Corporations Act 2001

SCHEDULE 2 - INSOLVENCY PRACTICE SCHEDULE (CORPORATIONS)  

Note: See section 600K .

PART 3 - GENERAL RULES RELATING TO EXTERNAL ADMINISTRATIONS  

Division 80 - Committees of inspection  

SECTION 80-55   OBLIGATIONS OF MEMBERS OF COMMITTEE OF INSPECTION  
Deriving profit or advantage from the company

80-55(1)    
A member of a committee of inspection must not directly or indirectly derive any profit or advantage from the external administration of the company.

Circumstances in which profit or advantage is taken to be derived

80-55(2)    
To avoid doubt, a member of a committee of inspection is taken to derive a profit or advantage from the external administration of the company if:

(a) the member directly or indirectly derives a profit or advantage from a transaction (including a sale or purchase) entered into for or on account of the company; or

(b) the member directly or indirectly derives a profit or advantage from a creditor of the company; or

(c) a related entity of the member directly or indirectly derives a profit or advantage from the external administration of the company.

Exceptions

80-55(3)    
Subsection (1) does not apply if the creditors resolve otherwise.

80-55(4)    
The member of the committee is not entitled to vote on the resolution referred to in subsection (3).

80-55(5)    
Subsection (1) does not apply to the extent that:

(a) another provision of this Act, or of another law, requires or permits the member of the committee of inspection to derive the profit or advantage; or

(b) the Court gives leave to the member of the committee to derive the profit or advantage.

Note: Subsection (1) would not, for example, prevent a creditor from recovering debts proved in a winding up, as this is permitted under Part 5.6 of Chapter 5 .

80-55(6)    
Despite paragraph (2)(c), subsection (1) does not apply to the extent that:

(a) the profit or advantage arises because the external administrator employs or engages a person to provide services in connection with the external administration of the company; and

(b) the person is a related entity of a member of the committee of inspection; and

(c) one of the following applies:

(i) the member does not know, and could not reasonably be expected to know, that the external administrator has employed or engaged a related entity of the member;

(ii) the creditors, by resolution, agree to the related entity being employed or engaged.

Offence

80-55(7)    
A person commits an offence of strict liability if:

(a) the person is subject to a requirement under subsection (1); and

(b) the person fails to comply with the requirement.

Penalty: 50 penalty units.

Note: A defendant bears an evidential burden in relation to the matters in subsections (3), (5) and (6) (see subsection 13.3(3) of the Criminal Code ).

Effect of contravention of this section

80-55(8)    
A transaction or any other arrangement entered into in contravention of this section may be set aside by the Court.