THE CORPORATIONS LAW

CHAPTER 5 - EXTERNAL ADMINISTRATION

PART 5.7B - RECOVERING PROPERTY OR COMPENSATION FOR THE BENEFIT OF CREDITORS OF INSOLVENT COMPANY

Division 5 - Liability of holding company for insolvent trading by subsidiary

SECTION 588V   WHEN HOLDING COMPANY LIABLE  

588V(1)  [Holding company of company incurring debt]  

A corporation contravenes this section if:

(a)  the corporation is the holding company of a company at the time when the company incurs a debt; and

(b)  the company is insolvent at that time, or becomes insolvent by incurring that debt, or by incurring at that time debts including that debt; and

(c)  at that time, there are reasonable grounds for suspecting that the company is insolvent, or would so become insolvent, as the case may be; and

(d)  one or both of the following subparagraphs applies:

(i) the corporation, or one or more of its directors, is or are aware at that time that there are such grounds for so suspecting;

(ii) having regard to the nature and extent of the corporation's control over the company's affairs and to any other relevant circumstances, it is reasonable to expect that:

(A) a holding company in the corporation's circumstances would be so aware; or

(B) one or more of such a holding company's directors would be so aware; and

(e)  that time is at or after the commencement of this Part.

588V(2)  [No offence]  

A corporation that contravenes this section is not guilty of an offence.