CHAPTER 2E
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RELATED PARTY TRANSACTIONS
Note: This Chapter applies to a CCIV with modifications: see Division
5
of Part
8B.3
.
History
Ch 2E amended by No 8 of 2022, s 3, Sch 2[76] (effective 1 July 2022).
SECTION 207
207
PURPOSE
The rules in this Chapter are designed to protect the interests of a public company's members as a whole, by requiring member approval for giving financial benefits to related parties that could endanger those interests.
PART 2E.2
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RELATED PARTIES AND FINANCIAL BENEFITS
SECTION 228
RELATED PARTIES
228(1)
Controlling entities.
An entity that controls a public company is a related party of the public company.
228(2)
Directors and their spouses.
The following persons are related parties of a public company:
(a)
directors of the public company;
(b)
directors (if any) of an entity that controls the public company;
(c)
if the public company is controlled by an entity that is not a body corporate
-
each of the persons making up the controlling entity;
(d)
spouses of the persons referred to in paragraphs (a), (b) and (c).
History
S 228(2) amended by No 144 of 2008, Sch 14 Pt 3
[
145] (effective 10 December 2008).
228(3)
Relatives of directors and spouses.
The following relatives of persons referred to in subsection (2) are related parties of the public company:
(a)
parents;
(b)
children.
228(4)
Entities controlled by other related parties.
An entity controlled by a related party referred to in subsection (1), (2) or (3) is a related party of the public company unless the entity is also controlled by the public company.
228(5)
Related party in previous 6 months.
An entity is a related party of a public company at a particular time if the entity was a related party of the public company of a kind referred to in subsection (1), (2), (3) or (4) at any time within the previous 6 months.
228(6)
Entity has reasonable grounds to believe it will become related party in future.
An entity is a related party of a public company at a particular time if the entity believes or has reasonable grounds to believe that it is likely to become a related party of the public company of a kind referred to in subsection (1), (2), (3) or (4) at any time in the future.
228(7)
Acting in concert with related party.
An entity is a related party of a public company if the entity acts in concert with a related party of the public company on the understanding that the related party will receive a financial benefit if the public company gives the entity a financial benefit.
SECTION 229
GIVING A FINANCIAL BENEFIT
229(1)
In determining whether a financial benefit is given for the purposes of this Act:
(a)
give a broad interpretation to financial benefits being given, even if criminal or civil penalties may be involved; and
(b)
the economic and commercial substance of conduct is to prevail over its legal form; and
(c)
disregard any consideration that is or may be given for the benefit, even if the consideration is adequate.
History
S 229(2) amended by No 76 of 2023, s 3, Sch 2[97] (effective 20 October 2023).
229(2)
Giving a financial benefit
includes the following:
(a)
giving a financial benefit indirectly, for example, through 1 or more interposed entities;
(b)
giving a financial benefit by making an informal agreement, oral agreement or an agreement that has no binding force;
(c)
giving a financial benefit that does not involve paying money (for example by conferring a financial advantage).
229(3)
The following are examples of
giving a financial benefit
to a related party:
(a)
giving or providing the related party finance or property;
(b)
buying an asset from or selling an asset to the related party;
(c)
leasing an asset from or to the related party;
(d)
supplying services to or receiving services from the related party;
(e)
issuing securities or granting an option to the related party;
(f)
taking up or releasing an obligation of the related party.