THE CORPORATIONS LAW

CHAPTER 2J - TRANSACTIONS AFFECTING SHARE CAPITAL

PART 2J.2 - SELF-ACQUISITION AND CONTROL OF SHARES

SECTION 259E   WHEN A COMPANY CONTROLS AN ENTITY  

259E(1)  [Control of entity]  

For the purposes of this Part, a company controls an entity if the company has the capacity to determine the outcome of decisions about the entity's financial and operating policies.

259E(2)  [Influence and behaviour]  

In determining whether a company has this capacity:

(a)  the practical influence the company can exert (rather than the rights it can enforce) is the issue to be addressed; and

(b)  any practice or pattern of behaviour affecting the entity's financial or operating policies is to be taken into account (even if it involves a breach of an agreement or a breach of trust).

259E(3)  [Joint capacity]  

Merely because the company and an unrelated entity jointly have the capacity to determine the outcome of decisions about another entity's financial and operating policies, the company does not control the other entity.

259E(4)  [Exercise of legal obligation]  

A company is not to be taken to control an entity merely because of a capacity that it is under a legal obligation to exercise for the benefit of someone other than its shareholders.

Note:

This situation could arise, for example, if the company holds shares as a trustee or is performing duties as a liquidator.