owners and prospective owners of those policies over the interests of
shareholders.
(4) A reference in subsection (2) or (3)
to the interests of owners of policies referable to a statutory fund is a
reference to the interests of such persons viewed as a group.
(5) A director of a life company does not
commit a breach of duty because of the doing of an act by the company if the
company is permitted by this Part to do the act.
(6) If:
(a) in respect of any act or omission
of a life company, a director of the company is guilty of a breach of the duty
imposed by subsection (1); and
(b) the act or omission of the company
results in a loss to a statutory fund of the company;
the director is liable to pay the company an amount equal
to the amount of the loss.
(7) If 2 or more persons are liable under subsection (6)
in relation to the same act or omission, the liability of those persons is
joint and several.
(8) An action under subsection (6) may
be brought:
(a) by the company; or
(b) with the written approval of APRA,
by the owner of a policy referable to the statutory fund involved.
(9) An approval under subsection (8) may
be given subject to conditions relating to the persons, or the number of
persons, who may join in the action as plaintiffs.
(10) A person cannot be made liable both under
this section and under section 50 in respect of the same act or omission
of a life company.
49
APRA may give notice
(1) If a life company has contravened this
Part, APRA may give the company a written notice requiring the company, within
a specified period, to take such action as is specified in the notice to remedy
the contravention.
(2) The period specified in a notice must be
a period ending not earlier than one month after the giving of the notice.
(3) The action to be specified in a notice is
such action as APRA thinks appropriate and reasonable to overcome the effects
of the contravention.
(4) At any time before the end of the period
specified in a notice, APRA may extend the period by such further period as
APRA thinks fit.
(5) A life company must comply with a notice
under subsection (1).
50
Liability of directors
(1) If:
(a) APRA has given a notice to a life
company under section 49 in respect of a contravention of this Part; and
(b) the contravention has resulted in
a loss to a statutory fund; and
(c) the company has failed to comply
with the notice within the period specified in it or within that period as
extended under subsection 49(4);
the persons who were the directors of the company when the
contravention occurred are jointly and severally liable to pay the company an
amount equal to the amount of the loss.
(2) A person is not liable under subsection (1)
if the person proves that he or she used due diligence to ensure that the
company complied with the notice.
51
APRA’s power to sue in the name of a company
If APRA thinks that it is in the
interests of the owners of policies referable to a statutory fund to do so,
APRA may bring an action against a person in the name, and for the benefit, of
a life company for the recovery of an amount that the company is entitled to
recover under section 50.
Division 3—Restructure and termination of statutory funds
52
Restructure of statutory funds
(1) Prudential Rules or the prudential
standards may provide that:
(a) a life company may apply to APRA
to restructure its statutory funds by making one or more policies that are
referable to a statutory fund or funds of the company become referable to
another statutory fund or funds of the company (whether existing or proposed);
and
(b) if the application is approved,
the restructure is to take place.
(2) The fund, or each fund, to which the
policies are referable before the restructure is a transferring fund,
and the fund, or each fund, to which the policies will become referable after
the restructure is a receiving fund.
(3) Without limiting the generality of subsection (1),
Prudential Rules or the prudential standards may provide for the following:
(a) requirements for making the
application;
(b) criteria for approving or refusing
to approve the application;
(c) requirements to notify interested
persons of the outcome of the application;
(d) matters connected with how the
restructure takes place, including the following:
(i) policies becoming
referable to a receiving fund or funds;
(ii) policy and other
liabilities becoming referable to a receiving fund or funds;
(iii) assets of a
transferring fund becoming assets of a receiving fund or funds;
(iv) the timing of the
restructure;
(v) if a receiving fund is
a proposed new statutory fund—the establishment of that fund;
(e) requirements for the company to
give APRA information following the restructure.
(4) APRA
cannot approve the application if it considers that:
(a) the restructure will result in
unfairness to the owners of policies referable to a transferring fund or a
receiving fund when those owners are viewed as a group; or
(b) immediately after the restructure:
(i) a transferring fund
will not satisfy the prudential standards in relation to solvency; or
(ii) a receiving fund will
not satisfy the prudential standards in relation to solvency; or
(c) the company is being wound up when
the application is made.
53
Termination of statutory funds
(1) Prudential Rules or the prudential
standards may provide that:
(a) a life company may apply to APRA
to terminate one or more of its statutory funds; and
(b) if the application is approved,
the termination is to take place.
(2) Without limiting the generality of subsection (1),
Prudential Rules or the prudential standards may provide for the following:
(a) requirements for making the
application;
(b) criteria for approving or refusing
to approve the application;
(c) requirements to notify interested
parties of the outcome of the application;
(d) matters connected with how the
termination takes place, including the following:
(i) distribution or
application of assets;
(ii) settling of
liabilities;
(iii) the timing of the
termination;
(e) requirements for the company to
give APRA information following the termination.
(3) APRA cannot approve the application if it
considers that:
(a) the termination will result in
unfairness to the owners of policies referable to the fund or funds when those
owners are viewed as a group; or
(b) the company is being wound up when
the application is made.
54
Prudential Rules may deal with transitional matters
Prudential Rules may deal with matters
of a transitional, saving or application nature relating to the transition:
(a) from Division 3 of Part 4
of this Act, as in force before the date that is the transfer date for the purposes
of the Financial Sector Reform (Amendments and Transitional Provisions) Act
(No. 1) 1999, to this Division; and
(b) from the Friendly Societies Codes
(as defined in item 1 of Schedule 8 to the Financial Sector Reform
(Amendments and Transitional Provisions) Act (No. 1) 1999), as in
force before the date that is the transfer date for the purposes of that Act,
to this Division.
Division 4—Additional requirements for transfer of policies between
statutory funds by endorsement
55
Additional requirements for transfer of policies between statutory funds by
endorsement
(1) In this section, liabilities,
in relation to a life company, means:
(a) policy liabilities; and
(b) reserves; and
(c) any other liabilities of the
company.
(2) If:
(a) a life company has more than one
statutory fund in respect of its life insurance business; and
(b) because of an endorsement as
mentioned in subsection 35(4), either:
(i) a policy has ceased to
be referable to one of those funds and become referable to another fund; or
(ii) a policy referable to
one or more of those funds has become referable to a further fund or funds;
the company must transfer to each fund to which the policy
has become referable assets of a value equivalent to such part of the
liabilities (including policy liabilities) of the company as is ascertained in
accordance with Prudential Rules or the prudential standards.
(3) If, because of an endorsement as
mentioned in subsection 35(4):
(a) a policy that is referable to a
statutory fund becomes referable to another statutory fund; or
(b) a policy that is referable to one
statutory fund becomes referable to 2 or more statutory funds;
the life company concerned must give notice to the owner
of the policy in accordance with Prudential Rules or the prudential standards.
Division 5—Allocation of profits and losses and capital payments
56
Interpretation
(1) In this Division:
Australian fund has the same meaning as in
Part 6.
Australian/overseas fund has the same meaning
as in Part 6.
Australian participating business means
participating business carried on in Australia.
overseas fund has the same meaning as in Part 6.
overseas participating business means
participating business carried on outside Australia.
(2) The categories of business of a statutory
fund for the purposes of this Division are the categories of business into
which the classes of life insurance business to which the fund relates are
divided by section 75 or 76.
(3) In its application to a company other
than a company limited only by shares, a provision of this Division that
includes the expression “shareholders’” is to be read as if “members’” were
substituted for “shareholders’”.
57
Obligation to allocate operating profit or loss
If annual financial statements given to
APRA under the Financial Sector (Collection of Data) Act 2001 disclose
that a category of business of a statutory fund has an operating profit for the
period to which the statements relate or has incurred an operating loss for the
period, the life company must allocate the profit or loss, as the case may be.
58
Operating profit etc.
(1) A category of business of a statutory
fund has an operating profit for a period if the income of the category for the
period exceeds outgoings of the category for the period. The amount of the
operating profit is the amount by which income exceeds outgoings.
(2) A category of business of a statutory
fund incurs an operating loss for a period if the outgoings of the category for
the period exceed the income of the category for the period. The amount of the
operating loss is the amount by which outgoings exceed income.
59
Allocation of operating profit etc.
(1) A life company must allocate all of the
operating profit or loss of a category of business of a statutory fund for a
period.
(2) A life company allocates an operating
profit for a period by identifying in its financial statements prepared as at
the end of the period:
(a) the amount of the profit; and
(b) the amount of the profit that
should be treated as, or added to, Australian policy owners’ retained profits;
and
(c) the amount of the profit that
should be treated as, or added to, overseas policy owners’ retained profits;
and
(d) the amount of the profit that
should be treated as, or added to, shareholders’ retained profits (Australian
participating); and
(e) the amount of the profit that
should be treated as, or added to, shareholders’ retained profits (overseas and
non‑participating).
(3) A life company allocates an operating
loss for a period by identifying in its financial statements prepared as at the
end of the period:
(a) the amount of the loss; and
(b) the amount representing the
portion of the loss to be taken into account in reduction of Australian policy
owners’ retained profits; and
(c) the amount representing the
portion of the loss to be taken into account in reduction of overseas policy
owners’ retained profits; and
(d) the amount representing the
portion of the loss to be taken into account in reduction of shareholders’
retained profits (Australian participating); and
(e) the amount representing the
portion of the loss to be taken into account in reduction of shareholders’
retained profits (overseas and non‑participating).
(4) A life company must allocate to
shareholders’ capital of a statutory fund all capital payments made to the fund
under section 37.
(5) A company allocates a capital payment by:
(a) identifying in its financial
statements prepared as at the end of the period in which the payment was made
the amount of the payment; and
(b) identifying that amount as an
amount that should be added to shareholders’ capital.
60
Basis of allocation of operating profit etc.
(1) The allocation of an operating profit of
a category of business of a statutory fund must be made in accordance with the
following rules:
(a) in the case of a profit of a
category representing Australian participating business, at least 80%, or such
higher percentage as is specified in the constitution of the company, of the
profit must be treated as, or added to, Australian policy owners’ retained
profits of the statutory fund;
(b) any part of a profit of a category
representing Australian participating business and not allocated under paragraph (a)
must be treated as, or added to, shareholders’ retained profits (Australian
participating) of the statutory fund;
(c) subject to paragraph (d), any
part of a profit of a category representing overseas participating business, to
the extent that such an allocation would not be inconsistent with the
constitution of the company, may be treated as, or added to, overseas policy
owners’ retained profits of the statutory fund;
(d) if the constitution of the company
requires any part of a profit representing overseas participating business to
be treated as overseas policy owners’ retained profits, at least that part of
the profit must be treated as, or added to, overseas policy owners’ retained
profits of the statutory fund under paragraph (c);
(e) any part of a profit of a category
representing overseas participating business and not allocated under paragraph (c)
must be treated as, or added to, shareholders’ retained profits (overseas and
non‑participating) of the statutory fund;
(f) a profit of a category
representing non‑participating business must be treated as, or added to,
shareholders’ retained profits (overseas and non‑participating) of the
statutory fund.
(2) The allocation of an operating loss of a
category of business of a statutory fund must be made in accordance with the
following rules:
(a) in the case of a loss of a
category representing Australian participating business, no more than 80%, or
such higher percentage as is specified in the constitution of the company, may
be taken into account in reduction of Australian policy owners’ retained
profits of the statutory fund;
(b) any part of a loss of a category
representing Australian participating business and not allocated under paragraph (a)
must be allocated in reduction of shareholders’ retained profits (Australian
participating) of the statutory fund;
(c) subject to paragraph (d), any
part of a loss of a category representing overseas participating business, to
the extent that such an allocation would not be inconsistent with the
constitution of the company, may be allocated in reduction of overseas policy
owners’ retained profits of the statutory fund;
(d) if the constitution of the company
requires any part of a loss of a category representing overseas participating
business to be allocated in reduction of overseas policy owners’ retained
profits, no more than that part of the loss may be allocated in reduction of
overseas policy owners’ retained profits of the statutory fund under paragraph (c);
(e) any
part of a loss of a category representing overseas participating business and
not allocated under paragraph (c) must be allocated in reduction of
shareholders’ retained profits (overseas and non‑participating) of the
statutory fund;
(f) a loss of a category representing
non‑participating business must be allocated in reduction of
shareholders’ retained profits (overseas and non‑participating) of the
statutory fund.
Division 6—Distribution of retained profits and shareholders’ capital
61
Interpretation
(1) In this Part:
Australian policy owners’ retained profits,
in relation to a statutory fund at a particular time, means the total of:
(a) the starting amount; and
(b) the total of the amounts
allocated, before that time, under paragraph 60(1)(a);
less:
(c) the total of the amounts referred
to in paragraphs (a) and (b) distributed before that time; and
(d) the total of the amounts
allocated, before that time, under paragraph 60(2)(a).
overseas policy owners’ retained profits, in
relation to a statutory fund at a particular time, means the total of:
(a) the starting amount; and
(b) the total of the amounts
allocated, before that time, under paragraph 60(1)(c);
less:
(c) the total of the amounts referred
to in paragraphs (a) and (b) distributed before that time; and
(d) the total of the amounts
allocated, before that time, under paragraph 60(2)(c).
shareholders’ capital, in relation to a
statutory fund at a particular time, means the total of:
(a) the starting amount; and
(b) the total amount of capital
payments allocated, before that time, under subsection 59(5);
less the total of the amounts referred to in paragraphs (a)
and (b) distributed before that time.
shareholders’ retained
profits (Australian participating), in relation to a statutory fund at
a particular time, means the total of:
(a) the starting amount; and
(b) the total of the amounts
allocated, before that time, under paragraph 60(1)(b);
less:
(c) the total of the amounts referred
to in paragraphs (a) and (b) distributed before that time; and
(d) the total of the amounts
allocated, before that time, under paragraph 60(2)(b).
shareholders’ retained profits (overseas and non‑participating),
in relation to a statutory fund at a particular time, means the total of:
(a) the starting amount; and
(b) the total of the amounts
allocated, before that time, under paragraphs 60(1)(e) and (f);
less:
(c) the total of the amounts referred
to in paragraphs (a) and (b) distributed before that time; and
(d) the total of the amounts
allocated, before that time, under paragraphs 60(2)(e) and (f).
starting amount, for the purposes of a
definition in this section, means the amount ascertained in accordance with
Prudential Rules or prudential standards made for the purposes of the
definition.
(2) In its application to a company other
than a company limited only by shares,
a provision of this Division that includes the expression
“share holders’” is to be read as follows:
(a) the provision is to be read as if
“members’” were substituted for “shareholders’”;
(b) in the case of subsection 62(1),
the resulting reference to “members’ funds” is to be read as a reference to an
account of the company representing funds that are not assets of a statutory
fund.
62
Distribution of retained profits
(1) The distribution of retained profits of a
statutory fund must be in accordance with the following rules:
(a) Australian policy owners’ retained
profits may only be distributed to owners of Australian policies that provide
for participating benefits;
(b) subject to paragraph (c),
overseas policy owners’ retained profits may only be distributed to owners of
overseas policies that provide for participating benefits;
(c) overseas policy owners’ retained
profits may be distributed to owners of Australian policies that provide for
participating benefits or transferred to shareholders’ funds if the
distribution or transfer has been approved by APRA;
(d) shareholders’ retained profits
(Australian participating) and shareholders’ retained profits (overseas and non‑participating)
may be:
(i) transferred to
shareholders’ funds; or
(ii) transferred to another
statutory fund of the company; or
(iii) distributed to owners
of policies that provide for participating benefits.
(2) A distribution of retained profits of a
statutory fund may only be made after the directors of the company have
received the appointed actuary’s written advice as to the likely consequences
of the proposed distribution.
(3) A distribution of retained profits of a
statutory fund must not be made if:
(a) the distribution would have the
result that the prudential standards in relation to solvency would not be
satisfied in relation to the fund; or
(b) the distribution would involve a
contravention of a direction given by APRA under section 230B in relation
to solvency; or
(c) in the case of a distribution of
shareholders’ retained profits (Australian participating), the distribution
would involve a contravention of Prudential Rules or prudential standards made
for the purposes of subsection (5).
(4) Except with the approval of APRA, a
distribution of shareholders’ retained profits (Australian participating) or
shareholders’ retained profits (overseas and non‑participating) must not
be made if:
(a) the distribution would have the
result that the prudential standards in relation to capital adequacy would not
be satisfied in relation to the fund; or
(b) the distribution would involve a
contravention of a direction given by APRA under section 230B in relation
to capital adequacy.
(5) Prudential Rules or the prudential
standards may prohibit the distribution of shareholders’ retained profits
(Australian participating) unless the distribution is in accordance with
specified requirements relating to the distribution of Australian policy
owners’ retained profits.
63
Distribution of shareholders’ capital
(1) A distribution of shareholders’ capital
in relation to a statutory fund:
(a) may only be made after the
directors of the life company concerned have received the appointed actuary’s
written advice as to the likely consequences of the proposed distribution; and
(b) must not be made if:
(i) the distribution would
have the result that the prudential standards in relation to solvency would not
be satisfied in relation to the fund; or
(ii) the distribution would
involve a contravention of a direction given by APRA under section 230B in
relation to solvency.
(2) Except with the approval of APRA, a
distribution of shareholders’ capital in relation to a statutory fund must not
be made if:
(a) the distribution would have the
result that the prudential standards in relation to capital adequacy would not
be satisfied in relation to the fund; or
(b) the distribution would involve a
contravention of a direction given by APRA under section 230B in relation
to capital adequacy.
(3) Shareholders’ capital may only be
distributed in the following ways:
(a) by transfer to shareholders’ funds;
(b) by transfer to another statutory
fund of the company;
(c) by distribution to owners of
policies that provide for participating benefits.
Part 6—Financial management of life companies
Division 1—Preliminary
74
Interpretation
(1) In this Part, unless the contrary
intention appears:
Australian fund means a statutory fund that
relates only to life insurance business carried on in Australia.
Australian/overseas fund means a statutory
fund that relates to life insurance business carried on in Australia and life
insurance business carried on outside Australia.
overseas fund means a statutory fund that
relates only to life insurance business carried on outside Australia.
(2) For the purposes of sections 88,
88A, 98 and 98A of this Part, treat a reference in those sections to this Act
as including a reference to the First Home Saver Accounts Act 2008.
Division 2—Financial records and statements
75
Financial records—Australian and Australian/overseas funds
(1) A life company must keep such records of the
income and outgoings of each statutory fund (other than an overseas fund) of
the company as will record properly the affairs and transactions of the company
in respect of:
(a) each class of life insurance
business to which the fund relates; and
(b) each category of business within
such a class; and
(c) each subcategory of business
within such a category.
(2) In the case of an Australian fund, a
class of life insurance business to which the fund relates is divided into the
following categories:
(a) Australian participating business;
(b) non‑participating business.
(3) In the case of an Australian/overseas
fund, a class of life insurance business to which the fund relates is divided
into the following categories:
(a) Australian participating business;
(b) overseas participating business;
(c) non‑participating business.
(4) If a life company administers part of the
life insurance business included in a category of business to which a statutory
fund relates separately from all other business included in that category, that
part of the life insurance business constitutes a subcategory within that
category of business.
76
Financial records—overseas funds
(1) A life company must keep such records of
the income and outgoings of an overseas fund of the company as will record
properly the affairs and transactions of the company in respect of:
(a) each class of life insurance
business to which the fund relates; and
(b) each category of business within
such a class.
(2) A class of life insurance business to
which an overseas fund relates is divided into the following categories:
(a) overseas participating business;
(b) non‑participating business.
(3) This section does not apply in relation
to an eligible foreign life insurance company.
77
Financial year of a life company
(1) Subject to subsection (6), the
financial year of an existing life company is the period that, immediately
before the commencement of this Act, was the financial year of the company
under the Life Insurance Act 1945.
(2) Subject to subsection (6), the
financial year of any other life company is the period nominated by the company
for the purposes of section 20.
(3) A life company may give APRA written
notice that it wishes to change its financial year.
(4) A notice must specify:
(a) the period that is to be treated
as the first financial year of the company commencing after the giving of the
notice; and
(b) the period that is to constitute
the second and subsequent financial years of the company after the giving of
the notice.
(5) The period specified for the purpose of paragraph (4)(a)
may exceed 12 months but must not exceed 15 months.
(6) If APRA approves the change proposed in a
notice, the periods specified in the notice become financial years of the
company.
(7) If a period specified in a notice for the
purpose of paragraph (4)(a) commences after the first day of a period (the
existing financial year) that would, if the notice had not been given,
have constituted a financial year of the company, the portion of the existing
financial year before that commencement constitutes a financial year of the
company.
78
Treatment of income and outgoings relating to mixed business
(1) If:
(a) a life company carries on other
business as well as its life insurance business; and
(b) an amount of income or outgoings
relates both to the business of a statutory fund and to the other business;
the company must apportion the amount so as to determine
what part of the amount relates to the business of the statutory fund.
(2) Only the part of the amount so determined
is to be treated as related to the business of the statutory fund.
(3) If a life company incurs a liability in
respect of a matter that is related in part to the business of a statutory fund
of the company and in part to the business of another company:
(a) the life company must apportion
the liability; and
(b) only the portion of the liability
referable to the business of the statutory fund may be treated as outgoings of
the fund.
79
Treatment of income or outgoings relating to 2 or more categories of business
etc.
(1) If an amount of income or outgoings of a
life company (including an amount ascertained by apportionment under section 78)
relates to the business of 2 or more statutory funds, the company must:
(a) apportion the amount so as to
determine what part of the amount relates to the business of each fund; and
(b) include in its records relating to
each fund the part of the amount that relates to the business of that fund.
(2) If an amount of income or outgoings of a
life company (including an amount ascertained by apportionment under section 78
or subsection (1) of this section) relates to 2 classes of life insurance
to which a statutory fund relates, the company must:
(a) apportion the amount so as to
determine what part of the amount relates to each class; and
(b) include in its records relating to
each class the part of the amount that relates to that class.
(3) For the
purposes of section 75, if an amount of income or outgoings of a life
company (including an amount ascertained by apportionment under section 78
or this section) relates to 2 or more categories of business, the company must:
(a) apportion the amount so as to
determine what part of the amount relates to each of the categories of
business; and
(b) include in its records relating to
each category the part of the amount that relates to that category.
(4) For the purposes of section 75, if
an amount of income or outgoings of a life company (including an amount
ascertained by apportionment under section 78 or this section) relates to
2 or more subcategories, the company must:
(a) apportion the amount so as to
determine what part of the amount relates to each subcategory; and
(b) include in its records relating to
each subcategory the part of the amount that relates to that subcategory.
80
Basis of apportionment
(1) An apportionment for the purposes of
section 78 or 79 must be made:
(a) on an equitable basis; and
(b) according to generally accepted
accounting principles.
(2) Before an apportionment is made, the
directors of the company concerned must obtain the appointed actuary’s written
advice whether the basis of the proposed apportionment is appropriate.
(3) An apportionment is not effective unless
a report given by the auditor of the life company for the purposes of the Financial
Sector (Collection of Data) Act 2001 states that the apportionment has been
made equitably and in accordance with generally accepted accounting principles.
81
Treatment of appreciation and depreciation of assets
If a life company treats an asset as
having appreciated or depreciated, the company must, for the purposes of this
Part, treat the amount of the appreciation or depreciation as an amount of
income or outgoing, as the case may be.
83
Life company to have auditor
(1) A life company must have an auditor
appointed by the life company.
(2) The auditor of a life company must
perform for the life company the functions of an auditor set out in the
prudential standards and in reporting standards made by APRA under the Financial
Sector (Collection of Data) Act 2001.
(3) The life company must make any
arrangements necessary to enable the auditor to perform those functions.
84
Appointment of auditor
A life company must not appoint a person
as the auditor of the life company unless:
(a) the life company is reasonably
satisfied that the person meets the eligibility criteria set out in the
prudential standards for appointment as the auditor of a life company; and
(b) no order is in force under
section 245A that the person is disqualified from being or acting as an
auditor of the life company.
85
Ending an appointment as auditor
(1) A life company must end the appointment
of a person as auditor of the life company if:
(a) the person does not meet the
eligibility criteria set out in the prudential standards for appointment as the
auditor of a life company; or
(b) the life company is satisfied that
the person has, in relation to the company, failed to perform adequately and
properly the functions and duties of an auditor under this Act; or
(c) an order takes effect under
section 245A that the person is disqualified from being or acting as an
auditor of the life company.
(2) If:
(a) a life company is required under
subsection (1) to end the appointment of a person as auditor of the
company; and
(b) the power to appoint the auditor
of the company is not vested in the directors of the company or is not vested
in the directors of the company alone;
the directors may appoint a person who satisfies the
requirements in paragraphs 84(a) and (b) to be the auditor of the company until
an appointment is made in accordance with the constitution or other rules of
the life company.
87
Notification of appointment etc. of auditor
(1) When a life company appoints a person as
its auditor, the company must give APRA written notice of:
(a) the name of the person; and
(b) the date of the appointment; and
(c) any other matter specified in the
prudential standards.
(2) Notice under subsection (1) must be
given within 14 days after the day of the appointment.
(3) If a person ceases to be the auditor of a
life company, the company must give APRA written notice that the person has so
ceased and of the day on which he or she so ceased.
(4) Notice under subsection (3) must be
given within 14 days after the day on which the person ceased to be the auditor
of the company.
88
Auditor’s obligation to report to company and APRA
(1) The auditor of a life company must draw
to the attention of the company, or of the directors or an officer of the
company, any matter that comes to the attention of the auditor and that the
auditor thinks requires action to be taken by the company or its directors:
(a) to avoid a contravention of this
Act or the Financial Sector (Collection of Data) Act 2001; or
(b) to avoid prejudice to the
interests of the owners of policies issued by the company.
(2) If the auditor of a life company thinks:
(a) that there are reasonable grounds
for believing that the company or a director of the company may have
contravened this Act or any other law; and
(b) that the contravention is of such
a nature that it may affect significantly the interests of the owners of
policies issued by the company;
the auditor must immediately inform APRA in writing of:
(c) his or her opinion; and
(d) the information on which it is
based.
(2A) Subsection (2) does not apply to the
auditor of a life company in relation to a contravention if:
(a) a director or senior manager of
the life company informs the auditor that the life company has informed APRA in
writing of the contravention; and
(b) the auditor has no reason to
disbelieve the director or senior manager.
(2B) A person commits an offence if:
(a) the person is a director or senior
manager of a life company; and
(b) the person knows that:
(i) there are reasonable
grounds for believing that the life company or a director of the life company
may have contravened this Act or any other Act; and
(ii) the contravention is
of such a nature that it may affect significantly the interests of the owners
of policies issued by the company; and
(c) the person informs the auditor of
the life company that the life company has informed APRA in writing of the
contravention; and
(d) the life company has not done so.
Penalty: Imprisonment for 12 months.
(3) If:
(a) the auditor of a life company has
drawn to the attention of the company, or of the directors or an officer of the
company, a matter that the auditor thinks requires action to be taken by the
company or its directors:
(i) to avoid a contravention
of this Act or the Financial Sector (Collection of Data) Act 2001; or
(ii) to avoid prejudice to
the interests of the owners of policies issued by the company; and
(b) the auditor is satisfied that
there has been reasonable time for the taking of the action but the action has
not been taken;
the auditor must inform APRA in writing of the matter
referred to in paragraph (a).
(4) If:
(a) a person becomes subject to an
obligation under subsection (2) or (3) to inform APRA of anything; and
(b) before the person informs APRA,
the person ceases to be the auditor of the life company concerned;
the person remains subject to the obligation as if he or
she were still the auditor of the company.
88A
Auditor may give information to APRA
(1) A person who is or was an auditor of a
life company may give information, or produce books, accounts or documents,
about the life company to APRA if the person considers that doing so will
assist APRA in performing its functions under this Act or under the Financial
Sector (Collection of Data) Act 2001.
(2) A person who, in good faith and without
negligence, gives information to APRA in accordance with this section is not
subject to any action, claim or demand by, or any liability to, any other
person in respect of the information.
89
Qualified privilege of auditors
(1) This section applies to a person who is,
or has been, the auditor of a life company.
(2) A person to whom this section applies has
qualified privilege in respect of:
(a) any statement, written or oral, made
by him or her under, or for the purposes of, a provision of this Act or the Financial
Sector (Collection of Data) Act 2001; and
(b) the answer to any question he or
she is required by the audit committee of the life company to answer.
(3) The privilege conferred by this section
is in addition to any privilege conferred on a person by the Corporations
Act 2001.
Division 3—Appointed actuaries
93
Appointment
(1) Subject to subsection (2), a life
company must have an actuary appointed by the company.
(2) Within 6 weeks after a person ceases to
be the appointed actuary of a life company, the company must appoint another
person to be the actuary of the company.
(3) A life company must not appoint a person
as the actuary of the life company unless:
(a) the life company is reasonably
satisfied that the person meets the eligibility criteria set out in the
prudential standards for appointment as the actuary of a life company; and
(b) no order is in force under
section 245A that the person is disqualified from being or acting as an
actuary of the life company.
(7) An appointment of a person as actuary of
a life company cannot take effect while there is in force an appointment of
another person as the company’s actuary.
94
Ending an appointment as actuary
(1) A life company must end the appointment
of a person as actuary of the life company if:
(a) the person does not meet the
eligibility criteria set out in the prudential standards for appointment as the
actuary of a life company; or
(b) the life company is satisfied that
the person has, in relation to the company, failed to perform adequately and
properly the duties and functions of an appointed actuary under this Act; or
(c) an order takes effect under
section 245A that the person is disqualified from being or acting as an
actuary of the life company.
(2) If:
(a) a life company is required under
subsection (1) to end the appointment of a person as actuary of the
company; and
(b) the power to appoint the actuary
of the company is not vested in the directors of the company or is not vested
in the directors of the company alone;
the directors may appoint a person who satisfies the
requirements in paragraphs 93(3)(a) and (b) to be the actuary of the company
until an appointment is made in accordance with the constitution or other rules
of the life company.
95
Notification of appointment etc.
(1) A life company that appoints a person
under section 93 must give APRA written notice of:
(a) the name of the person; and
(b) details of the actuarial qualifications
and experience of the applicant; and
(c) the date of the appointment; and
(d) any other matter specified in the
prudential standards.
(2) Notice under subsection (1) must be
given within 14 days after the day of the appointment.
(3) If a person ceases to be the appointed
actuary of a life company, the company must give APRA written notice that the
person has so ceased and of the date on which he or she so ceased.
(4) Notice under subsection (3) must be
given within 14 days after the day on which the person ceased to be the
appointed actuary of the company.
96
Compliance with prudential standards
The appointed actuary of a life company,
in the performance of his or her duties and the exercise of his or her powers,
must comply with the prudential standards.
97
Role of actuary
(1) The appointed actuary of a life company
must perform for the company the functions of an actuary set out in the
prudential standards and in reporting standards made by APRA under the Financial
Sector (Collection of Data) Act 2001.
(2) The life company must make any
arrangements necessary to enable the appointed actuary to perform those
functions. These arrangements may include (without limitation) the following:
(a) providing access to documents and
information in the company’s control;
(b) requiring officers or employees of
the company to answer questions;
(c) allowing the actuary to attend
meetings of directors of the company, annual general meetings or any other
meetings of members of the company;
(d) allowing the actuary to speak at
meetings of directors of the company on matters under consideration that relate
to the functions and duties of the actuary.
98
Actuary’s obligation to report to APRA
(1) The appointed actuary of a life company
must draw to the attention of the company, or of the directors or an officer of
the company, any matter that comes to the attention of the actuary and that the
actuary thinks requires action to be taken by the company or its directors:
(a) to avoid a contravention of this
Act or the Financial Sector (Collection of Data) Act 2001; or
(b) to avoid prejudice to the
interests of the owners of policies issued by the company.
(2) If the appointed actuary of a life
company thinks:
(a) that there are reasonable grounds
for believing that the company or a director of the company may have
contravened this Act or any other law; and
(b) that the contravention is of such
a nature that it may affect significantly the interests of the owners of
policies issued by the company;
the appointed actuary must immediately inform APRA in
writing of:
(c) his or her opinion; and
(d) the information on which it is
based.
(2A) Subsection (2) does not apply to the
appointed actuary of a life company in relation to a contravention if:
(a) a director or senior manager of
the life company informs the actuary that the life company has informed APRA in
writing of the contravention; and
(b) the actuary has no reason to
disbelieve the director or senior manager.
(2B) A person commits an offence if:
(a) the person is a director or senior
manager of a life company; and
(b) the person knows that:
(i) there are reasonable
grounds for believing that the life company or a director of the life company
may have contravened this Act or any other Act; and
(ii) the contravention is
of such a nature that it may affect significantly the interests of the owners
of policies issued by the company; and
(c) the person informs the appointed
actuary of the life company that the life company has informed APRA in writing
of the contravention; and
(d) the life company has not done so.
Penalty: Imprisonment for 12 months.
(3) If:
(a) the appointed actuary of a life
company has drawn to the attention of the company, or of the directors or an
officer of the company, a matter that the actuary thinks requires action to be
taken by the company or its directors:
(i) to avoid a
contravention of this Act or the Financial Sector (Collection of Data) Act
2001; or
(ii) to avoid prejudice to
the interests of owners of policies issued by the company; and
(b) the appointed actuary is satisfied
that there has been reasonable time for the taking of the action but the action
has not been taken;
the appointed actuary must inform APRA in writing of the
matter referred to in paragraph (a).
(5) If:
(a) a person becomes subject to an
obligation under subsection (2) or (3) to inform APRA of anything; and
(b) before the person informs APRA,
the person ceases to be the appointed actuary of the life company concerned;
the person remains subject to the obligation as if he or
she were still the appointed actuary of the company.
98A
Appointed actuary may give information to APRA
(1) A person who is or was the appointed
actuary of a life company may give information, or produce books, accounts or
documents, about the life company to APRA if the person considers that doing so
will assist APRA in performing its functions under this Act or under the Financial
Sector (Collection of Data) Act 2001.
(2) A person who, in good faith and without
negligence, gives information to APRA in accordance with this section is not
subject to any action, claim or demand by, or any liability to, any other
person in respect of the information.
99
Qualified privilege of appointed actuary
(1) A person who is, or has been, the
appointed actuary of a life company has qualified privilege in respect of any
statement, whether written or oral, made by him or her for the purpose of the
performance of his or her functions as appointed actuary of the company.
(2) In particular (and without limiting subsection (1)),
a person who is or has been the appointed actuary of a life company has
qualified privilege in respect of:
(a) any statement, written or oral,
made by him or her under, or for the purposes of, a provision of this Act; and
(b) the answer to any question he or
she is required by the audit committee of the life company to answer.
(3) The privilege conferred by this section
is in addition to any privilege conferred on a person by any other law.
Division 8—Miscellaneous
114
Method of valuing policy liabilities
(1) This section applies to a valuation of
policy liabilities made for the purposes of any provision of this Act, other
than a provision of Division 2 of Part 8.
(2) A valuation of the policy liabilities
referable to a statutory fund must be made in accordance with the prudential
standards.
124
Policy owner’s right to copy of annual financial statements and annual return
(1) The owner of a policy issued by a life
company is entitled, on his or her request, to be provided by the company with
one copy of the latest annual financial statements and annual return given by
the company to APRA under the Financial Sector (Collection of Data) Act 2001.
(2) Copies provided under subsection (1)
are to be provided free of charge.
125
Referring matters to professional associations for auditors and actuaries
(1) If APRA is of the opinion that an auditor
of a life company:
(a) has failed, whether within or
outside Australia, to perform adequately and properly his or her duties as an
auditor under:
(i) this Act; or
(ii) any other law of the
Commonwealth, a State or a Territory; or
(b) is otherwise not a fit and proper
person to be the auditor of a life company;
APRA may refer the details of the matter to either or both
of the following:
(c) the Companies Auditors and
Liquidators Disciplinary Board established by Division 1 of Part 11
of the Australian Securities and Investments Commission Act 2001;
(d) those members of the professional
association of the auditor whom APRA believes will be involved in considering
or taking any disciplinary or other action concerning the matter against the
auditor.
(2) If APRA is of the opinion that an
appointed actuary of a life company:
(a) has failed, whether within or
outside Australia, to perform adequately and properly his or her duties as an
actuary under:
(i) this Act; or
(ii) any other law of the
Commonwealth, a State or a Territory; or
(b) is otherwise not a fit and proper
person to be the actuary of a life company;
APRA may refer the details of the matter to those members
of the professional association of the actuary whom APRA believes will be
involved in considering or taking any disciplinary or other action concerning
the matter against the actuary.
(3) If APRA refers details of a matter under
this section, APRA must also give written notice of the referral (including the
nature of the matter) to the auditor or actuary.
125A
APRA may direct removal of auditor or actuary
(1) APRA may, if satisfied there is a ground
under subsection (2), give a written direction to a life company to end
the appointment of a person as:
(a) the auditor of the company; or
(b) the appointed actuary of the
company.
(2) The grounds for giving a direction to end
a person’s appointment are:
(a) either:
(i) for a person who is a
disqualified person only because he or she was disqualified under
section 245A—the person is disqualified from being or acting as an auditor
or actuary of the company; or
(ii) otherwise—the person
is a disqualified person; or
(b) the person is not a fit and proper
person to hold the appointment; or
(c) the person has failed to perform
adequately and properly the duties or functions of the appointment under this
Act, the regulations or the Financial Sector (Collection of Data) Act 2001.
(3) Before directing a life company to end a
person’s appointment, APRA must:
(a) give written notice to:
(i) the life company; and
(ii) the person; and
(b) give the life company and the
person a reasonable opportunity to make submissions on the matter.
(4) The notice must include a statement that
any submissions in response to the notice may be discussed by APRA with other
persons as mentioned in paragraph (5)(b).
(5) If a submission is made in response to
the notice, APRA:
(a) must have regard to the
submission; and
(b) may discuss any matter contained
in the submission with any persons APRA considers appropriate for the purpose
of assessing the truth of the matter.
(6) A direction to end a person’s appointment
takes effect on the day specified in the direction, which must be at least 7
days after the direction is made.
(7) If APRA directs a life company to end a
person’s appointment, APRA must give the life company and the person a copy of
the direction.
(8) A direction to end a person’s appointment
is not a legislative instrument.
(9) A life company commits an offence if:
(a) the life company does or fails to
do an act; and
(b) by doing or failing to do the act,
the life company fails to comply with a direction under this section.
Penalty: 60 penalty units.
(10) Subsection (9) is an offence of
strict liability.
Note: For strict liability, see
section 6.1 of the Criminal Code.
Part 7—Monitoring and investigation of life companies
Division 1—Preliminary
126
Interpretation
(1) In this Part:
authorised person means a person appointed
under section 127.
officer, in relation to a company, means:
(a) a person who is, or has been, an
officer of the company, and includes a person who is, or has been:
(i) a director, secretary
or employee of the company; or
(ii) the appointed actuary
of the company; or
(iii) the auditor of the
company; or
(iv) a shareholder of the
company; or
(b) a person who, in the capacity of
an insurance intermediary (other than an insurance broker) within the meaning
of the Insurance Contracts Act 1984, is, or has been, an agent of the
company.
relevant business, in relation to a company,
means the business of the company to which a show cause notice relates.
relevant person, in relation to a company,
means:
(a) a director, secretary or employee
of the company; or
(b) the appointed actuary of the
company; or
(c) the auditor of the company.
show cause notice means a notice given under
subsection 135(1).
(2) For the purposes of this Part, treat a
reference in this Part to this Act as including a reference to the First
Home Saver Accounts Act 2008.
127
Appointment of authorised persons
(1) The
Regulator may appoint:
(a) a member of its own staff; or
(b) a member of the other Regulator’s
staff;
as an authorised person for the purposes of a specified
provision of this Act.
(2) An appointment must be in writing.
(3) A person who is authorised under subsection (1)
for the purposes of a provision of this Act may:
(a) exercise any power of the
Regulator or an authorised person under that provision; and
(b) perform any functions of the
Regulator or an authorised person under that provision.
128
Associated company
For the purposes of this Part, a company
(first company) is associated with another company if the 2
companies are related to each other and:
(a) the first company carries on life
insurance business; or
(b) either of those companies is, or
has directors who are, accustomed or under an obligation, whether formal or
informal, to act in accordance with the directions, instructions or wishes of
the other company or its directors.
129
Related companies
The question whether companies 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.
Division 2—Monitoring life companies
130 Purpose
of Division
It is the purpose of this Division to
provide the means whereby the Regulator may monitor the extent of compliance by
a life company with:
(a) this Act; and
(b) directions given under this Act;
and
(c) conditions on the registration of
the company.
131
Requirement to give information to Regulator
(1) For the purposes of this Act, the
Regulator may give a life company a written notice requiring the company to
give the Regulator, in writing:
(a) information about any matter
relating to the company’s business; or
(b) information about any matter
relating to the business of a subsidiary of the company; or
(c) a copy of any document relating to
such a matter held by the company.
(2) The notice must specify a period within
which the information or copy is to be given to the Regulator. The period
specified must be a period ending not earlier than 7 days, and not later than
one month, after the day on which the notice is given to the company.
(3) A life company must comply with a notice
under this section.
(4) A company is entitled to be paid
reasonable compensation for making copies for the purpose of complying with a
notice requiring that a copy of a document be given to the Regulator.
132
Requirement to produce records
(1) For the purposes of this Act, the
Regulator may give a life company a written notice requiring the company to
produce to the Regulator or a specified authorised person, at a reasonable time
and place specified in the notice, any records relating to the affairs of the
company.
(2) The Regulator or the authorised person
may inspect, take extracts from and make copies of any record produced under
this section.
(3) A life company must comply with a notice
under this section.
(4) If:
(a) a requirement is made under subsection (1);
and
(b) the information that constitutes
the records to which the requirement relates is stored, in whole or in part, by
electronic means;
the company to which the requirement is directed does not
comply with the requirement unless it produces all of the records in
documentary form.
132A
Requirement to notify APRA of certain matters
Matters requiring immediate notice
(1) If:
(a) a life company becomes aware that
the life company has breached or will breach a provision of this Act; and
(b) the provision relates to financial
obligations the life company has to the owners of policies issued by it or to
the life company’s minimum capital requirements;
the life company must immediately notify APRA in writing
of the breach.
Offence in relation to matters requiring immediate
notice
(2) A life company commits an offence if the
life company contravenes subsection (1).
Penalty: 200 penalty units.
Defence if matter already notified
(3) Subsection (2)
does not apply to a life company in relation to a breach referred to in
subsection (1) if:
(a) the life company becomes aware of
the breach because it is informed of it by the auditor or appointed actuary of
the life company; and
(b) the auditor or appointed actuary
informs the life company that the auditor or actuary has notified APRA in
writing of the breach; and
(c) the life company has no reason to
disbelieve the auditor or appointed actuary.
Note 1: Auditors and appointed actuaries must give APRA
certain information under sections 88 and 98, and may give APRA
information under sections 88A and 98A.
Note 2: The defendant bears an evidential burden in
relation to the matters in subsection (3). See subsection 13.3(3) of the Criminal
Code.
Matters requiring notice as soon as practicable
(4) If a life company becomes aware:
(a) both:
(i) that the life company
has breached or will breach a provision of this Act (other than a provision to
which subsection (1) applies); and
(ii) that the breach is or
will be significant (see subsection (5)); or
(b) of a matter that materially and
adversely affects the life company’s financial position;
the life company must give APRA a written report about the
breach or matter as soon as practicable, and in any case no later than 10
business days, after becoming aware of the breach or matter.
(5) For the purposes of
subparagraph (4)(a)(ii), a breach of a provision is or will be significant
if the breach is or will be significant having regard to any one or
more of the following:
(a) the number or frequency of similar
breaches;
(b) the impact the breach has or will
have on the life company’s ability to conduct its life insurance business;
(c) the extent to which the breach
indicates that the life company’s arrangements to ensure compliance with this
Act or with the prudential standards might be inadequate;
(d) the actual or potential financial
loss arising or that will arise from the breach:
(i) to the owners of
policies issued by the life company; or
(ii) to the life company;
(e) any matters prescribed by the regulations
for the purposes of this paragraph.
Offence in relation to matters requiring notice as soon
as practicable
(6) A life company commits an offence if the
life company contravenes subsection (4).
Penalty: 200 penalty units.
Defence if auditor or actuary notifies breach
(7) Subsection (6) does not apply to a
life company in relation to a breach or matter referred to in
subsection (4) if:
(a) the auditor or appointed actuary
of the life company gives APRA a written report about the breach or matter; and
(b) the report is given before, or
within 10 business days after, the life company becomes aware of the breach or
matter.
Note 1: Auditors and appointed actuaries must give APRA
certain information under sections 88 and 98, and may give APRA information
under sections 88A and 98A.
Note 2: The defendant bears an evidential burden in
relation to the matters in subsection (7). See subsection 13.3(3) of the Criminal
Code.
Ancillary offences
(8) If an individual:
(a) commits an offence under
subsection (2) or (6) 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 under
subsection (2) or (6);
the individual is punishable on conviction by a fine not
exceeding 40 penalty units.
Limits on information to be provided
(9) A notice or report given under
subsection (1) or (4) must not include information, books, accounts or
documents with respect to the affairs of an individual insured person, unless
the information, books, accounts or documents are in respect of prudential
matters relating to the life company.
133
Access to premises
(1) For the purposes of this Act, an
authorised person may enter, at any reasonable time, any premises at which the
authorised person has reasonable cause to believe records relating to the
affairs of a life company are kept.
(2) The authorised person may:
(a) inspect any records found on the
premises that the authorised person believes on reasonable grounds to relate to
the affairs of the life company; and
(b) take extracts from, or make copies
of, such records.
(3) The authorised person may not enter
premises under subsection (1) except with the consent of the occupier of
the premises.
133A
Enforceable undertakings
(1) APRA may accept a written undertaking
given by a person in connection with a matter in relation to which APRA has a
power or function under this Act.
(2) The person may, with APRA’s consent, vary
or withdraw the undertaking.
(3) If APRA considers that a person who has
given an undertaking has breached any of the terms of the undertaking, APRA may
apply to the Court for an order under subsection (4).
(4) If the Court is satisfied that a person
who has given an undertaking has breached any of the terms of the undertaking,
the Court may make any or all of the following orders:
(a) an order directing the person to
comply with the undertaking;
(b) an order directing the person to
pay to the Commonwealth an amount up to the amount of any financial benefit
that the person obtained (whether directly or indirectly) and that is
reasonably attributable to the breach;
(c) any order that the Court considers
appropriate directing the person to compensate any other person who has
suffered loss or damage as a result of the breach;
(d) any other order that the Court
considers appropriate.
Division 3—Investigation by APRA
135
Giving of show cause notice
(1) The Regulator may give a life company a
written notice inviting the company to give the Regulator:
(a) a written statement of reasons why
the Regulator should not investigate the life insurance business, or a
specified part of the life insurance business, of the company; and
(b) any other written material the
company wishes to put forward in support of its statement.
(2) A show cause notice must:
(a) specify the ground or grounds on
which it is given; and
(b) specify the period within which
the statement and written material referred to in subsection (1) must be
given to the Regulator.
(3) The period specified under paragraph (2)(b)
must be a period of at least 14 days commencing on the day on which the show
cause notice is given.
136
Grounds for giving of show cause notice
The following are the grounds on which a
show cause notice may be given to a life company:
(a) that the life company is, or is
likely to become, unable to meet its policy or other liabilities as they become
due;
(b) that the life company may have
contravened:
(i) this Act or the Life
Insurance Act 1945 or the Financial Sector (Collection of Data) Act 2001;
or
(ii) a direction given to
the company under this Act or the Financial Sector (Collection of Data) Act
2001; or
(iii) a condition imposed,
under section 22, on the registration of the company;
(c) that the life company has not
complied with a requirement of a notice given to the company under section 131
or 132;
(ca) that a term of an undertaking
referred to in section 133A that relates to the life company has been
breached by a person who is subject to the undertaking;
(d) that the ratio, for the most
recent financial year of the company, of the expenses of conducting any life
insurance business of the life company to the income derived from premiums is
unduly high;
(e) that the method used by the life
company to apportion income or expenditure between classes of life insurance
business or between life insurance business and other business is inequitable;
(f) that the ratio, for the most
recent financial year of the company, of the total amount of premiums falling
due but not paid to the total premium income is unduly high;
(g) that information in the possession
of the Regulator calls for the investigation of the whole or any part of the
life insurance business of the life company.
137
Decision to investigate
(1) The Regulator may investigate life
insurance business of a life company if:
(a) the Regulator has given the
company a show cause notice in respect of the business; and
(b) the company has consented to an
investigation under this Division of that business.
(2) The Regulator may investigate life insurance
business of a life company if:
(a) the Regulator has given the
company a show cause notice in respect of the business; and
(b) the period specified in the notice
for the purpose of paragraph 135(2)(b) has expired; and
(c) either:
(i) the company has not
given the Regulator a statement in accordance with the notice; or
(ii) after having
considered the statement given to the Regulator by the company, the Regulator
is satisfied of the existence of the ground, or a ground, set out in the show
cause notice; and
(d) the Regulator is satisfied that it
is in the best interests of owners of policies issued by the company that the
business be investigated under this Division.
138
Investigation of associated company
If:
(a) the Regulator has decided under
section 137 to investigate business of a life company (the first
company); and
(b) another company (the associated
company) is, or at some relevant time has been, associated with the
first company; and
(c) the Regulator believes on
reasonable grounds that it is necessary for the purposes of the investigation
to investigate all or any part of the business of the associated company;
the Regulator may investigate all or any part of that
business.
139
Investigation procedure
(1) Before starting to investigate the
relevant business of a company under section 137 or 138, the Regulator
must give the company a written notice stating that the Regulator proposes to
investigate that business.
(2) Before starting to investigate the
relevant business of a company, an authorised person must give to the company a
copy of the person’s identity card.
140
Access to premises for purposes of investigation
If the Regulator has reasonable grounds
for believing that it is necessary to enter premises for the purposes of an
investigation of business of a company, an authorised person, with such
assistance as is necessary and reasonable, may, at any reasonable time, enter
the premises and:
(a) inspect any record found on the
premises that the authorised person believes on reasonable grounds to relate to
the affairs of the company; and
(b) take extracts from, or make copies
of, any such record.
141
Requirement to produce records
(1) For the purposes of an investigation of
business of a company, the Regulator may give a person who is a relevant person
in relation to the company written notice requiring the person to produce to
the Regulator or a specified authorised person, at a reasonable time and place
specified in the notice, any records relating to that business.
(2) If:
(a) a requirement is made under subsection (1);
and
(b) the information that constitutes
the records to which the requirement relates is stored, in whole or in part, by
electronic means;
the person to whom the requirement is directed does not
comply with the requirement unless he or she produces all of the records in
documentary form.
142
Regulator’s power to require assistance
When the Regulator is investigating, or
has decided to investigate, business of a company, the Regulator may give a
person who is a relevant person in relation to the company written notice
requiring the person to do either or both of the following:
(a) to give the Regulator all
reasonable assistance in connection with the investigation;
(b) to attend before a specified authorised
person and answer questions concerning matters relevant to the investigation.
143
Application for warrant to seize records not produced
(1) If:
(a) the Regulator is investigating, or
has decided to investigate, business of a company; and
(b) the Regulator has reasonable
grounds for suspecting that there are, or may be within the next 3 days, on
particular premises records:
(i) whose production has
been required under this Division; and
(ii) that have not been
produced in compliance with that requirement;
the Regulator may:
(c) lay before a magistrate an
information or complaint on oath setting out those grounds; and
(d) apply for the issue of a warrant
to search the premises for those records.
(2) On an application under this section, the
magistrate may require further information to be given, either orally or by
affidavit, in connection with the application.
144
Grant of warrant
(1) This section applies if, on an
application under section 143, the magistrate is satisfied that there are
reasonable grounds for suspecting that there are, or may be within the next 3
days, on particular premises, particular records:
(a) whose production has been required
under this Division; and
(b) that have not been produced in
compliance with that requirement.
(2) The magistrate may issue a warrant
authorising:
(a) a member of the Australian Federal
Police named in the warrant; or
(b) that member together with an
authorised person;
with such assistance, and by such force, as is necessary
and reasonable, to do the acts set out in subsection (3).
(3) The acts are:
(a) entering on or into the premises;
and
(b) searching the premises; and
(c) breaking open and searching
anything, whether a fixture or not, in or on the premises; and
(d) taking possession of, or securing
against interference, records that appear to be any or all of those records.
(4) If the magistrate issues such a warrant,
he or she must set out on the information or complaint laid before him or her
under subsection 143(1) for the purposes of the application:
(a) which of the grounds set out in
the information; and
(b) particulars of any other grounds;
he or she has relied on to justify the issue of the
warrant.
(5) A warrant under this section must:
(a) specify the premises and records
referred to in subsection (1); and
(b) state whether entry is authorised
to be made at any time of the day or night or only during specified hours; and
(c) state that the warrant ceases to
have effect on a specified day that is not more than 7 days after the day of
issue of the warrant.
145
Powers if records produced or seized
(1) This section applies if:
(a) records are produced to a person
under a requirement made under this Division; or
(b) under
a warrant issued under section 144, a person:
(i) takes
possession of records; or
(ii) secures records
against interference.
(2) If paragraph (1)(a) applies, the
person may take possession of any of the records.
(3) The person may inspect, and may make
copies of, or take extracts from, any of the records.
(4) The person may use, or permit the use of,
any of the records for the purposes of a proceeding.
(5) The person may retain possession of any
of the records for so long as is necessary:
(a) for the purposes of exercising a
power conferred by this section (other than this subsection and subsection (7));
or
(b) for the purposes of the
investigation; or
(c) for a decision to be made about
whether or not a proceeding to which the records concerned would be relevant
should be begun; or
(d) for such a proceeding to be begun
and carried on.
(6) No‑one is entitled, as against the
person, to claim a lien on any of the records, but such a lien is not otherwise
prejudiced.
(7) While the records are in the person’s
possession, the person must permit another person to inspect at all reasonable
times such (if any) of the records as the other person would be entitled to
inspect if they were not in the first‑mentioned person’s possession.
146
Powers if records not produced
If a person (the record holder)
fails to produce particular records in accordance with a requirement made under
this Division, the person who made the requirement may require the record
holder to state, to the best of his or her knowledge and belief:
(a) where the records may be found;
and
(b) who last had possession, custody
or control of the records and where that person may be found.
147
Offences related to investigations
(1) A person must not, without reasonable
excuse, intentionally or recklessly refuse or fail to comply with a requirement
of the Regulator or an authorised person under this Division.
Penalty: 30 penalty units.
Note: Chapter 2 of the Criminal Code
sets out the general principles of criminal responsibility.
(2) A person who knows that the Regulator or
an authorised person is investigating, or is about to investigate, business of
a company under this Division must not, with intent to delay or obstruct the
investigation or proposed investigation:
(a) conceal, destroy, mutilate or
alter a record relating to the business of the company; or
(b) if a record relating to that
business is in a particular State or Territory—take or send the record out of
that State or Territory or out of Australia.
(3) A person who contravenes subsection (2)
is guilty of an offence punishable on conviction by imprisonment for not more
than 6 months.
Note 1: Subsection 4B(2) of the Crimes Act 1914
allows a court to impose an appropriate fine instead of, or in addition to, a
term of imprisonment. If a body corporate is convicted of the offence, subsection
4B(3) of that Act allows a court to impose a fine of an amount that is not
greater than 5 times the maximum fine that could be imposed by a court on an
individual convicted of the same offence.
Note 2: Chapter 2 of the Criminal Code sets
out the general principles of criminal responsibility.
149
Regulator must give company written summary of conclusions
After an investigation under this
Division in respect of a company has finished, the Regulator must give the
company a written summary of the conclusions the Regulator has reached as a
result of the investigation.
151
Identity cards
(1) The Regulator may cause an identity card
to be issued to an authorised person.
(2) An
identity card must:
(a) contain a recent photograph of the
authorised person to whom it is issued; and
(b) be in a form approved by the
Regulator.
(3) If an authorised person proposes to enter
premises otherwise than in accordance with a warrant, the authorised person
must produce his or her identity card to the occupier of the premises for the
occupier’s inspection. If the authorised person fails to do so, the authorised
person is not entitled to enter the premises under subsection 133(1).
(4) If a person to whom an identity card has
been issued ceases to be an authorised person, the person must immediately
return the identity card to the Regulator.
(5) A person
must not contravene subsection (4) without reasonable excuse.
Penalty: 1 penalty unit.
(6) Subsection (5) is an offence of
strict liability.
Note 1: Chapter 2 of the Criminal Code sets
out the general principles of criminal responsibility.
Note 2: For strict liability, see section 6.1
of the Criminal Code.
Division 3A—Life companies required to comply with determinations of the
Superannuation Complaints Tribunal
151A
Life companies must comply with determinations of the Superannuation Complaints
Tribunal
(1) A life company must comply with any
determination made in respect of it by the Superannuation Complaints Tribunal:
(a) as a result of it being joined
under section 18 of the Superannuation (Resolution of Complaints) Act
1993 as a party to a complaint under section 14 of that Act against a
trustee in respect of a decision relating to a death benefit or a disability
benefit; or
(b) as a result of it being joined as
a party to a complaint under section 14A of that Act; or
(c) as a result of it being a party to
a complaint under section 15A or 15B of that Act;
(d) as a result of it being joined as
a party to a complaint under section 15E or 15F of that Act, concerning
insurance benefits under a contract of insurance, where the premiums are paid
from an RSA (within the meaning of the Retirement Savings Accounts Act 1997);
or
(e) as a result of it being a party to
a complaint under section 15H or 15J of that Act, concerning insurance
benefits under a contract of insurance, where the premiums are paid from an RSA
(within the meaning of the Retirement Savings Accounts Act 1997).
(2) In this section:
Superannuation Complaints Tribunal means
the Superannuation Complaints Tribunal established under section 6 of the Superannuation
(Resolution of Complaints) Act 1993.
Division 4—Special provisions relating to the execution of warrants
152
Interpretation
In this Division:
company concerned means:
(a) in relation to records—the company
by which, or for which, the records are kept; and
(b) in relation to the execution of a
warrant—the company to whose records the warrant relates.
executing officer, in relation to a warrant,
means:
(a) a person named in the warrant as a
person authorised to do the acts set out in subsection 144(3); or
(b) a person assisting a person
referred to in paragraph (a).
warrant means a warrant under section 144.
153
Use of equipment to examine or process things
(1) The executing officer may bring to the
premises to which a warrant relates any equipment reasonably necessary for the
examination or processing of things found at the premises to determine whether
they constitute records that may be seized under the warrant.
(2) If:
(a) it is not practicable to examine
or process the things at the premises; or
(b) the company concerned consents in
writing;
the things may be moved to another place so that the
examination or processing can be carried out in order to determine whether they
constitute records that may be seized under the warrant.
(3) If things containing electronically
stored information are moved to another place for the purpose of examination or
processing under subsection (2), the executing officer must, if it is
practicable to do so:
(a) inform the company concerned of
the address of the place and the time at which the examination or processing
will be carried out; and
(b) allow a person nominated by the
company to be present during the examination or processing.
(4) The executing officer may operate
equipment already at the premises to carry out the examination or processing of
a thing found at the premises in order to determine whether it constitutes a
record or records that may be seized under the warrant if the executing officer
has reasonable grounds for believing that:
(a) the equipment is suitable for the
examination or processing; and
(b) the examination or processing can
be carried out without damage to the equipment or thing.
154
Use of electronic equipment at premises
(1) If there are reasonable grounds for
believing that information constituting the whole or part of a record or
records that may be seized under a warrant is stored at the premises by
electronic means, the executing officer may operate electronic equipment at the
premises to see whether the information is accessible by doing so.
(2) The executing officer may only operate
the electronic equipment if he or she has reasonable grounds for believing that
the operation of the equipment can be carried out without damage to the
equipment.
(3) If the executing officer, after operating
the equipment, finds that the information is accessible by doing so, he or she
may:
(a) seize the equipment and any disk,
tape or other associated device; or
(b) if the information can, by using
facilities at the premises, be put in documentary form—operate the facilities
to put the information in that form and seize the documents so produced; or
(c) if the information can be
transferred to a disk, tape or other storage device that:
(i) is brought to the
premises; or
(ii) is at the premises and
the use of which for the purpose has been agreed to in writing by the company
concerned;
operate the equipment or other
facilities to copy the information to the storage device and take the storage
device from the premises.
(4) An executing officer may seize equipment
under paragraph (3)(a) only if it is not practicable to put the
information in documentary form as mentioned in paragraph (3)(b) or to
copy the information as mentioned in paragraph (3)(c).
(5) If the executing officer has reasonable
grounds for believing that:
(a) information may be accessible by
operating electronic equipment at the premises; and
(b) expert assistance is required to
operate the equipment; and
(c) if he or she does not take action
under this subsection, the information may be destroyed, altered or otherwise
interfered with;
he or she may do whatever is necessary to secure the
equipment, whether by locking it up, placing a guard or otherwise.
(6) The executing officer must give notice to
the company concerned of his or her intention to secure equipment and of the
fact that the equipment may be secured for up to 24 hours.
(7) The equipment may be secured:
(a) for a period not exceeding 24
hours; or
(b) until the equipment has been
operated by the expert;
whichever happens first.
(8) If the executing officer has reasonable
grounds for believing that the expert assistance will not be available within
24 hours, he or she may apply to the magistrate who issued the warrant for an
extension of that period.
(9) The executing officer must give notice to
the company concerned of his or her intention to apply for an extension, and
the company is entitled to be heard in relation to the application.
(10) The provisions of this Division relating
to the grant of warrants apply, with such modifications as are necessary, to
the grant of an extension.
155
Compensation for damage to electronic equipment
(1) If:
(a) damage is caused to equipment as a
result of it being operated as mentioned in section 153 or 154; and
(b) the damage was caused as a result
of:
(i) insufficient care
being exercised in selecting the person who was to operate the equipment; or
(ii) insufficient care
being exercised by the person operating the equipment;
compensation for the damage is payable to the owner of the
equipment.
(2) Compensation is payable out of money
appropriated by the Parliament for the purpose.
(3) In determining the amount of compensation
payable, regard is to be had to whether the company concerned and its employees
and agents, if they were available at the time, had provided any warning or
guidance as to the operation of the equipment that was appropriate in the
circumstances.
156
Copies of seized things to be provided
(1) Subject to subsection (2), if an
executing officer seizes, under a warrant relating to premises:
(a) a document, film, computer file or
other thing that can be readily copied; or
(b) a storage device the information
in which can be readily copied;
the executing officer must, if requested to do so by an
officer of the company concerned who is present when the warrant is executed,
give a copy of the thing or the information to that person as soon as
practicable after the seizure.
(2) Subsection (1) does not apply if the
thing that has been seized was seized under paragraph 154(3)(b) or (c).
Division 5—Protections in
relation to information
Subdivision A—Protection for whistleblowers
156A
Disclosures qualifying for whistleblower protection
(1) This section applies to a disclosure of
information by a person (the discloser) who is, in relation to a
life company, any of the following:
(a) an officer of the life company;
(b) an employee of the life company;
(c) a person who has a contract for
the supply of services or goods to the life company;
(d) an employee of a person who has a
contract for the supply of services or goods to the life company.
(2) The disclosure of information by the
discloser qualifies for protection under this Subdivision if:
(a) the disclosure is made to any of
the following:
(i) APRA;
(ii) the life company’s
auditor or a member of an audit team conducting an audit of the life company;
(iii) the appointed actuary
of the life company;
(iv) a director or senior
manager of the life company;
(v) a person authorised by
the life company to receive disclosures of the kind made; and
(b) the discloser informs the person
to whom the disclosure is made of the discloser’s name before making the
disclosure; and
(c) both:
(i) the information
concerns misconduct, or an improper state of affairs or circumstances, in
relation to the life company; and
(ii) the discloser
considers that the information may assist a person referred to in
paragraph (a) to perform the person’s functions or duties in relation to
the life company; and
(d) the discloser makes the disclosure
in good faith.
(3) In this section, officer has
the same meaning as it has in the Corporations Act 2001.
156B
Whistleblower protection for disclosures that qualify
(1) If a person makes a disclosure that
qualifies for protection under this Subdivision:
(a) the person is not subject to any
civil or criminal liability for making the disclosure; and
(b) no contractual or other remedy may
be enforced, and no contractual or other right may be exercised, against the
person on the basis of the disclosure.
(2) Without limiting subsection (1):
(a) the person has qualified privilege
in respect of the disclosure; and
(b) a contract to which the person is
a party must not be terminated on the basis that the disclosure constitutes a
breach of the contract.
(3) Without limiting paragraphs (1)(b)
and (2)(b), if a court is satisfied that:
(a) a person (the employee)
is employed in a particular position under a contract of employment with
another person (the employer); and
(b) the employee makes a disclosure
that qualifies for protection under this Subdivision; and
(c) the employer purports to terminate
the contract of employment on the basis of the disclosure;
the court may order that the employee be reinstated in
that position or a position at a comparable level.
(4) If an individual makes a disclosure of
information that qualifies for protection under this Subdivision, the
information is not admissible in evidence against the individual in criminal
proceedings or in proceedings for the imposition of a penalty, other than
proceedings in respect of the falsity of the information.
156C
Victimisation of whistleblowers prohibited
Actually causing detriment to another person
(1) A person commits an offence if:
(a) the person engages in conduct; and
(b) the person’s conduct causes any
detriment to another person; and
(c) the person intends that his or her
conduct cause detriment to the other person; and
(d) the person engages in his or her
conduct because the other person made a disclosure that qualifies for
protection under this Subdivision.
Penalty: 25 penalty units or imprisonment for 6 months, or
both.
Threatening to cause detriment to another person
(2) A person (the first person)
commits an offence if:
(a) the first person makes a threat to
another person (the second person) to cause any detriment to the
second person or to a third person; and
(b) the first person:
(i) intends the second
person to fear that the threat will be carried out; or
(ii) is reckless as to
causing the second person to fear that the threat will be carried out; and
(c) the first person makes the threat
because a person:
(i) made a disclosure that
qualifies for protection under this Subdivision; or
(ii) may make a disclosure
that would qualify for protection under this Subdivision.
Penalty: 25 penalty units or imprisonment for 6 months, or
both.
Threats
(3) For the purposes of subsection (2),
a threat may be:
(a) express or implied; or
(b) conditional or unconditional.
(4) In a prosecution for an offence under
subsection (2), it is not necessary to prove that the person threatened
actually feared that the threat would be carried out.
Definition
(5) In this section:
engage in conduct means:
(a) do an act; or
(b) omit to do an act.
156D
Right to compensation
If:
(a) a person:
(i) commits an offence
under subsection 156C(1) or (2); or
(ii) commits an offence
under Part 2.4 of the Criminal Code in relation to subsection
156C(1) or (2); and
(b) another person suffers damage
because of the conduct constituting the offence or because of the
contravention;
the person is liable to compensate the other person for
the damage.
156E
Confidentiality requirement for company, company officers and employees and
auditors
(1) A person (the offender)
commits an offence under this subsection if:
(a) a person (the discloser)
makes a disclosure of information that qualifies for protection under this
Subdivision; and
(b) the disclosure is made to:
(i) the life company’s
auditor or a member of an audit team conducting an audit of the life company;
or
(ii) a director or senior
manager of the life company; or
(iii) a person authorised by
the life company to receive disclosures of that kind; and
(c) the offender is:
(i) the life company’s
auditor or a member of an audit team conducting an audit of the life company;
or
(ii) a director or senior
manager of the life company; or
(iii) a person authorised by
the life company to receive disclosures of that kind; or
(iv) the life company; or
(v) an officer or employee
of the life company; and
(d) the offender discloses any of the
following information (the confidential information):
(i) the information
referred to in paragraph (a);
(ii) the identity of the
discloser;
(iii) information that is
likely to lead to the identification of the discloser; and
(e) the confidential information is
information that the offender obtained directly or indirectly because of the
disclosure referred to in paragraph (a); and
(f) either:
(i) the offender is the
person to whom the disclosure referred to in paragraph (a) is made; or
(ii) the offender is a
person to whom the confidential information is disclosed in contravention of
this section and the offender knows that the disclosure of the confidential
information to the offender was unlawful or made in breach of confidence; and
(g) the disclosure referred to in
paragraph (d) is not authorised under subsection (2).
Penalty: 25 penalty units.
(2) The disclosure referred to in paragraph (1)(d)
is authorised under this subsection if:
(a) it is made to APRA; or
(b) it is made to a member of the
Australian Federal Police (within the meaning of the Australian Federal
Police Act 1979); or
(c) it is made to someone else with
the consent of the discloser.
(3) In this section, officer
has the same meaning as it has in the Corporations Act 2001.
Subdivision B—Self‑incrimination
156F
Self‑incrimination
(1) A person is not excused from complying
with a requirement under this Act or under the Financial Sector (Collection
of Data) Act 2001 to give information to APRA on the ground that doing so
would tend to incriminate the person or make the person liable to a penalty.
(2) However, if the person is an individual,
the information given by the individual in compliance with the requirement is
not admissible in evidence against the individual in criminal proceedings or in
proceedings for the imposition of a penalty, other than proceedings in respect
of the falsity of the information, if:
(a) before giving the information, the
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 liable to a
penalty.
Part 8—Judicial management, other external administration and
winding up
Division 1—Judicial management
157
Application for order for judicial management
(1) APRA may apply to the Court for an order
that a life company, or part of the business of a life company, be placed under
judicial management.
(2) Subject to subsection (3), a life
company may apply to the Court for an order that the company, or part of the
business of the company, be placed under judicial management.
(3) A life company may only apply if it has
given APRA at least one month’s notice in writing of its intention to apply.
(4) On an application by APRA, the life
company is entitled to be heard.
(5) On an application by the life company,
APRA is entitled to be heard.
158
Order for judicial management after investigation
On an application under section 157,
the Court may make an order that a life company, or part of the business of a
life company, be placed under judicial management if the Court is satisfied:
(a) that the life insurance business
of the company has been investigated under Division 3 of Part 7; and
(b) that, having regard to the results
of the investigation, it is in the interests of owners of policies issued by
the company that the order be made.
159
Order for judicial management on other grounds
On an application under section 157,
the Court may make an order that a life company, or part of the business of a
life company, be placed under judicial management if the Court is satisfied:
(a) that:
(i) the company is, or is
likely to become, unable to meet its policy or other liabilities as they become
due; or
(ii) the company has failed
to comply with the prudential standards in relation to solvency; or
(iii) the company has failed
to comply with a direction under section 230B in relation to solvency; or
(iv) there are reasonable
grounds for believing that the financial position or management of the company
may be unsatisfactory; and
(b) that the time needed to make or
complete an investigation of the life insurance business of the company under
Division 3 of Part 7 would be likely to be such as to prejudice the
interests of owners of policies issued by the company.
160
Commencement of judicial management
The judicial management of a life
company, or part of the business of a life company, commences:
(a) at the time specified in the order
for judicial management as the time at which the judicial management is to
commence; or
(b) if no time is so specified, when
the order is made.
161
Stay of proceedings during judicial management
(1) While a life company, or part of the
business of a life company, is under judicial management, a proceeding in a
court against the company or in relation to any of its property cannot be
commenced or proceeded with, except:
(a) with the judicial manager’s
written consent; or
(b) with the leave of the Court and in
accordance with such terms (if any) as the Court imposes.
(2) Subsection (1) does not apply to 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.
(3) A judicial manager is not subject to any
liability in respect of a refusal to give a consent for the purpose of subsection (1).
162 No
judicial management except in accordance with this Act
A company is not to be judicially
managed except in accordance with this Act.
163
Appointment of judicial manager
(1) If the Court orders the judicial
management of a company, or of part of the business of a company, the Court
must, by its order, appoint a judicial manager of the company, or of that part
of the company’s business, as the case requires.
(2) The Court may at any time cancel the
appointment of a judicial manager and appoint another person as judicial
manager.
164
Remuneration of judicial manager
(1) The Court may give directions about:
(a) the remuneration and allowances
that a judicial manager is to receive; and
(b) who is to pay the remuneration and
allowances.
(2) The Court may charge the judicial
manager’s remuneration and allowances on the property of the company under
judicial management in such order of priority in relation to any existing
charges on that property as the Court thinks fit.
165
Management vests in judicial manager
(1) Subject to subsection (2), if the
Court has made an order:
(a) placing a company under judicial
management; or
(b) placing part of the business of a
company under judicial management;
then, at the time the judicial management commences:
(c) any person vested with the
management of the company, or of that business, immediately before that time is
divested of that management; and
(d) the management of the company, or
of that business, vests in the judicial manager appointed by the Court.
(2) 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.
(3) Subsection (2) does not prevent the
variation of a policy under section 209.
(4) To avoid doubt, if the life company is an
eligible foreign life insurance company, paragraphs (1)(c) and (d) do not
apply to the extent that the management of the company, or of the business,
relates to life insurance business carried on outside Australia by the company
(see section 16ZE).
165A
Effect on external administrator of judicial manager managing company
(1) The appointment of an external
administrator of a company is terminated when the management of the company
vests in the judicial manager appointed by the Court.
(2) An external administrator of a company
must not be appointed while the management of the company is vested in the
judicial manager appointed by the Court.
(3) If:
(a) a person who ceased to be the
external administrator of a company under subsection (1); or
(b) a purported external administrator
of a company appointed in contravention of subsection (2);
purports to act in relation to the company’s business
while the management of the company is vested in a judicial manager, the
purported act is invalid and of no effect.
(4) As soon as possible after the Court
orders the judicial management of a company and appoints a judicial manager,
the judicial manager must inform the external administrator (if any) of the
company that the management of the company vests in the judicial manager when
the judicial management commences. However, failure to inform the external
administrator does not affect the operation of this section.
165B
Judicial manager being in control not ground for denying obligation
(1) This section applies if a life company is
party to a contract, whether the proper law of the contract is Australian law
(including the law of a State or Territory) or law of a foreign country
(including the law of part of a foreign country).
(2) The vesting in the judicial manager of
the management of the company, or of part of the business of the company, does
not allow the contract, or any other party to the contract, to do any of the
following:
(a) deny any obligations under that
contract;
(b) accelerate any debt under that
contract;
(c) close out any transaction relating
to that contract.
166
Continued application of other Parts of Act
The appointment of a judicial manager
under this Part does not affect the continued operation of other Parts of this
Act or the operation of the Financial Sector (Collection of Data) Act 2001
in relation to a life company or the obligation of a life company to comply
with provisions of other Parts of this Act or the provisions of the Financial
Sector (Collection of Data) Act 2001.
167
Court’s control of judicial manager
(1) A judicial manager is subject to the
control of the Court.
(2) In addition to duties imposed by this
Division, a judicial manager has such duties as the Court directs.
(3) A judicial manager may apply to the Court
at any time for instructions:
(a) as to the way in which the
judicial management should be conducted; or
(b) in relation to any matter arising
during the judicial management.
(4) Before applying to the Court for
instructions, the judicial manager must:
(a) inform APRA that he or she intends
to make the application; and
(b) give APRA written details of the
application.
(5) APRA is entitled to be heard on the
application.
168
Powers of judicial manager
(1) The judicial manager of a life company,
or of part of the business of a life company, has the following powers:
(a) to bring or defend any legal
proceedings in the name and on behalf of the company;
(b) to appoint a legal practitioner to
help him or her in the performance of his or her duties;
(c) to appoint an actuary (other than
the appointed actuary) to help him or her in the performance of his or her
duties;
(d) to sell or otherwise dispose of
all or any of the property of the company;
(e) to do all acts and execute in the
name and on behalf of the company all deeds, receipts and other documents;
(f) for the purpose of paragraph (d),
to use the company’s common or official seal;
(g) subject to the Bankruptcy Act
1966, to prove in the bankruptcy of any debtor of the company or under any
deed executed under that Act;
(h) to draw, accept, make and endorse
any bill of exchange or promissory note in the name and on behalf of the
company;
(i) to obtain credit, whether on the
security of the company or otherwise;
(j) to take out letters of
administration of the estate of a deceased debtor, and to do anything necessary
for obtaining payment of any money due from a debtor, or his or her estate,
that cannot conveniently be done in the name of the company;
(k) to appoint an agent to do anything
that it is not practicable for the judicial manager to do personally or that it
is unreasonable to expect him or her to do personally;
(l) such other powers as the Court
directs.
(2) The powers conferred by this section are
in addition to powers conferred on a judicial manager by any other provision of
this Division.
168A
Judicial manager’s additional powers to facilitate recapitalisation
Powers
(1) A judicial manager of a life 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 judicial
manager:
(a) issue shares, or rights to acquire
shares, in the company;
(b) cancel shares, or rights to
acquire shares, in the company;
(c) reduce the company’s share capital
by cancelling any paid‑up 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 judicial manager
will usually need to get and consider a report on the fair value of each share
or right concerned (see section 168B), and will need to report to the
Court and obtain the Court’s order for the act (see sections 175 and 176).
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
judicial 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 judicial manager may do an act under
subsection (1) despite:
(a) the Corporations Act 2001;
and
(b) the company’s constitution; and
(c) any contract or arrangement to
which the company is party; and
(d) any listing rules (as defined in
section 761A of the Corporations Act 2001) of a financial market
(as defined in that section) in whose official list the company is included.
168B
Considering report before acting under section 168A
Getting and considering report on fair value of shares
or rights
(1) Before determining terms for an act under
subsection 168A(1), the judicial 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
judicial 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
(c) any relationship between the
expert and any of the following persons:
(i) the judicial manager;
(ii) a person who is an
associate of the judicial manager under Division 2 of Part 1.2 of the
Corporations Act 2001;
(iii) the company;
(iv) a person who is an
associate of the company 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
judicial manager proposes to issue (taking into account the relative financial
risk, and voting and distribution rights, of the classes); and
(c) then allocate the value of each
class pro rata among the shares in that class that either have been issued or
that the judicial 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 168A.
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 of the life company
concerned; 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 judicial manager concerned.
(10) A determination made under
subsection (8) is not a legislative instrument.
168C
Act under section 168A not ground for denying obligation
(1) This section applies if a life company is
party to a contract, whether the proper law of the contract is Australian law
(including the law of a State or Territory) or law of a foreign country
(including the law of part of a foreign country).
(2) The fact that a judicial manager does an
act under subsection 168A(1) relating to the life company does not allow the
contract, or any other party to the contract, to do any of the following:
(a) deny any obligations under that
contract;
(b) accelerate any debt under that
contract;
(c) close out any transaction relating
to that contract.
169
Application by APRA for instructions to judicial manager
(1) APRA may
apply to the Court for an order that the Court give instructions to the
judicial manager relating to the conduct of the judicial management of a life
company, or of part of the business of a life company.
(2) The judicial manager is entitled to be
heard on the application.
170
Request by APRA for information
(1) APRA may ask a judicial manager for
information about the conduct of the judicial management.
(2) The judicial manager must comply with
APRA’s request.
171
Duration of judicial management
If the Court orders that a life company,
or part of the business of a life company, be placed under judicial management,
the company, or that part of its business, as the case requires, remains under
judicial management until:
(a) the judicial management is
cancelled; or
(b) the Court orders that the company
be wound up.
172
Cancellation of judicial management
(1) A judicial manager appointed to manage a
life company or part of the business of a life company may apply to the Court
for an order cancelling the judicial management.
(2) Any other interested person may apply to
the Court for an order cancelling the judicial management of a life company or
of part of the business of a life company.
(3) On an application under subsection (1)
or (2), the Court may cancel the order for the judicial management of the
company, or of that business, if it appears to the Court:
(a) that the purpose of the order has
been fulfilled; or
(b) that for any reason it is
undesirable that the order remain in force.
(4) Before applying to the Court under subsection (1)
or (2), the judicial manager or interested person must:
(a) inform APRA that he or she intends
to make the application; and
(b) give APRA written details of the
application.
(5) At the time when an order cancelling the
judicial management of the company or of the business comes into force:
(a) the judicial manager is divested
of the management of the company or of the business; and
(b) the management of the company or
of the business vests in the board of directors or other governing body of the
company.
(6) APRA is entitled to be heard on any application
made under subsection (1) or (2).
173
Judicial manager must conduct management efficiently and economically
The judicial manager of a company must
conduct the judicial management as efficiently and economically as possible.
174
Disclaimer of onerous property
(1) A judicial manager has the same power to
disclaim property of a life company as a liquidator of the company would have
under the Corporations Act 2001.
(2) For the purpose of subsection (1),
Division 7A of Part 5.6 of the Corporations Act 2001 is to be
read as if:
(a) any reference to a liquidator were
a reference to a judicial manager; and
(b) subsection
568(10) of that Act were omitted; and
(c) a reference in subsection 568B(3)
or 568E(5) to the company’s creditors were a reference to the owners of
policies issued by the company.
(3) A disclaimer by a judicial manager has
the same effect, and the judicial manager is under the same obligations, as if
the disclaimer had been made under Division 7A of Part 5.6 of the Corporations
Act 2001.
175
Report by judicial manager
(1) As soon as possible after starting to
manage a company or part of the business of a company, a judicial manager must
file with the Court a report that:
(a) recommends the course of action
listed in subsection (2) that is, in his or her opinion, most advantageous
to the general interest of the policy owners of the company while promoting
financial system stability in Australia; and
(b) sets out the reasons for that
recommendation.
(2) The following are the possible courses of
action:
(a) to transfer the business, or part
of the business, of the company to another company under Part 9 (whether
the policies issued by the company continue for the original sums insured, with
the addition of bonuses that attach to the policies, or for reduced amounts);
(b) to allow the company to carry on
its business after a period of judicial management (whether the policies issued
by the company continue for the original sums insured, with the addition of
bonuses that attach to the policies, or for reduced amounts);
(ba) to do one or more of the acts
described in subsection 168A(1) (which is about various measures to
recapitalise the life company);
(c) to wind up the company;
(d) to take such other course of
action as the judicial manager considers desirable, which may, for example, be
a course of action that includes either or both of the following:
(i) altering the
constitution, rules or other arrangements for governance of the company, if it
is registered under the Corporations Act 2001, to enable or facilitate
the performance of the judicial manager’s functions and duties, the exercise of
the judicial manager’s powers or a course of action described in
paragraph (a), (b), (ba) or (c);
(ii) one or more of the
courses of action described in paragraphs (a), (b), (ba) and (c).
(3) A report may recommend different courses
of action in respect of different parts of a life company’s business.
(4) If the
Court makes an order under section 176 giving effect to a course or
courses referred to in paragraph (2)(a), (b), (ba) or (d), the judicial
manager may file with the Court a further report or further reports dealing
with matters to which a report under subsection (1) may relate.
(5) A report under subsection (4) must
set out the reasons for any recommendation made in the report.
(6) As soon as possible after filing a report
under this section, the judicial manager must:
(a) give a copy of it to APRA; and
(b) apply to the Court for an order to
give effect to the course or courses of action stated in the report.
(7) A report, or a copy of a report, under
this section must be available for inspection by any person:
(a) at the Registry of the Court in
which the report is filed during the business hours of that Registry; and
(b) at such other place (if any) as
APRA determines.
176
Order of Court on report of judicial manager
(1) On an application for an order to give
effect to a course or courses of action recommended in a report under section 175:
(a) APRA and any other person interested
is entitled to be heard; and
(b) the Court may make an order giving
effect to such course or courses of action as it considers in the circumstances
to be most advantageous to the general interest of the owners of policies
issued by the life company concerned, while promoting financial system
stability in Australia.
(2) The course or courses of action to which
an order may give effect may be one or more of the following:
(a) one or more of the courses of
action set out in subsection 175(2);
(b) one or more other courses of
action.
(3) An order under this section:
(a) is binding on all persons; and
(b) takes effect despite anything in
any of the following:
(i) the Corporations
Act 2001;
(ii) the constitution or
other rules of the company;
(iii) any contract or
arrangement to which the company is party;
(iv) any listing rules (as
defined in section 761A of the Corporations Act 2001) of a
financial market (as defined in that section) in whose official list the
company is included.
177
Transfer of business to another company
(1) If the Court orders the transfer of the
business, or part of the business, of a company to another company, the
judicial manager must prepare a scheme for the transfer in accordance with Part 9.
(2) Until the Court confirms the scheme under
that Part, 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.
178
Resignation
A judicial manager appointed under this
Division may resign the appointment as judicial manager by filing with the
Court a signed notice of resignation.
179
Indemnity
A judicial manager is not subject to any
liability to any person in respect of anything done, or omitted to be done, in
good faith in the exercise or performance of powers, functions or duties
conferred or imposed on the judicial manager by this Act.
179A
Exceptions to Part IV of the Trade Practices Act 1974
For the purposes of subsection 51(1) of
the Trade Practices Act 1974, the following things are specified and
specifically authorised:
(a) the acquisition of assets in:
(i) a sale or disposal of
property of a life company under this Division by a judicial manager of the
life company or part of the business of the life company; or
(ii) a transfer of
insurance business of a life company under a scheme prepared by a judicial
manager of the life company, or part of the business of the life company, 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) an agreement or deed for carrying
out a transfer described in subparagraph (a)(ii);
(c) arrangements necessary to give
effect to a scheme described in subparagraph (a)(ii);
(d) the acquisition of shares in a
life company as a direct result of:
(i) the issue or sale of
the shares under this Division by a judicial manager of the life company; or
(ii) the exercise of a
right to acquire shares that was issued or sold under this Division by a judicial
manager of the life company.
Division 1A—Other external administration
179B
Relationship of this Division with Chapter 5 of the Corporations Act
2001
This Division applies in relation to a
life company in addition to Chapter 5 of the Corporations Act 2001.
179C
Involving APRA in applications to appoint external administrators of life
companies
(1) Before a person (other than APRA) 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, the person
must give APRA written notice that the person proposes to make the application.
(2) APRA is entitled to be heard on the
application.
(3) After receiving the notice, APRA may
request the person to provide details of the proposed application.
Offence
(4) A person (other than APRA) commits an
offence if:
(a) the person 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; and
(b) before making the application, the
person did not give APRA written notice indicating that the person proposed to
make the application.
Penalty: 60 penalty units.
(5) An offence against subsection (4) is
an offence of strict liability.
Note: For strict liability, see section 6.1 of
the Criminal Code.
Division 2—Winding‑up
180
Winding‑up of life companies
(1) Subject to subsection (2), a life
company is not to be wound up except by order of the Court on an application
under subsection 175(6) or section 181.
(2) A life company may be wound up
voluntarily if:
(a) the company is a friendly society;
and
(b) each person with an interest in a
benefit fund of the society is a member of the society; and
(c) each member of the society has
only one vote on a special resolution to wind up the society (whether the
resolution is decided on a show of hands or on a poll).
For this purpose, a member of the society is
a person who is a member of the society for the purposes of the Corporations
Act 2001.
(3) If a special resolution to wind up a
friendly society is passed, the society must lodge a copy of the special
resolution with APRA.
Note: Under the Corporations Act 2001, a copy
of the resolution must also be lodged with ASIC.
(4) A friendly society is guilty of an
offence if it does not comply with subsection (3) within 7 days after the
day on which the special resolution was passed.
Maximum penalty for contravention of this subsection: 30
penalty units.
Note: 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 penalty stated above.
(5) Subsection (4) is an offence of
strict liability.
Note 1: Chapter 2 of the Criminal Code sets
out the general principles of criminal responsibility.
Note 2: For strict liability, see section 6.1
of the Criminal Code.
181
Order on application by APRA
(1) Subject to subsection (2), APRA is
entitled to apply for an order that a life company be wound up.
(2) APRA may only make an application if,
having regard to the conclusions reached by APRA as a result of an
investigation under Division 3 of Part 7, APRA is satisfied that it
is necessary or proper that the application be made.
(3) On an application under subsection (1),
the Court may make an order that a life company be wound up if the Court is
satisfied that it is in the interests of the owners of policies issued by the
company that such an order be made.
182
Operation of Corporations Act
Subject to this Division, the winding‑up
of a life company is to be conducted in accordance with the Corporations Act
2001, being the law under which the company is incorporated or is taken to
be incorporated.
183
Notification to APRA regarding applications by liquidator
(1) Before making an application to the Court
in relation to a matter arising under the winding‑up of a life company, a
liquidator must give APRA written notice that the liquidator proposes to make
the application.
(2) The notice must include details of the proposed
application.
(3) APRA is entitled to be heard on the
application.
183A
Application by liquidator for directions—voluntary winding up of friendly
society
A liquidator may apply to the Court for
directions regarding any matter arising under the voluntary winding‑up of
a friendly society.
Note: The liquidator must give APRA written notice
under section 183 that the liquidator intends to make the application.
184
Application by APRA for directions
(1) APRA may apply to the Court for
directions regarding any matter arising under the winding‑up of a life
company.
(2) APRA must give the liquidator written
notice that APRA intends 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.
185
APRA’s power to ask for information
(1) APRA may ask a liquidator for information
in writing about the winding‑up of a life company.
(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.
186
Determination of amounts to be treated as liabilities of life company
(1) In relation to each person who, according
to the company’s records, appears to be:
(a) the owner of a policy issued by
the company; or
(b) interested in a policy issued by
the company;
the liquidator must determine:
(c) whether the company has a policy
liability to the person; and
(d) if the company has such a
liability, the amount that represents the value of that policy liability.
(2) Determinations under subsection (1)
are to be made in accordance with any directions of the Court.
(2A) If the company is a friendly society, the
liquidator must take account of the approved benefit fund rules of the society
in making determinations under subsection (1), to the extent that those
rules are consistent with any directions of the Court.
(3) The liquidator must notify each person
referred to in subsection (1) of the amount determined under that
subsection in respect of each policy of which the person is the owner or in
which the person is interested.
(4) If the liquidator determines an amount
under subsection (1), then, for the purposes of the winding‑up:
(a) the company is to be taken to have
a liability under the relevant policy in that amount to the person to whom the
determination relates; and
(b) subject to subsection (5),
that person is bound by the liquidator’s determination.
(5) A person who is notified of an amount
under subsection (3) may dispute the amount:
(a) in accordance with the Rules of
Court; or
(b) as the Court otherwise directs in
the particular case.
187
Application of statutory fund assets
(1) Subject to this section, in the winding‑up
of a life company, the assets of a statutory fund (the primary fund)
must first be applied in accordance with the Corporations Act 2001 in
discharging debts and claims referred to in subsection 556(1) of that Act.
(2) Subsection (1) has effect only to
the extent that debts or claims are liabilities that are referable to the
business of the primary fund.
(3) If any assets remain after the
application of subsection (1), the assets must be applied according to the
following rules:
(a) the assets are to be applied first
in discharge of policy liabilities of the company referable to the primary
fund;
(b) if any assets remain, they are to
be applied in discharge of other liabilities that are referable to the business
of the fund;
(c) if, after the application of
assets according to paragraphs (a) and (b), any assets of the primary fund
remain, those assets are to be applied in such manner as the Court directs;
(d) directions given for the purpose
of paragraph (c) are to be such directions as the Court considers
equitable, having regard to:
(i) the interests of the
owners of policies referable to the primary fund;
(ii) the interests of the
owners of policies referable to statutory funds of the company other than the
primary fund; and
(iii) the interests of
creditors of the company whose debts have not been discharged by the
application of assets according to paragraph (b); and
(iv) the interests of
shareholders of the company.
(4) The reference in subparagraph (3)(d)(iii)
to creditors of a company is not limited to creditors to whom amounts are due
in relation to the business of a statutory fund. The reference is intended to
include all creditors of a company, whatever the nature of the liabilities
involved.
(5) If a liability of the company:
(a) is referable to 2 or more
statutory funds; or
(b) is referable in part to a
statutory fund but is also related to business, other than life insurance
business, carried on by the company;
the liquidator may apportion the liability so as to
determine the part of the liability that is to be borne by each of the
statutory funds or by the statutory fund, as the case may be.
(6) In making an apportionment under subsection (5),
the liquidator must comply with any directions of the Court.
(7) The part of the amount so determined in
relation to a statutory fund is to be treated as a liability of the company
that is referable to the business of the fund.
188
Liability of directors for loss to statutory fund
(1) If:
(a) a life company contravenes this
Act in relation to a statutory fund; and
(b) the contravention results in a
loss to the statutory fund; and
(c) either:
(i) the Court orders that
the company be wound up; or
(ii) for a company that is
a friendly society referred to in subsection 180(2)—the members of the society
have passed a special resolution that the society be wound up;
the persons who were the directors of the company when the
contravention occurred are jointly and severally liable to pay to the company
an amount equal to the amount of the loss.
(2) A person is not liable under subsection (1)
if the person proves that he or she used due diligence to prevent the
occurrence of such a contravention.
(3) On application by the liquidator of the
company, the Court may order any person liable under subsection (1) to pay
to the company the whole or any part of the loss.
(4) A person cannot be made liable both under
this section and under Division 2 of Part 4 in respect of the same
contravention.
Part 9—Transfers and amalgamations of life insurance business
189
Interpretation
A reference in this Part to a company
affected by a scheme is a reference to a company that is a party or proposed
party to an agreement or deed by which the transfer or amalgamation provided
for by the scheme is, or is to be, carried out.
190
Transfer or amalgamation of life insurance business
(1) No part of the life insurance business of
a life company may be:
(a) transferred to another life
company; or
(b) amalgamated with the business of
another life company;
except under a scheme confirmed by the Court.
(2) The reference in paragraph (1)(a) to
a life company includes a reference to a company that is registered under this
Act but has not begun to carry on life insurance business in Australia.
(3) A scheme must set out:
(a) the terms of the agreement or deed
under which the proposed transfer or amalgamation is to be carried out; and
(b) particulars of any other
arrangements necessary to give effect to the scheme.
(4) Subsection (1) does not require that
a transfer or amalgamation of life insurance business be made under a scheme
approved by the Court if:
(a) immediately before the transfer or
amalgamation, the business is referable to a statutory fund that relates only
to life insurance business carried on outside Australia; and
(b) the transfer or amalgamation will
result in the business becoming referable to a statutory fund that relates only
to life insurance business carried on outside Australia.
(5) Subsection (1)
does not require that a transfer of life insurance business be made under a
scheme approved by the Court if the transfer is a transfer of business made
under the Financial Sector (Business Transfer and Group Restructure) Act
1999.
191
Steps to be taken before application for confirmation
(1) In this section:
affected policy owner means the owner of a
policy that is referable to a statutory fund affected by a scheme.
approved summary means a summary approved by
APRA.
(2) An application for confirmation of a
scheme may not be made unless:
(a) a copy of the scheme and any
actuarial report on which the scheme is based have been given to APRA in
accordance with the regulations; and
(b) notice of intention to make the
application has been published by the applicant in accordance with the
regulations; and
(c) an approved summary of the scheme
has been given to every affected policy owner.
(3) Without limiting the provision that may
be made by the regulations for the purposes of paragraph (2)(b), the
notice referred to in that paragraph must include, in relation to each company
affected by the scheme, details of the place and time at which an affected
policy owner may obtain a copy of the scheme.
(4) An affected policy owner is entitled, on
his or her request, to be provided by the company with one copy of the scheme
free of charge.
(5) The Court may dispense with the need for
compliance with paragraph (2)(c) in relation to a particular scheme if it
is satisfied that, because of the nature of the scheme or the circumstances
attending its preparation, it is not necessary that the paragraph be complied
with.
192
Actuarial report on scheme
(1) When a copy of a scheme has been given to
APRA for the purpose of paragraph 191(2)(a), APRA may arrange for an
independent actuary to make a written report on the scheme.
(2) APRA may give a copy of the report to
each company affected by the scheme.
193
Application to Court
(1) Any of the companies affected by a scheme
may apply to the Court for confirmation of the scheme.
(2) An application for confirmation must be
made in accordance with the regulations.
(3) APRA is entitled to be heard on an
application.
194
Confirmation of scheme
(1) The Court may:
(a) confirm a scheme without
modification; or
(b) confirm the scheme subject to such
modifications as it thinks appropriate; or
(c) refuse to confirm the scheme.
(2) In deciding whether to confirm a scheme
(with or without modifications), the Court must have regard to:
(a) the interests of the policy owners
of a company affected by the scheme; and
(b) if a report relevant to all or
part of the scheme has been filed with the Court under section 175—that
report; and
(c) any other matter the Court
considers relevant.
195
Effect of confirmation etc.
When a scheme is confirmed:
(a) it becomes binding on all persons;
and
(b) it has effect in spite of anything
in the constitution of any company affected by the scheme; and
(c) the company on whose application
the scheme was confirmed must cause a copy of the scheme to be lodged at an
office of ASIC in every State and Territory in which a company affected by the
scheme carried on business.
196
Costs of actuary’s report
(1) When a
scheme is confirmed, the company that applied for the confirmation becomes
liable to pay to the Commonwealth an amount equal to the expenses reasonably
incurred by APRA in obtaining a report under section 192 in relation to
the scheme.
(2) An amount due under subsection (1)
may be recovered by the Commonwealth as a debt in any court of competent
jurisdiction.
197
Documents to be lodged in case of transfer or amalgamation
(1) If any part of the life insurance
business carried on by a life company is transferred to, or amalgamated with
the life insurance business of, another company, the latter company must give
APRA such documents as are required by the regulations.
(2) The documents must be lodged within the
time fixed by the regulations or within such further time as APRA, in
accordance with the regulations, allows.
Part 10—Provisions relating to policies
Division 1—Issue of policies
198
Alteration of proposal and policy forms
(1) ASIC may give a life company written
notice requiring the company to submit to ASIC any form of proposal or policy
document ordinarily used by the company in Australia.
(2) If ASIC thinks that a form submitted in
answer to a notice under subsection (1) does not comply with this Act or
is likely to mislead, ASIC may give the life company written notice:
(a) setting out particulars of the way
in which the form fails to comply with this Act or is likely to mislead; and
(b) inviting the life company to make
submissions to ASIC on any matter set out in the notice.
(3) If:
(a) at least 14 days have elapsed
since ASIC gave notice to the life company; and
(b) either:
(i) the company has not
made any submissions to ASIC; or
(ii) having taken into
account the submissions made by the life company, ASIC is satisfied that the
form in question fails to comply with this Act or is likely to mislead;
ASIC may give the life company a written direction to
change the form in the way specified in the direction.
(4) A life company must not make use of a
form in respect of which ASIC has given a direction under subsection (3),
or allow such a form to be used by a representative of the company, unless the
form has been changed in accordance with the direction.
199
Capacity of young persons to insure etc.
(1) A person
who is at least 10 but has not reached 16 may, with the written consent of
a parent or a person who stands in the place of a parent:
(a) enter into a policy (including a
life policy on his or her own life or on another life); or
(b) take an assignment of a policy.
(2) A person who has reached 16 but has not
reached 18 has the same capacity to exercise rights or powers in relation to a
policy of which he or she is the owner as a person who has reached 18.
Division 2—Assignments and mortgages
200
Assignment of policy
(1) The rights of a person as owner of a
policy may only be assigned at law under this section.
(2) An assignment is not effective at law
unless the following requirements have been satisfied:
(a) the assignment must be by
memorandum of transfer in accordance with, or substantially in accordance with,
the form prescribed by the regulations;
(b) the memorandum must be endorsed on
the policy document or on an annexure to the policy document that is referred
to in the policy document or in another annexure to the policy document;
(c) the memorandum must be signed by
the transferor and the transferee;
(d) the assignment must be registered
in a register of assignments kept by the life company concerned;
(e) the date of registration must be
inserted in the memorandum;
(f) the memorandum must be signed by
the principal executive officer of the life company or by a person authorised
by the principal executive officer to sign such memoranda.
(3) If all the requirements of subsection (2)
are satisfied, an assignment has the following effects at law:
(a) the transferee has all the rights
and powers, and is subject to all the liabilities, of the transferor under the
policy;
(b) the transferee may sue in his or
her own name on the policy;
(c) payment to the transferee of money
due under the policy discharges the life company from all liability under the
policy in respect of the money;
(d) the memorandum of transfer is
conclusively presumed to have been registered in accordance with subsection (2)
on the date shown in the memorandum;
(e) as between the life company and a
person claiming money under the policy, the transferee is conclusively
presumed, for all purposes, to have been the absolute owner of the policy at
the time of registration of the assignment, free from all trusts, rights,
equities and interests, and entitled to receive the money and give a good
discharge for it;
(f) any security over the policy
given by the transferee is effective in spite of any trust or any right, equity
or interest of another person;
(g) the surrender of the policy by the
transferee is effective in spite of any trust or any right, equity or interest
of another person;
(h) the life company, in respect of
any dealing it has with the transferee, is not required or concerned to inquire
as to the circumstances in which, or the consideration for which, the policy
was assigned to the transferee or any previous transferee;
(i) subject to section 202, the
life company, in respect of any dealing it has with the transferee, is not
affected by express, implied or constructive notice of any trust, right, equity
or interest.
(4) An assignment under this section does
not:
(a) make the transferee a member of
the life company; or
(b) deprive the transferor of
membership of the company in respect of the policy;
except in accordance with the company’s constitution.
(5) This section does not:
(a) impose on a person under 16 any
liability to which he or she would not be subject apart from this section; or
(b) confer on a person under 16 any
power or capacity he or she would not have apart from this section; or
(c) render effective a receipt,
security or surrender given by a person under 16 if it would not be effective apart
from this section.
(6) The rights and liabilities under a policy
are not merged or extinguished, either at law or in equity, merely because the
policy is assigned, whether at law or in equity, to the life company that
issued the policy.
(7) A life company
is not obliged to register an assignment under paragraph (2)(d) if the
company is required or permitted, by another law of the Commonwealth, to refuse
to register the assignment.
(8) This section:
(a) does not prejudice the effect in
equity of an assignment of the rights of a person as owner of a policy that is
made otherwise than under this section; and
(b) has effect subject to section 203.
201
Mortgages and trusts
(1) If a policy is assigned by way of
mortgage or on trust:
(a) the mortgage or trust is not
effective unless:
(i) it is created by some
means other than the memorandum of transfer; and
(ii) the memorandum of
transfer does not contain any provisions about the rights and duties of the
assignor, the assignee or any other person in respect of the mortgage or trust;
and
(b) no notice of the mortgage or trust
is to be entered on the memorandum of transfer or endorsed on the policy; and
(c) subject to section 202, the
life company is not affected by express, implied or constructive notice of the
mortgage or trust.
(2) In spite of subsection (1), the
transferee under an assignment may be described in the memorandum of transfer
as the trustee or trustees of a superannuation fund.
202
Effect of notice of trust etc.
(1) A life company is not entitled to rely on
section 200 or subsection 201(1) in relation to a matter in which the
company has not acted in good faith.
(2) A life company is not entitled to rely on
section 200 or subsection 201(1) in relation to any trust, right, equity
or interest of which the company has received express notice in writing.
(2A) A life company is not taken, for the
purposes of subsection (2), to have received express notice in writing of
a trust, right, equity or interest merely because the transferee under an
assignment is described in the memorandum of transfer as the trustee or
trustees of a superannuation fund.
(3) If a life company has received express
notice in writing of a trust, right, equity or interest claimed in relation to
money payable under a policy, the company may pay the money into the Court.
(4) Payment of the money into the Court
discharges the company from liability to any person in respect of the money.
(5) The money is to be paid out in accordance
with an order of the Court.
203
Transfer of policy after change of trustee
(1) If:
(a) either:
(i) a policy has been
issued or assigned to a person as trustee; or
(ii) a policy has become
vested in a person as trustee in some other way; and
(b) the person is no longer the
trustee under the relevant trust;
another person may give the life company written notice
that the person giving the notice is now the trustee under the trust.
(2) A notice is to be given in accordance
with the regulations.
(3) The regulations may require that a notice
be in the form of, or be verified by, a statutory declaration.
(4) If notice is given in accordance with
this section, the life company may record the name of the person who gave the
notice as the owner of the policy.
(5) When the person’s name is recorded under subsection (4),
the person becomes the owner of the policy by force of this section.
Division 2A—Restriction on assignment or commutation of payments under
structured settlements and structured orders
203A
Definitions
In this Division:
structured order has the same meaning as it
has in Division 54 of the Income Tax Assessment Act 1997.
structured settlement has the same meaning as
it has in Division 54 of the Income Tax Assessment Act 1997.
tax‑exempt annuity has the meaning
given by paragraph 203B(a).
tax‑exempt lump sum has the meaning
given by paragraph 203B(b).
203B
Application of Division to tax‑exempt annuities and lump sums
This Division applies, at a particular
time, to:
(a) an annuity (a tax‑exempt
annuity) payable (now or in the future) by:
(i) a company that is
registered under this Act; or
(ii) a body that carries on
State insurance, within the meaning of paragraph 51(xiv) of the Constitution;
if, at that time, the
requirements of sections 54‑20 to 54‑40 of the Income Tax Assessment
Act 1997 are satisfied in relation to the annuity; and
(b) a lump sum (a tax‑exempt
lump sum) payable (now or in the future) by:
(i) a company that is
registered under this Act; or
(ii) a body that carries on
State insurance, within the meaning of paragraph 51(xiv) of the Constitution;
if, at that time, the
requirements of sections 54‑45 to 54‑60 of the Income Tax
Assessment Act 1997 are satisfied in relation to the lump sum.
Note 1: The application of this Division to bodies that
carry on State insurance is subject to section 5.
Note 2: Division 54 of the Income Tax
Assessment Act 1997 provides a tax exemption for certain payments under
structured settlements and structured orders.
203C
Assignments or commutations of tax‑exempt annuities are generally not
effective
(1) A purported assignment or commutation of
an annuity that is, at the time of the purported assignment or commutation, a
tax‑exempt annuity is not effective at law (subject to subsection (2)).
(2) However, the annuity can be commuted as
mentioned in section 54‑35 of the Income Tax Assessment Act 1997.
203D
Assignments or commutations of tax‑exempt lump sums are not
effective
(1) A purported assignment of the right to
receive a lump sum that is, at the time of the purported assignment, a tax‑exempt
lump sum is not effective at law.
(2) A purported commutation, or other early
cashing‑out, of the right to receive a lump sum that is, at the time of
the purported commutation or cashing‑out, a tax‑exempt lump sum is
not effective at law.
203E Relationship
with Division 2
Division 2 has effect subject to
this Division.
Division 3—Protection of policies
204
Protection of interest of insured
(1) The rights and interests of a person
under:
(a) a life policy effected on his or
her life; or
(b) a life policy effected on the life
of the person’s spouse or de facto partner;
are not liable to be applied or made available by any
judgment, order or process of a court in discharge of a debt owed by the
person.
(2) Subsection (1) applies:
(a) regardless of when a policy was
issued; and
(b) in the case of a policy referred
to in paragraph (1)(a)—whether or not the policy is owned by the person.
(3) This section has effect subject to the Bankruptcy
Act 1966.
205
Protection of policy money on person’s death
(1) If, on the death of a person, money
becomes payable to the person’s estate under a policy effected on the person’s
life, the following provisions apply:
(a) except as permitted by paragraph (b),
the money is not liable to be applied or made available:
(i) under any judgment,
order or process of a court; or
(ii) in any other manner
whatsoever;
in payment of the person’s
debts;
(b) the money may be applied in
payment of a debt of the person if:
(i) the person had entered
into a contract that provided expressly for the money to be so applied; or
(ii) the person had charged
the money with the payment of the debt; or
(iii) the person gave an
express direction, in his or her will or other testamentary document signed by
the person, that the money be so applied;
(c) none
of the following constitutes an express direction for the purposes of subparagraph (b)(iii):
(i) a mere direction that
debts be paid;
(ii) a charge of debts on
the whole or a part of the person’s estate;
(iii) the creation of a
trust for the payment of debts.
(2) This section has effect regardless of
when a policy was issued.
(3) This section has effect subject to the Bankruptcy
Act 1966.
Division 4—Surrender values, paid‑up policies and non‑forfeiture
of policies
206
Application of Division
(1) Subject to subsections (2) and (3),
this Division applies to all policies.
(2) This Division does not apply to policies
declared by the regulations to be excluded from the operation of this Division.
(3) The regulations may provide that this
Division applies to a class of policies subject to specified modifications. If
such provision is made, this Division applies to the class of policies
accordingly.
207
Surrender of policies
(1) The owner of:
(a) a policy in respect of which there
is no contractual obligation on the owner to make any payments of premiums
after the first year for which the policy is in force; or
(b) a policy (other than a policy
referred to in paragraph (a)) that has been in force for at least 3 years;
may request the company that issued the policy to
surrender the policy.
(2) A request under subsection (1) must
be in writing.
(3) Subject to section 208, if the
policy owner makes a request under subsection (1), the company must pay to
the policy owner an amount equal to the surrender value of the policy less the
amount of any debt owed to the company under, or secured by, the policy.
(4) Subject to subsection (6), if apart
from this subsection, the surrender value of a policy at a particular time
would be less than an amount calculated, for the purposes of this subsection,
in accordance with the prudential standards, the last‑mentioned amount is
the surrender value of the policy at that time.
(5) Subsection (6) applies to a life
policy issued before the commencement of this Act and still in force
immediately after that commencement.
(6) If, apart from this subsection, the
surrender value of a policy under this Act would at any time be less than the
adjusted pre‑1 July 1995 surrender value of the policy, the adjusted
pre‑1 July 1995 surrender value of the policy is the surrender value
of the policy for the purposes of this Act.
(7) In subsection (6):
adjusted pre‑1 July 1995 surrender value,
in relation to a policy to which that subsection applies, means the surrender
value of the policy immediately before 1 July 1995, adjusted for any
transactions entered into on or after that date in relation to the policy that
affected its surrender value.
208
Relaxation of company’s obligations to surrender
(1) A life company may apply to APRA for the
suspension or variation of its obligation to make payments under section 207.
(2) If APRA thinks that such payments would
prejudice:
(a) the financial stability of the
company; or
(b) the interests of the policy owners
of the company;
APRA may, in writing, suspend or vary the company’s
obligation to pay the surrender values for such period as APRA thinks fit.
(3) A suspension or variation may be subject
to such conditions as APRA thinks fit.
209
Paid‑up policies
(1) If premiums under a policy have been paid
in respect of a period of at least 3 years, the owner of the policy may request
the life company concerned:
(a) to vary the policy so that no
further premiums are payable; and
(b) to treat the policy as a paid‑up
policy.
(2) A request
under subsection (1) must be in writing.
(3) On receiving the request, the life
company must vary the policy by reducing the amount payable under the policy to
an amount calculated in accordance with the prudential standards.
(4) The policy, as varied, is to be taken to
be a paid‑up policy.
(5) If, when a request is made under subsection (1):
(a) the policy‑owner owes a debt
to the life company under the policy; or
(b) a debt owed by the policy‑owner
to the life company is secured by the policy;
the company may either:
(c) treat the debt as a debt secured
by the paid‑up policy; or
(d) in calculating the reduced amount
payable under the policy, take the debt into account in accordance with the
prudential standards.
(6) If a debt is taken into account in
accordance with paragraph (5)(d), the debt is discharged.
210
Non‑forfeiture of policies in certain cases of non‑payment of
premiums
(1) A policy is not liable to be forfeited
only because of the non‑payment of a premium (the overdue premium)
if:
(a) at least 3 years’ premiums have
been paid on the policy; and
(b) the surrender value of the policy
exceeds the total of:
(i) the amount of the
overdue premium; and
(ii) the total of any other
amounts owed to the company under, or secured by, the policy.
(2) For the purposes of paragraph (1)(b),
the surrender value of the policy is to be worked out as at the day immediately
before the day on which the overdue premium falls due.
(3) Until the overdue premium is paid, the
company may charge interest on it on terms not less favourable to the policy
owner than such terms (if any) as are prescribed by the regulations.
(4) The overdue premium and any unpaid
interest charged on it are taken, for the purposes of this Act, to be a debt
owing to the company under the policy.
(5) A life company may only forfeit a policy
because of the non‑payment of a premium if:
(a) the company has given the policy
owner a written notice:
(i) setting out the amount
of the premium and the day on which it became, or will become, due; and
(ii) stating that the
policy will be forfeited at the end of 28 days after the giving of the notice
or 28 days after the day on which the premium became, or will become, due,
whichever is the later if the amount due to the company has not been paid; and
(b) at least 28 days have elapsed
since:
(i) the day on which the
notice was given; or
(ii) the day on which the
premium became due;
whichever is the later.
Division 5—Payment of policy money
211
Probate or administration not necessary in certain cases—a single policy
(1) If:
(a) there is only a single policy
under which money is payable by a particular life company to the personal
representative of a deceased person; and
(b) the money does not exceed $50,000
or such other amount as is prescribed for the purposes of this paragraph;
the company may pay the money to:
(c) the spouse, de facto partner,
parent, child, brother, sister, niece or nephew of the deceased person; or
(d) a person who satisfies the company
that he or she is entitled to the property of the deceased person:
(i) under the deceased
person’s will; or
(ii) under the law relating
to the disposition of the property of deceased persons; or
(e) a person who satisfies the company
that he or she is entitled to obtain probate of the will of the deceased person
or to take out letters of administration of the deceased person’s estate.
(1A) For the purposes of paragraph (1)(c),
if one person is the child of another person because of the definition of child
in this Act, relationships traced to or through the person are to be
determined on the basis that the person is the child of the other person.
(2) A company may pay the money without
requiring the production of any probate or letters of administration.
(3) A company that makes a payment under this
section is discharged from all further liability in respect of the money
payable under the policy.
(4) A person to whom a company makes a
payment under this section must apply the money in due course of
administration.
(5) In this section money, in
relation to a policy, means the total of the money payable under the policy,
less any debt due to the company under, or secured by, the policy.
212
Probate or administration not necessary in certain cases—2 or more policies
(1) If:
(a) there are 2 or more policies under
which money is payable by a particular life company to the personal
representative of a deceased person; and
(b) the total of the money payable
under the policies does not exceed the amount of $50,000 or such other amount
as is prescribed for the purposes of this paragraph;
the company may pay the money to:
(c) the spouse, de facto partner,
parent, child, brother, sister, niece or nephew of the deceased person; or
(d) a person who satisfies the company
that he or she is entitled to the property of the deceased person:
(i) under the deceased
person’s will; or
(ii) under the law relating
to the disposition of the property of deceased persons; or
(e) a person who satisfies the company
that he or she is entitled to obtain probate of the will of the deceased person
or to take out letters of administration of the deceased person’s estate.
(1A) For the purposes of paragraph (1)(c),
if one person is the child of another person because of the definition of child
in this Act, relationships traced to or through the person are to be
determined on the basis that the person is the child of the other person.
(2) A company may pay the money without
requiring the production of any probate or letters of administration.
(3) A company that makes a payment under this
section is discharged from all further liability in respect of the money
payable under the policies.
(4) A person to whom a company makes a
payment under this section must apply the money in due course of
administration.
(5) In this section, money, in
relation to a policy, means the total of the money payable under the policy,
less any debt due to the company under, or secured by, the policy.
213
Death of policy owner who is not the life insured
(1) This section applies:
(a) if the owner of a life policy dies
before the person whose life is insured by the policy; and
(b) either:
(i) the adjusted surrender
value of the policy is less than the prescribed amount; or
(ii) the policy is one of 2
or more policies owned by the deceased owner and issued by the same company the
total adjusted surrender values of which are less than the prescribed amount.
(2) If a person (the applicant)
satisfies the company that issued the policy:
(a) that he or she is entitled, under
the will or on the intestacy of the deceased owner, to the benefit of the
policy; or
(b) that he or she is entitled to
obtain probate of the will or to take out letters of administration of the
estate of the deceased owner;
the company may endorse on the policy a declaration that
the applicant has so satisfied the company and is the owner of the policy.
(3) The company may endorse the policy
without requiring the production of any probate or letters of administration.
(4) If subsection (2) applies, the
applicant becomes, subject to subsection (5), the owner of the policy.
(5) Subsection (4) does not:
(a) confer on the applicant any
beneficial interest in the policy that he or she would not otherwise have had;
or
(b) affect any right or interest of a
person other than the applicant in relation to the policy.
(6) For the purposes of this section, the
adjusted surrender value of a policy is the surrender value of the policy as at
the day on which the owner died, less any debt due to the company under, or
secured by, the policy.
(7) In this section, prescribed amount
means $25,000 or such other amount as is prescribed by the regulations for the
purposes of this section.
214
Company not bound to see to the application of money paid by it
A company is not, in any circumstances,
bound to see to the application of any money it pays in respect of a policy.
215
Power to pay money into Court
(1) A life company may pay into the Court any
money payable by the company in respect of a policy for which, in the company’s
opinion, no sufficient discharge can otherwise be obtained.
(2) Payment of the money into the Court
discharges the company from any liability under the policy in relation to the
money.
(3) Any money paid into the Court under this
section is to be dealt with according to the order of the Court.
(4) This section has effect subject to the
Rules of the Court.
216
Unclaimed money
(1) Within 3 months after the end of each
calendar year, a life company must give to ASIC a statement in the form
prescribed by the regulations of all unclaimed money, other than unclaimed
money held in RSAs (within the meaning of the Retirement Savings Accounts
Act 1997) or FHSAs (within the meaning of the First Home Saver Accounts
Act 2008), as at the end of that year.
Note: The First Home Saver Accounts Act 2008
deals with unclaimed money held in FHSAs.
(2) A life company must not intentionally or
recklessly fail to comply with subsection (1).
Penalty: 50 penalty units.
Note: Chapter 2 of the Criminal Code
sets out the general principles of criminal responsibility.
(3) When the company gives the statement to
ASIC, it must at the same time pay to the Commonwealth an amount equal to the
amount of unclaimed money worked out under subsection (6).
(4) If, between the end of the calendar year
and the date on which the statement is given to ASIC, the company has paid any
money to persons to whom the amounts were due by the company, the company must
give ASIC, with the statement under subsection (1), a statement in the
form prescribed by the regulations relating to the amounts so paid.
(5) A life company must not intentionally or
recklessly fail to comply with subsection (3) or (4).
Penalty: 50 penalty units.
Note: Chapter 2 of the Criminal Code
sets out the general principles of criminal responsibility.
(6) For the purposes of subsection (3),
the amount to be paid to the Commonwealth is an amount worked out in accordance
with the formula:
where:
Statement amount means the total of unclaimed
money shown in the statement referred to in subsection (1).
Money paid means the total of any amounts
paid to persons to whom the amounts were due by the company between the end of
the calendar year and the date on which the statement referred to in subsection (1)
is given to ASIC.
(7) If:
(a) unclaimed money has been paid by a
company to the Commonwealth under this section; and
(b) ASIC or an authorised officer
certifies in writing that, apart from this section, the company or a successor
company would have paid that money to a person;
the Treasurer must:
(c) cause the unclaimed money to be
paid to that company; and
(d) direct the company to pay the
money to the person specified in the direction.
(8) A direction must be in writing.
(9) The company must not intentionally or
recklessly fail to comply with a direction under paragraph (7)(d).
Penalty: 50 penalty units.
Note: Chapter 2 of the Criminal Code
sets out the general principles of criminal responsibility.
(10) If a company satisfies ASIC or an
authorised officer that an amount paid to the Commonwealth under this section
is more than the amount that would have been payable under the policy to the
policy owner, an amount equal to the excess is to be refunded to the company.
(11) Subject to subsection (7), if a
company pays an amount to the Commonwealth under this section, the company is,
upon that payment, discharged from further liability in respect of that amount.
(12) The Consolidated Revenue Fund is
appropriated to the extent necessary for the purposes of this section.
(13) ASIC must keep a register that contains:
(a) particulars of each amount of
unclaimed money specified in a statement given to ASIC for the purposes of subsection (1);
and
(b) particulars of the persons to
whom, if this section had not been enacted, the money would have been payable.
(14) The particulars referred to in paragraph (13)(b)
may include a person’s tax file number.
(14A) It is the intention of the Parliament that a
law of a State or Territory has no effect to the extent to which it requires a
life company to:
(a) pay unclaimed money to, or to an
authority of, a State or Territory; or
(b) lodge a return relating to
unclaimed money with, or with an authority of, a State or Territory.
(15) In this section:
authorised officer means a member of staff
authorised by ASIC for the purposes of this section.
successor company, in relation to another
company (the first company), means the company to which the life
insurance business of the first company has been transferred.
unclaimed money
means:
(a) all sums of money that have become
legally payable by a company in respect of policies; but
(b) in respect of which the time
within which proceedings may be taken for their recovery has expired;
and includes:
(c) sums of money payable on the
maturity of a policy which are not claimed within 7 years after the maturity
date of the policy; and
(d) any money that the company
considers should be treated as unclaimed money.
217 No
deduction in respect of other policies
(1) Subject to subsection (2), if a
claim arising under a policy is paid, no deductions are to be made on account
of premiums or debts due to the company under any other policy, except with the
written consent of the claimant.
(2) The claimant may give written consent to any
deductions.
Division 6—Children’s advancement policies
218
Interpretation
(1) In this Division:
child’s advancement policy means a policy
issued, before a child has reached full age, by a person other than the child,
which contains one or both of the following:
(a) provision for payment of a sum to
the executors, administrators or assigns of the child on the child’s death
after the child reaches the vesting age; or
(b) provision for payment of a sum to
the child or his or her assigns on the child reaching an age that is at least
the vesting age.
full age means:
(a) in relation to a policy issued
before 18 May 1989—the age of 21 years; and
(b) in relation to a policy issued on
or after 18 May 1989 but before the commencement of this Act—the age of 18
years; and
(c) in relation to a policy issued
after the commencement of this Act—the age of 16 years.
vesting age, in relation to a child and a
policy, means:
(a) an age of 10 years or more
specified in the policy for the purpose of defining the time at which money
becomes payable under the policy; or
(b) the age of 25 years;
whichever is the earlier.
(2) For the purposes of the definition of vesting
age in subsection (1), if a policy specifies a date without
specifying the age of the child at that date, the policy is to be taken to
specify the age that is the age of the child at that date.
219
Property in child’s advancement policy
(1) Subject to subsection (2), this
section applies to every child’s advancement policy, whether effected before or
after the commencement of this Act.
(2) This section does not apply to a child’s
advancement policy effected by a parent, or a person who stands in the place of
a parent, of a child in which it is expressly provided that this section does
not apply to it.
(3) Subject to section 220 and unless
and until the child reaches the vesting age:
(a) the policy is the absolute
property, both at law and in equity, of the person effecting the policy or his
or her assigns; and
(b) that person or his or her assigns:
(i) in the case of a
policy effected after the commencement of the Life Insurance Act 1945 and
before the commencement of this Act—is taken to have had the power to assign,
mortgage, charge, surrender, vary or otherwise deal with the policy; or
(ii) in any other case—may
assign, mortgage, charge, surrender, vary or otherwise deal with the policy.
(4) If a child whose life is insured under a
child’s advancement policy reaches the vesting age, the policy is taken, from
the day on which the child reaches that age, to be the absolute property of the
child, both at law and in equity, subject:
(a) to any debt owing to the company
under, or secured by, the policy; and
(b) to any dealing done by the policy
owner before the child reaches the vesting age.
220
Death or bankruptcy of policy owner
(1) This section applies if the person who
effects a child’s advancement policy dies or becomes bankrupt:
(a) during the child’s lifetime; and
(b) before the child reaches the
vesting age.
(2) Subject to
any dealings in relation to the policy effected by the policy owner before his
or her death or bankruptcy, the representative of the policy owner holds the
policy in trust for the child until:
(a) the child reaches the vesting age;
or
(b) the child dies before reaching the
vesting age.
(3) The representative of the policy owner
may:
(a) assign, mortgage, charge,
surrender, vary or otherwise deal with the policy; and
(b) apply the proceeds as he or she
thinks fit for the maintenance or benefit of the child and the payment of
premiums in respect of the policy.
(4) The company which issued the policy is
under no obligation to see to the application of the proceeds of the policy.
(5) If the child dies before reaching the
vesting age, the money payable in respect of the policy is to be applied in the
way in which it would be applied apart from this section.
(6) In this section:
dealings does not include any testamentary
dealings.
representative, in relation to a policy
owner, means:
(a) if the policy owner has died—the executor
or administrator of the policy owner; or
(b) if the policy owner is
bankrupt—the Official Receiver or the trustee of the policy owner’s estate.
Division 7—Lost or destroyed policy documents
221
Lost or destroyed policy—issue of replacement policy document
(1) This section applies if:
(a) the owner of a policy; or
(b) a person claiming the benefit of
section 211, 212 or 213 in respect of a policy;
claims that the policy document is lost or has been
destroyed.
(2) A person referred to in subsection (1)
may ask the company liable under the policy to issue to the person a
replacement policy document in substitution for the lost document.
(3) The company may issue a replacement
policy document to the policy owner if it is satisfied that there is sufficient
evidence of the loss or destruction of the original policy document.
(4) The company may only issue a replacement
policy document to a person referred to in paragraph (1)(b) if the company
is satisfied that section 211, 212 or 213, as the case may be, should be
applied in favour of the person in relation to the policy.
(5) If the company does not issue a
replacement policy document within 6 months after it receives a request from a
policy owner, the policy owner may apply to a court of summary jurisdiction of
a State or Territory for an order under subsection (6).
(6) If, on an application under subsection (5),
a court is satisfied that an original policy document is lost or has been
destroyed, the court may order the company concerned to issue a replacement
policy document to the applicant on such terms (if any), and within such
period, as the court thinks fit.
(7) A request under subsection (2) must
be in writing.
(8) This section is subject to sections 222,
223, 224 and 225.
(9) The courts of summary jurisdiction of the
States are invested with federal jurisdiction to hear and determine
applications under subsection (5).
(10) Subject to the Constitution, jurisdiction
is conferred on the courts of summary jurisdiction of the Territories to hear
and determine applications under subsection (5).
222
Form of replacement policy document
A replacement policy document:
(a) must, as far as possible:
(i) be a copy of the
original policy document; and
(ii) contain a copy of
every endorsement on the original policy document; and
(b) must state the reason why the
replacement policy document was issued.
223
Notice before issuing replacement policy document
(1) This section applies if the amount of the
net claim value of a policy at the date the replacement policy document is
issued is more than $25,000 or such other amount as is prescribed.
(2) For the purposes of subsection (1),
the net claim value of a policy at a particular time is the amount calculated
according to the regulations.
(3) At least 10 days before issuing the
replacement policy document, the company must give notice of its intention to
do so:
(a) in a newspaper circulating in the
district in which the owner of the policy resides; or
(b) if a person claiming the benefit
of section 211, 212 or 213 applies for the replacement policy document—in
a newspaper circulating in the district in which the deceased policy owner
ordinarily resided at the time he or she died; or
(c) in a newspaper circulating in the
district in which the company considers the original policy document to have
been lost or destroyed.
(4) The applicant for a replacement policy
document must meet all the expenses of the advertisement and of the issue of
the replacement policy document. The expenses must be paid at the time the
person asks the company to issue the replacement policy document.
(5) After a replacement policy document has
been issued, the company must arrange for the following details to be entered
in the appropriate register kept under Division 8:
(a) the fact that a replacement policy
document has been issued;
(b) the reason for the issue of the
replacement policy document.
224
Claim under policy where policy document lost or destroyed
(1) If:
(a) a person claiming to be the owner
of a policy or claiming the benefit of section 211, 212 or 213 in respect
of a policy:
(i) claims that the
original policy document is lost or has been destroyed; and
(ii) gives to the company
evidence of the loss or destruction that the company considers sufficient; and
(iii) makes a claim under
the policy or makes any other request or claim in respect of it that would
result in the termination of the policy; and
(b) the company liable under the
policy:
(i) has given at least 10
days notice of its intention to satisfy the claim or comply with the request;
and
(ii) after giving notice,
satisfies the claim or complies with the request; and
(iii) records details of its
action in the appropriate register kept under Division 8;
the company is discharged from all liability to any person
under the policy.
(2) A notice under subparagraph (1)(b)(i)
is to be given:
(a) if the person who made the claim
or request referred to in subparagraph (1)(a)(iii) claims to be the owner
of the policy—in a newspaper circulating in the district in which the person
resides; or
(b) if the person who made the claim
or request referred to in subparagraph (1)(a)(iii) claims the benefit of
section 211, 212 or 213 in respect of the policy—in a newspaper
circulating in the district in which the deceased policy owner ordinarily
resided at the time he or she died; or
(c) in a newspaper circulating in a
district in which the company considers the original policy to have been lost
or destroyed.
(3) The expenses of the advertisement are to
be paid by the person who made the claim or the request referred to in subparagraph (1)(a)(iii).
225
Application of sections 221, 222, 223 and 224 to replacement policy
document
If the owner of a policy or a person
claiming the benefit of section 211, 212 or 213 in respect of a policy
claims that a replacement policy document is lost or has been destroyed,
sections 221, 222, 223 and 224 apply to the replacement policy document as
if it were an original policy document.
Division 8—General
226
Registers
(1) A life company must have a register of
policies for each State and Territory in which it carries on life insurance
business.
(2) A life company may have such other
registers as it thinks fit.
227
Registration of policies
(1) A life company must register each policy
issued by the company in Australia:
(a) in the register for the State or
Territory in which the policy owner lives; or
(b) if there is no such register or
the policy owner has requested that the policy be registered in some other
register—in the register chosen by the policy owner.
(2) A life company must register each policy
issued by the company outside Australia in a register for policies issued
outside Australia.
(3) The owner of a policy issued in Australia
may, in writing, ask the company that issued the policy to transfer the policy
from a register to another register.
(4) The company must comply with a request
under subsection (3).
(5) A policy may be transferred:
(a) from a register for policies
issued outside Australia to any other register; or
(b) to a register for policies issued
outside Australia from any other register:
if the policy owner makes a written request for the
transfer and the life company concerned agrees to the transfer.
(6) The owner of a policy is liable to pay to
a life company an amount equal to the total of the expenses incurred by the
company in connection with a transfer of the policy under subsection (3)
or (4).
228
Effect of suicide on policy
A life company may only avoid a life
policy on the ground that the person whose life is insured by the policy
committed suicide if the policy expressly excludes liability in case of
suicide.
229
Condition as to war risk void
(1) Subject to subsection (2), any term
or condition of a life policy is void if it limits, to an amount less than the
total of the sum insured and bonuses, the amount payable under the policy if
the life insured by the policy dies on war service.
(2) Subsection (1) does not apply if
there is written on the policy document an acknowledgment signed by the person
to whom the policy was issued that the policy is subject to the term or
condition.
230
Policies not invalidated by contraventions of the Act
A life company’s failure to comply with
this Act does not invalidate any policy issued by the company.
Part 10A—Prudential standards and directions
Division 1—Prudential standards
230A
APRA may make prudential standards for life companies
(1) APRA may, in writing, determine standards
in relation to prudential matters to be complied with by:
(a) all life companies; or
(b) a specified class of life
companies; or
(c) one or more specified life
companies;
in order to protect the interests of policy owners or
prospective policy owners of the life companies concerned.
Note: A failure to comply with a standard is not an
offence, but it may lead to a direction being given under section 230B.
(2) A standard may impose different
requirements to be complied with in different situations or in respect of
different activities.
(3) A standard is of no effect to the extent
that it conflicts with this Act or the Financial Sector (Collection of Data)
Act 2001.
(4) A standard may provide for APRA to
exercise powers and discretions under the standard, including (but not limited
to) discretions to approve, impose, adjust or exclude specific prudential
requirements in relation to one or more specified life companies.
(5) APRA may, in writing, vary or revoke a
standard.
(5A) A standard referred to in
paragraph (1)(c), or an instrument varying or revoking such a standard,
has effect:
(a) from the day on which the
standard, variation or revocation is made; or
(b) if the standard, variation or
revocation specifies a later day—from that later day.
(7) If APRA determines or varies a standard
referred to in paragraph (1)(c) it must, as soon as practicable, give a
copy of the standard, or of the variation, to the life company, or to each life
company, to which the standard applies.
(9) If APRA revokes a standard referred to in
paragraph (1)(c) it must, as soon as practicable, give notice of the
revocation to the life company, or to each life company, to which the standard
applied.
(12) A failure to comply with subsection (7)
or (9) does not affect the validity of the action concerned.
(12A) The following instruments made under this
section are not legislative instruments:
(a) a standard referred to in
paragraph (1)(c);
(b) an instrument varying or revoking
a standard referred to in paragraph (1)(c).
(12B) Otherwise, an instrument made under this
section is a legislative instrument.
(13) In this section:
Territory means an internal Territory, or an
external Territory to which this Act extends.
(14) For the purposes of this Part, treat a
reference in this section to this Act as including a reference to the First Home
Saver Accounts Act 2008.
Division 2—Directions
230B
APRA may give directions in certain circumstances
(1) APRA may give a life company a direction
of a kind specified in subsection (2) if APRA has reason to believe that:
(a) the company has contravened a
provision of this Act or the Financial Sector (Collection of Data) Act 2001;
or
(b) the company is likely to
contravene this Act or the Financial Sector (Collection of Data) Act 2001,
and such a contravention is likely to give rise to a prudential risk; or
(c) the company has contravened a
condition or direction under this Act or the Financial Sector (Collection of
Data) Act 2001; or
(d) the direction is necessary in the
interests of policy owners or prospective policy owners of the company; or
(e) the company is, or is about to
become, unable to meet its liabilities; or
(f) there is, or there might be, a
material risk to the security of the company’s assets; or
(g) there has been, or there might be,
a sudden material deterioration in the company’s financial condition; or
(h) the company is conducting its
affairs in an improper or financially unsound way; or
(i) the failure to issue a direction
would materially prejudice the interests of policy owners or prospective policy
owners of the company; or
(j) the company is conducting its
affairs in a way that may cause or promote instability in the Australian
financial system.
(1A) The direction must:
(a) be given by notice in writing to
the company; and
(b) specify the ground referred to in
subsection (1) as a result of which the direction is given.
(2) The kinds of direction the life company
may be given are as follows:
(a) a direction to comply with the
whole or a part of this Act or the Financial Sector (Collection of Data) Act
2001;
(aa) a direction to comply with a
condition or direction referred to in paragraph (1)(c);
(b) a direction to order an audit of
the affairs of the company, at the expense of the company, by an auditor chosen
by APRA;
(c) a direction to order an actuarial
investigation of the affairs of the company, at the expense of the company, by
an actuary chosen by APRA;
(d) a direction to do all or any of
the following:
(i) remove a director or
senior manager of the company from office;
(ii) ensure a director or
senior manager of the company does not take part in the management or conduct
of the business of the company except as permitted by APRA;
(iii) appoint a person or
persons as a director or senior manager of the company for such term as APRA
directs;
(e) a direction to remove any auditor
of the company from office and appoint another auditor to hold office for such
term as APRA directs;
(f) a direction to terminate the
appointment of the appointed actuary of the company and to appoint another
actuary to hold office for such term as APRA directs;
(g) a direction not to give any
financial accommodation to any person;
(h) a direction not to issue any
policy or collect any premium;
(i) a direction not to borrow any
amount;
(j) a direction not to accept any
payment on account of share capital, except payments in respect of calls that
fell due before the direction was given;
(k) a direction not to repay any
amount paid on shares;
(l) a direction not to pay a dividend
on any shares;
(m) a direction not to discharge any
policy or other liability;
(n) a direction not to transfer any
asset of a statutory fund;
(o) a direction not to pay or transfer
any amount to any person, or create an obligation (contingent or otherwise) to
do so;
(p) a direction not to undertake any
financial obligation (contingent or otherwise) on behalf of any other person;
(pa) a direction relating to the amount
of capital to be held by the company;
(q) any other direction as to the way
in which the affairs of the company are to be conducted or not conducted.
A direction under paragraph (o) not to pay any amount
does not apply to the payment or transfer of money pursuant to an order of a
court or a process of execution.
(3) Without limiting the generality of subsection (2),
a direction referred to in a paragraph of that subsection may:
(a) deal with some only of the matters
referred to in the paragraph; or
(b) deal with a particular class or
particular classes of those matters; or
(c) make different provision with
respect to different matters or different classes of matters.
(4) The direction may deal with the time by
which, or period during which, it is to be complied with.
(5) The life company has power to comply with
the direction despite anything in its constitution or any contract or
arrangement to which it is a party.
(6) APRA may, by notice in writing to the
life company, vary the direction if, at the time of the variation, it considers
that the variation is necessary or appropriate.
(7) APRA may, by notice in writing to the
life company, revoke the direction if, at the time of the revocation, it
considers that the direction is no longer necessary or appropriate.
(8) The direction ceases to have effect if:
(a) APRA revokes it under subsection (7);
or
(b) the Court orders that the company
be wound up; or
(c) for a company that is a friendly
society referred to in subsection 180(2)—the members of the society have passed
a special resolution that the society be wound up.
(9) APRA must not give a direction under this
section in relation to any part of the business of a life company if:
(a) that part of that business is
under the control of a judicial manager; or
(b) the Court has ordered that the
company be wound up; or
(c) for a company that is a friendly
society referred to in subsection 180(2)—the members of the society have passed
a special resolution that the society be wound up.
(10) In this section:
director, in relation to a life company that
is an eligible foreign life insurance company, means a member of the Compliance
Committee of the company.
senior manager of a life company means a
person who has or exercises any of the senior management responsibilities
(within the meaning of the prudential standards) for the life company.
(11) For the purposes of this Part, treat a
reference in this section to this Act as including a reference to the First
Home Saver Accounts Act 2008.
230C
Direction not grounds for denial of obligations
(1) This section applies if a life company or
subsidiary of a life company is party to a contract, whether the proper law of
the contract is Australian law (including the law of a State or Territory) or
law of a foreign country (including the law of part of a foreign country).
(1A) The fact that the life company is subject
to a direction by APRA under section 230B does not allow the contract, or
a party to the contract, other than the life company or subsidiary, to do any
of the following:
(a) deny any obligations under that
contract;
(b) accelerate any debt under that
contract;
(c) close out any transaction relating
to that contract.
This subsection has effect subject to subsections (2)
and (3).
(2) If the life company or subsidiary is
prevented from fulfilling its obligations under the contract because of a
direction under section 230B, other than a direction under paragraph
230B(2)(m), the other party or parties to the contract are, subject to any
orders made under subsection (3), relieved from obligations owed to the
life company or subsidiary under the contract.
(3) A party to a contract to which subsection (2)
applies may apply to the Court for an order relating to the effect on the
contract of a direction under section 230B. The order may deal with
matters including (but not limited to):
(a) requiring a party to the contract
to fulfil an obligation under the contract despite subsection (2);
(b) obliging a party to the contract
to take some other action (for example, paying money or transferring property)
in view of obligations that were fulfilled under the contract before the
direction was made.
The order must not require a person to take action that
would contravene the direction, or any other direction under section 230B.
230D
Supply of information about issue and revocation of directions
Power to publish notice of directions in Gazette
(1) APRA may publish in the Gazette notice
of any direction made under section 230B. The notice must include the name
of the life company given the direction and a summary of the direction.
Requirement to publish notice of revocation of certain
directions in Gazette
(2) If APRA publishes notice of a direction
made under section 230B and then later revokes the direction, APRA must
publish in the Gazette notice of that revocation as soon as practicable
after the revocation. Failure to publish notice of the revocation does not
affect the validity of the revocation.
Requirement to provide information about direction to
Treasurer
(3) If the Treasurer requests APRA to provide
information about:
(a) any directions under section 230B
in respect of a particular life company; or
(b) any directions made during a
specified period under section 230B in respect of any life companies;
APRA must comply with the request.
Power to inform Treasurer of direction
(4) APRA may provide any information that it
considers appropriate to the Treasurer about any directions, or revocations of
directions, made under section 230B, in respect of any life company, at
any time.
Requirement to inform Treasurer of revocation of
direction if informed of making of direction
(5) If APRA provides the Treasurer with
information about a direction and then later revokes the direction, APRA must
notify the Treasurer of the revocation of the direction as soon as practicable
after the revocation. Failure to notify the Treasurer does not affect the validity
of the revocation.
230E
Secrecy requirements
Information relating to directions and
revocations of directions is subject to the secrecy requirements in Part 6
of the Australian Prudential Regulation Authority Act 1998, unless the
information has been published in the Gazette under section 230D of
this Act.
230F
Non‑compliance with a direction
(1) A life company is guilty of an offence
if:
(a) it does, or fails to do, an act;
and
(b) doing, or failing to do, the act
results in a contravention of a direction given to it under section 230B.
Maximum penalty: 50 penalty units.
Note: 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 penalty stated above.
(1A) Subsection (1) is an offence of strict
liability.
Note 1: Chapter 2 of the Criminal Code sets
out the general principles of criminal responsibility.
Note 2: For strict liability, see section 6.1
of the Criminal Code.
(2) If a life company does or fails to do an
act in circumstances that give rise to the company committing an offence
against subsection (1), the company is guilty of an offence against that
subsection in respect of:
(a) the first day on which the offence
is committed; and
(b) each
subsequent day (if any) on which the circumstances that gave rise to the
company committing the offence continue (including the day of conviction for
any such offence or any later day).
Note: This subsection is not intended to imply that
section 4K of the Crimes Act 1914 does not apply to offences
against this Act or the regulations.
(3) An officer of a life company is guilty of
an offence if:
(a) the officer fails to take
reasonable steps to ensure that the company complies with a direction given to
it under section 230B; and
(b) the officer’s duties include
ensuring that the company complies with the direction, or with a class of
directions that includes the direction.
Maximum penalty: 50 penalty units.
Note: 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 penalty stated above.
(3A) Subsection (3) is an offence of strict
liability.
Note 1: Chapter 2 of the Criminal Code sets
out the general principles of criminal responsibility.
Note 2: For strict liability, see section 6.1
of the Criminal Code.
(4) If an officer of a life company fails to
take reasonable steps to ensure that the company complies with a direction
given to it under section 230B in circumstances that give rise to the
officer committing an offence against subsection (3), the officer is
guilty of an offence against that subsection in respect of:
(a) the first day on which the offence
is committed; and
(b) each subsequent day (if any) on
which the circumstances that gave rise to the officer committing the offence
continue (including the day of conviction for any such offence or any later
day).
Note: This subsection is not intended to imply that
section 4K of the Crimes Act 1914 does not apply to offences
against this Act or the regulations.
(5) In this section, officer
has the meaning given by section 9 of the Corporations Act 2001.
Note: Officer would include a member
of the Compliance Committee of an eligible foreign life insurance company.
Part 11—Miscellaneous
233
Operation of State and Territory laws
(1) Except as provided by subsections (2)
and (3), it is the intention of the Parliament that this Act is not to apply to
the exclusion of a law of a State or Territory to the extent that the law is
capable of operating concurrently with this Act.
(2) Subject to subsection (3), the
Parliament intends that, in relation to life insurance business (including
State life insurance extending beyond the limits of the State concerned), this
Act is to apply to the exclusion of:
(a) a superseded State Act; and
(b) any State Act amending a
superseded State Act; and
(c) any State Act enacted in
substitution for a superseded State Act.
(3) Nothing in this section is intended to
affect prejudicially the rights, powers or privileges of the owner, or a person
entitled to the benefit, of a policy issued before 20 June 1946 (the date of commencement of the Life Insurance Act 1945).
(4) In this section, superseded State
Act means a State Act referred to in subsection 8(1) of the Life
Insurance Act 1945, as in force immediately before the commencement of this
Act, that is still in operation.
233A
Transfer by life insurance company to statutory fund
This section authorises any share
capital reduction that occurs because a life company appropriates or transfers
an amount to a statutory fund established and maintained under this Act.
Note: Section 256B of the Corporations Act
2001 permits share capital reductions authorised by law to be carried out
without shareholder approval.
234
Prohibition of mixed insurance business
(1) A life company must not intentionally
carry on any insurance business other than life insurance business.
Penalty: 300 penalty units.
(2) Subsection (1) does not prohibit an
existing life company from carrying on general insurance business if the
company was carrying on general insurance business immediately before the
commencement of this Act.
235
Injunctions
(1) If a life company has engaged, is engaging,
or proposes to engage, in any conduct in contravention of this Act, of a
direction given under this Act or of a condition imposed on the registration of
the company, the Court may grant an injunction:
(a) restraining the company from
engaging in the conduct; or
(b) if the Court thinks it desirable
to do so, requiring the company to do a particular act.
(1A) If a life company that is an eligible
foreign life insurance company has engaged, is engaging, or proposes to engage,
in any conduct in contravention of this Act, of a direction given under this
Act or of a condition imposed on the registration of the company, the Court may
grant an injunction:
(a) restraining a member or members of
the Compliance Committee of the company from doing anything that would result
in the company engaging in the conduct; or
(b) if the Court thinks it desirable
to do so, requiring a member or members of the Compliance Committee of the
company to do a particular act.
(2) If a life company has refused or failed,
or is proposing to refuse or fail, to do an act that the company is required by
this Act to do, the Court may grant an injunction requiring the company to do
the act.
(2A) If a life company that is an eligible
foreign life insurance company has refused or failed, or is proposing to refuse
or fail, to do an act that the company is required by this Act to do, the Court
may grant an injunction requiring a member or members of the Compliance
Committee of the company to take action to ensure that the company does the
act.
(3) An injunction under subsection (1),
(1A), (2) or (2A) may only be granted on the application of the Regulator.
(4) The Court may grant an interim injunction
pending the determination of an application.
(5) The Court may discharge or vary an
injunction granted under subsection (1), (1A), (2) or (2A).
(6) The Regulator cannot be required, as a
condition of the grant of an interim injunction, to give an undertaking as to
damages.
(7) The power of the Court to grant an
injunction restraining a life company or other person from engaging in conduct
may be exercised:
(a) whether or not it appears to the
Court that the company or person intends to engage again, or to continue to
engage, in conduct of that kind; and
(b) whether or not the company or
person has previously engaged in conduct of that kind.
(8) The power of the Court to grant an
injunction requiring a company or person to do an act may be exercised whether
or not it appears to the Court that the company or person intends to refuse or fail
again, or to continue to refuse or fail, to do that act or thing.
(9) The powers conferred on the Court by this
section are in addition to, and not in derogation of, any other powers of the
Court.
236
Review of certain decisions [see Notes 3 and 4]
(1) In this section:
reviewable decision means any of the
following decisions:
(aaa) a decision under section 7A
that applies to a particular person;
(a) a declaration under subsection
12(2);
(aa) a declaration under subsection
12A(1) or 12B(2);
(b) a declaration under subsection
14(5);
(c) a declaration under subsection
15(4);
(ca) a determination under subsection
16C(2);
(cb) a variation or revocation, under
subsection 16C(3), of a determination under subsection 16C(2);
(cc) a decision under section 16E;
(cd) a refusal to give an approval
under subsection 16L(3) or 16Q(3);
(ce) a decision under subsection 16R(2)
to give a notice;
(cf) a determination of an amendment,
or a refusal to approve an amendment, under subsection 16R(4);
(cg) a refusal to give an approval
under subsection 16U(3);
(ch) a decision under subsection 16V(2)
to give a notice;
(ci) a refusal to approve
consequential amendments under subsection 16V(4);
(cj) a determination of consequential
amendments under subsection 16V(5);
(ck) a refusal to register a company
under section 21;
(d) a decision under subsection 22(1);
(e) a decision to vary a condition
under subsection 22(3) or (4);
(f) a refusal to revoke or vary a condition
under subsection 22(4);
(g) a decision to cancel registration
under subsection 26(2);
(ga) a refusal to cancel the
registration of a company under section 27;
(h) a refusal to give an approval
under paragraph 31(c);
(ha) a refusal to give an approval
under subsection 40(1);
(hb) a decision to impose conditions on
an approval granted under subsection 40(1);
(hc) a refusal to give an approval
under paragraph 43(3)(c);
(hd) a refusal to give an approval
under paragraph 48(8)(b);
(k) a refusal to give an approval
under Prudential Rules or prudential standards referred to in section 52;
(l) a refusal to give an approval
under Prudential Rules or prudential standards referred to in section 53;
(la) a refusal to give an approval
under paragraph 62(1)(c);
(m) a refusal to give an approval under
subsection 62(4);
(n) a refusal to give an approval
under subsection 63(2);
(u) a refusal to give an approval
under subsection 77(6);
(v) a decision under section 86
to make a declaration that a person is ineligible to hold an appointment as an
auditor of a life company;
(w) a decision under section 94A
to make a declaration that a person is ineligible to hold an appointment as
actuary of a life company;
(zh) a requirement under subsection
131(1);
(zi) a requirement under subsection
132(1);
(zn) a direction under subsection
198(3);
(zna) a refusal under section 208 to
suspend or vary a life company’s obligation to make payments;
(zo) a decision under subsection
216(10);
(zp) a decision under section 230A
to make, vary or revoke a standard referred to in paragraph 230A(1)(c);
(zq) a decision to give a direction
under section 230B as a result of the ground referred to in paragraph
230B(1)(a), (b), (c) or (d).
(1AA) For the purposes of this section, treat a
reference in this section to a reviewable decision as including a reference to
a decision of the Regulator (within the meaning of the First Home Saver
Accounts Act 2008) to which, under that Act, this section applies.
(2) A person affected by a reviewable
decision may request the Regulator to reconsider the decision.
(3) The request must be made by written
notice given to the Regulator 21 days after the person first receives notice of
the decision, or within such further period as the Regulator allows.
(4) The request must set out the reasons for
making the request.
(5) On receipt of the request, the Regulator
must reconsider the decision and may, subject to subsection (6), confirm
or revoke the decision or vary the decision in such manner as the Regulator
thinks fit.
(6) If the Regulator does not confirm, revoke
or vary a decision within 60 days after the Regulator received the request
under subsection (2) to reconsider the decision, the Regulator is taken to
have confirmed the decision under subsection (5) on the last day of that
period.
(7) If the Regulator confirms, revokes or
varies a decision before the end of the period referred to in subsection (6),
the Regulator must give written notice to the person telling the person:
(a) the result of the reconsideration
of the decision; and
(b) the reasons for confirming,
revoking or varying the decision, as the case may be.
(8) Application may be made to the
Administrative Appeals Tribunal for review of a decision of the Regulator that
has been confirmed or varied under subsection (5).
(9) If a decision is taken to be confirmed
because of subsection (6), section 29 of the Administrative
Appeals Tribunal Act 1975 applies as if the prescribed time for making
application for review of the decision were the period of 28 days beginning on
the day on which the decision is taken to be confirmed.
(10) If a request is made under subsection (3)
in respect of a reviewable decision, section 41 of the Administrative
Appeals Tribunal Act 1975 applies as if the making of the request were the
making of an application to the Administrative Appeals Tribunal for a review of
that decision.
237
Constitution and procedure of Tribunal
(3) A non‑presidential member of the
Administrative Appeals Tribunal must not sit as a member of the Administrative
Appeals Tribunal for the purposes of a review of a reviewable decision, or for
the purposes of a request under subsection 41(2) of the Administrative
Appeals Tribunal Act 1975 in respect of such decision, if he or she is a
director or employee of a company or body carrying on life insurance business
or insurance business (whether in Australia or elsewhere).
(4) An order must not be made under
subsection 41(2) of the Administrative Appeals Tribunal Act 1975 in
respect of a reviewable decision except by the Administrative Appeals Tribunal.
240
Register of Life Companies
(1) APRA must keep a register to be known as
the Register of Life Companies.
(2) Subject to this section and the
regulations, the Register is to be kept in such form and manner as APRA
determines.
(3) The Register must contain the prescribed
information in relation to each company that is registered under this Act.
(4) The Register may be kept by means of a
computer.
241
Inspection of Register etc.
(1) APRA must ensure that the Register is
available for inspection by any person during normal business hours.
(2) A person who has paid the prescribed fee
is entitled to inspect the Register.
(3) If the Register is kept wholly or partly
by means of a computer, subsection (1) is taken to be complied with, so
far as the Register is kept in that way, by giving persons access to computer
terminals that they can use to inspect the Register, either by viewing a screen
display or by obtaining a computer print‑out.
242
Non‑shareholder members of life company—voting by post
(1) This section applies to any life company
that is not a company limited only by shares.
(1A) This section does not apply in relation to
an eligible foreign life insurance company.
(2) Within one year after it is registered
under this Act, a life company to which this section applies must make
arrangements for:
(a) the establishment of a postal
voters’ roll in relation to:
(i) voting in contested
elections of directors of the company; and
(ii) voting on questions
relating to the alteration of the company’s constitution;
(b) the enrolment on the postal
voters’ roll of any member of the company who is not a shareholder, who applies
to be enrolled and who is entitled to vote:
(i) in elections referred
to in subparagraph (a)(i); or
(ii) on questions referred
to in subparagraph (a)(ii); and
(c) the voting by post in such
elections or on such questions by members so enrolled; and
(d) the inspection of the postal
voters’ roll, and the taking of copies of, or extracts from, the roll, after
the close of nominations and before the close of the voting in any election of
a director of the company by any candidate in the election.
(3) All regular votes cast under any
arrangements referred to in subsection (1) are valid for all purposes.
(4) If a
member of a life company who is enrolled on the postal voters’ roll does not
exercise his or her right to vote by post on 3 consecutive occasions when he or
she is entitled to vote, the company may remove his or her name from the roll.
However, he or she is eligible to be re‑enrolled on his or her request.
245 Disqualified
persons not to be directors, principal executive officers etc. of life
companies
(1) For the purposes of this Act, a person is
a disqualified person if, at any time:
(a) the person has been convicted of
an offence against this Act or the Life Insurance Act 1945; or
(b) the person has been convicted of
an offence against any other law of the Commonwealth or a law of a State, a
Territory or a foreign country, being an offence in respect of:
(i) conduct relating to
insurance; or
(ii) dishonest conduct; or
(c) the person has:
(i) become bankrupt; or
(ii) applied to take the
benefit of a law for the relief of bankrupt or insolvent debtors; or
(iii) compounded with his or
her creditors; or
(d) the Federal Court of Australia has
disqualified the person under section 245A.
(2) A person commits an offence if:
(a) the person is a disqualified
person; and
(b) the person is or acts as:
(i) a director of a
company registered under this Act; or
(ii) a principal executive
officer of a company registered under this Act; or
(iii) an appointed actuary
of a company registered under this Act; or
(iv) an auditor of a company
registered under this Act; and
(c) for a person who is a disqualified
person only because he or she was disqualified under section 245A—the
person is disqualified from being or acting as that director, principal
executive officer, actuary or auditor (as the case requires).
Penalty: Imprisonment for 2 years.
(3) A person commits an offence if:
(a) the person is a disqualified
person; and
(b) the person is or acts as:
(i) a director of a
company registered under this Act; or
(ii) a principal executive
officer of a company registered under this Act; or
(iii) an appointed actuary
of a company registered under this Act; or
(iv) an auditor of a company
registered under this Act; and
(c) for a person who is a disqualified
person only because he or she was disqualified under section 245A—the
person is disqualified from being or acting as that director, principal
executive officer, actuary or auditor (as the case requires).
Penalty: 60 penalty units.
(4) Subsection (3) is an offence of
strict liability.
Note: For strict liability, see
section 6.1 of the Criminal Code.
(5) A company commits an offence if:
(a) the company is registered under
this Act; and
(b) a person is a disqualified person;
and
(c) the person is or acts as:
(i) a director of the
company; or
(ii) a principal executive
officer of the company; or
(iii) an appointed actuary
of the company; or
(iv) an auditor of the
company; and
(d) for a person who is a disqualified
person only because he or she was disqualified under section 245A—the
person is disqualified from being or acting as that director, principal
executive officer, actuary or auditor (as the case requires); and
(e) in any case—the company allows the
person to be or act as a director, principal executive officer, actuary or
auditor (as the case requires).
Penalty: 250 penalty units.
(5A) A company commits an offence if:
(a) the company is registered under
this Act; and
(b) a person is a disqualified person;
and
(c) the person is or acts as:
(i) a director of the
company; or
(ii) a principal executive
officer of the company; or
(iii) an appointed actuary
of the company; or
(iv) an auditor of the
company; and
(d) for a person who is a disqualified
person only because he or she was disqualified under section 245A—the
person is disqualified from being or acting as that director, principal
executive officer, actuary or auditor (as the case requires); and
(e) in any case—the company allows the
person to be or act as a director, principal executive officer, actuary or
auditor (as the case requires).
Penalty: 60 penalty units.
(5B) Subsection (5A) is an offence of
strict liability.
Note: For strict liability, see
section 6.1 of the Criminal Code.
(6) A failure to comply with this section
does not affect the validity of an appointment or transaction.
(7) A reference in subsection (1) to a
person who has been convicted of an offence includes a reference to a person in
respect of whom an order has been made under section 19B of the Crimes
Act 1914, or under a corresponding provision of a law of a State, a
Territory or a foreign country, in relation to the offence.
(8) In this section:
director, in relation to a life company that
is an eligible foreign life insurance company, means a member of the Compliance
Committee of the company.
245A
Court power of disqualification
(1) On application by APRA, the Federal Court
of Australia may, by order, disqualify a person from being or acting as someone
referred to in subsection (2), for a period that the Court considers
appropriate, if the Court is satisfied that:
(a) the person is not a fit and proper
person to be or act as such a person; and
(b) the disqualification is justified.
(2) For the purposes of subsection (1),
the Court may disqualify a person from being or acting as a director, principal
executive officer, appointed actuary or auditor of:
(a) a particular company registered
under this Act; or
(b) a class of companies registered
under this Act; or
(c) any company registered under this
Act.
(3) In deciding whether it is satisfied as
mentioned in paragraph (1)(a), the Court may take into account:
(a) any matters specified in the
regulations for the purposes of this paragraph; and
(b) any criteria for fitness and
propriety specified in the prudential standards; and
(c) any other matters the Court
considers relevant.
(4) In deciding whether the disqualification
is justified as mentioned in paragraph (1)(b), the Court may have regard
to:
(a) if the application is for the
person to be disqualified from being or acting as a director or principal
executive officer—the person’s conduct in relation to the management, business
or property of any corporation; and
(b) if the application is for the
person to be disqualified from being or acting as an appointed actuary or
auditor—the person’s conduct in relation to the functions or duties of an
actuary or auditor under this Act; and
(c) in any case—any other matters the
Court considers relevant.
(5) As soon as practicable after the Court
disqualifies a person under this section, APRA must cause particulars of the
disqualification:
(a) if the person is, or is acting as,
a director, principal executive officer, appointed actuary or auditor of a
company registered under this Act—to be given to the company concerned; and
(b) to be published in the Gazette.
245B
Court power to revoke or vary a disqualification etc.
(1) A disqualified person, or APRA, may apply
to the Federal Court of Australia for:
(a) if the person is a disqualified
person only because he or she was disqualified under section 245A—a
variation or a revocation of the order made under that section; or
(b) otherwise—an order that the person
is not a disqualified person.
(2) If the Court revokes an order under
paragraph (1)(a) or makes an order under paragraph (1)(b), then,
despite section 245, the person is not a disqualified person.
(3) At least 21 days before commencing the
proceedings, written notice of the application must be lodged:
(a) if the disqualified person makes
the application—by the person with APRA; or
(b) if APRA makes the application—by
APRA with the disqualified person.
(4) An order under paragraph (1)(b) may
be expressed to be subject to exceptions and conditions determined by the
Court.
246
Principal executive officer
(1) Subject to subsection (3), the
principal executive officer of a life company, for the purposes of this Act, is
the person nominated for the purposes of section 20 or under subsection (2)
of this section.
(2) An existing life company must give APRA
written notice specifying the person who is to be the principal executive
officer of the life company for the purposes of this Act.
(3) Notice under subsection (2) must be
given within 3 months after the commencement of this Act.
(4) A life company may, at any time, give
APRA written notice specifying a person who is to be the principal executive
officer of the life company for the purposes of this Act.
(5) On the giving by a life company of a
notice under subsection (4), the person specified in the notice becomes
the principal executive officer of the life company for the purposes of this
Act.
247
Protection of person who discloses information etc. under compulsion
A person who:
(a) discloses information; or
(b) produces records;
in accordance with a requirement or direction of a person
apparently acting under this Act is not liable to anyone else in respect of the
disclosure or production, regardless of whether the requirement or direction
was lawfully made or given.
248
Offences
(1) No proceedings for an offence against
this Act may be instituted after the end of the period of 3 years after the
commission of the offence.
(2) The institution of proceedings against a
company 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;
of the company, or of part of the business of the company,
on a ground that relates to the matter that constitutes the offence.
250
Conduct by directors, servants and agents
(1) If, in proceedings for an offence against
this Act, it is necessary to establish the state of mind of a body corporate in
relation to particular conduct, it is sufficient to show:
(a) that the conduct was engaged in by
a director, servant or agent of the body corporate within the scope of his or
her actual or apparent authority; and
(b) that the director, servant or
agent had the state of mind.
(2) Any conduct engaged in on behalf of a
body corporate by a director, servant or agent of the body corporate within the
scope of his or her actual or apparent authority is taken, for the purposes of
a prosecution for an offence against this Act, to have been engaged in also by
the body corporate unless the body corporate establishes that it took
reasonable precautions and exercised due diligence to avoid the conduct.
(3) If, in proceedings for an offence against
this Act, it is necessary to establish the state of mind of an individual in
relation to particular conduct, it is sufficient to show:
(a) that the conduct was engaged in by
a servant or agent of the individual within the scope of his or her actual or
apparent authority; and
(b) that the servant or agent had the
state of mind.
(4) Any conduct engaged in on behalf of an
individual by a servant or agent of the individual within the scope of his or
her actual or apparent authority is taken, for the purposes of a prosecution
for an offence against this Act, to have been engaged in also by the individual
unless the individual establishes that he or she took reasonable precautions
and exercised due diligence to avoid the conduct.
(5) A reference in subsection (1) or (3)
to the state of mind of a person includes a reference to:
(a) the knowledge, intention, opinion,
belief or purpose of the person; and
(b) the person’s reasons for the
intention, opinion, belief or purpose.
(6) A reference in this section to a director
of a body corporate includes a reference to a constituent member of, or to a
member of a board or other group of persons administering or managing the
affairs of, a body corporate incorporated for a public purpose by a law of the
Commonwealth, of a State or a Territory.
(7) A reference in this section to engaging
in conduct includes a reference to failing or refusing to engage in conduct.
(8) A reference in this section to an offence
against this Act includes a reference to an offence created by section 6
of the Crimes Act 1914, being an offence that relates to this Act.
(9) Part 2.5 of the Criminal Code
does not apply in relation to an offence against this Act.
251
Compensation for acquisition of property
(1) If:
(a) apart from this section, the
operation of this Act would result in the acquisition of property from a person
otherwise than on just terms; and
(b) the acquisition would be invalid
because of paragraph 51(xxxi) of the Constitution;
the Commonwealth is liable to pay to the person
compensation of a reasonable amount as agreed on between the Commonwealth and
the person. If the Commonwealth and the person do not agree on the amount of
the compensation, the person may institute proceedings in the Court for the
recovery from the Commonwealth of such reasonable amount of compensation as the
Court determines.
(2) Any damages or compensation recovered or
other remedy given in a proceeding that is commenced otherwise than under this
section is to be taken into account in assessing compensation payable in a
proceeding that is commenced under this section and that arises out of the same
event or transaction.
(3) In this section:
acquisition of property and just terms
have the same respective meanings as in paragraph 51(xxxi) of the Constitution.
251A
Authorising contracts etc. for protecting policy owners’ interests and
financial system stability
Authorising the making of contracts and arrangements
(1) With the Finance Minister’s written
approval, the Minister may authorise the making of contracts and arrangements
by the Commonwealth for the purposes of:
(a) protecting the interests of the
owners and prospective owners of life insurance policies in a manner consistent
with the continued development of a viable, competitive and innovative life
insurance industry; or
(b) protecting financial system
stability in Australia.
Specifying amounts to be credited to Special Account
(2) The authorisation must specify the amount
(if any) to be credited to the Financial System Stability Special Account, so
that the total described in subsection (3) does not exceed by more than
$10,000,000,000 the total described in subsection (4).
Note: This ensures that the balance of the Special
Account directly attributable to authorisations under this section cannot
exceed $10,000,000,000 at any time.
(3) The total described in this subsection is
the total of all the amounts specified under subsection (2) in
authorisations made under this section (taking account of any amendments of
those authorisations).
(4) The total described in this subsection is
the total of all the amounts taken under subsection 21(2) of the Financial
Management and Accountability Act 1997 to be debited from the Financial
System Stability Special Account for expenditure for the purpose described in
paragraph 70G(c) of the Banking Act 1959.
Note: That purpose is making a payment under a
contract or arrangement whose making was authorised under this section.
Amending specification of amount to be credited
(5) The Minister may amend an authorisation
made under this section, but only to change the specification of an amount
under subsection (2), within the limit set out in that subsection.
Authorisation cannot be revoked
(6) The Minister cannot revoke an
authorisation made under this section.
Authorisation or amendment not disallowable or subject
to expiry
(7) An authorisation or amendment made under
this section is a legislative instrument, but neither section 42
(disallowance) nor Part 6 (sunsetting) of the Legislative Instruments
Act 2003 applies to the authorisation or amendment.
When authorisation or amendment takes effect
(8) The authorisation or amendment takes
effect from the time it is made, despite subsections 12(1) and (2) of the Legislative
Instruments Act 2003.
251B
Borrowing funds for payments under authorised contracts etc.
(1) Subsection (2) applies if the
Minister has determined under section 251A an amount to be credited to the
Financial System Stability Special Account.
(2) On behalf of the Commonwealth, the
Minister may, with the Finance Minister’s written approval, borrow money for
not more than 24 months on terms and conditions specified in, or consistent
with, the approval, so that the total unrepaid borrowing under this section is
not more than $10,000,000,000 at any time.
(3) The Finance Minister may delegate, in
writing, to an SES employee or acting SES employee in the Department that is
administered by the Finance Minister, the Finance Minister’s power of approval
for the purposes of subsection (2).
(4) In this section:
borrow includes raise money or obtain credit,
whether by dealing in securities or otherwise, but does not include obtain
credit in a transaction forming part of the day‑to‑day operations
of the Commonwealth.
252
Prudential Rules
(1) APRA may, by legislative instrument, make
rules prescribing all matters required or permitted by this Act to be
prescribed by Prudential Rules.
(2) APRA must not make rules under this
section on or after the day on which Part 1 of Schedule 1 to the Financial
Sector Legislation Amendment (Simplifying Regulation and Review) Act 2007 commences
(the cut‑off day).
(3) A rule made under this section that is in
force immediately before the cut‑off day continues in force until revoked
by APRA.
(4) APRA may, on or after the cut‑off
day, vary or revoke a rule continued in force under subsection (3).
253
Regulations
(1) The Governor‑General may make
regulations:
(a) prescribing matters required or
permitted by this Act to be prescribed; or
(b) prescribing matters necessary or
convenient to be prescribed for carrying out or giving effect to this Act.
(2) Without limiting subsection (1), the
regulations may:
(a) prescribe the time within which
any appeal to the Court provided for by this Act will lie; and
(b) prescribe penalties not exceeding
10 penalty units for any contravention of the regulations.
Part 12—How this Act affects existing life companies etc.
254
Companies registered under Life Insurance Act 1945
(1) An existing life company is taken, for
the purposes of this or any other Act, to be registered under this Act.
(2) An existing life company that is
incorporated outside Australia is taken, for the purposes of this Act, to be a
company within the meaning of this Act.
(3) If, immediately before this Act
commenced, an existing life company was subject to a condition imposed under
section 20 of the Life Insurance Act 1945, the condition has effect
as if it were a condition imposed under section 22 of this Act.
(5) Section 26 of this Act applies to an
existing life company as if the period of 12 months referred to in paragraph (1)(a)
of that section began on the day on which the company was registered under the Life
Insurance Act 1945.
(7) The following provisions of this Act do
not apply to an existing life company that is incorporated outside Australia:
(b) section 242;
(c) section 245.
(8) This Act does not apply in relation to
life insurance business carried on outside Australia by an existing life
company that is incorporated outside Australia.
264 Saving
provision: sections 83, 84 and 94 of the Life Insurance Act 1945
In spite of section 6 of the Life
Insurance (Consequential Amendments and Repeals) Act 1995, sections 83,
84 and 94 of the Life Insurance Act 1945, as in force immediately before
the commencement of this Act, continue to apply to policies to which those
sections applied immediately before the commencement of this Act as if the Life
Insurance Act 1945 had not been repealed.