THE CORPORATIONS LAW

CHAPTER 2E - RELATED PARTY TRANSACTIONS

PART 2E.1 - MEMBER APPROVAL NEEDED FOR RELATED PARTY BENEFIT

Division 2 - Exceptions to the requirement for member approval

SECTION 212   INDEMNITIES, EXEMPTIONS, INSURANCE PREMIUMS AND PAYMENT FOR LEGAL COSTS FOR OFFICERS  

212(1)  Indemnities, exemptions and insurance premiums.  

Member approval is not needed to give a financial benefit if:

(a)  the benefit is for a related party who is an officer of the public company or entity; and

(b)  the benefit is:

(i) an indemnity, exemption or insurance premium in respect of a liability incurred as an officer of the public company or entity; or

(ii) an agreement to give an indemnity or exemption, or to pay an insurance premium, of that kind; and

(c)  to give the benefit would be reasonable in the circumstances of the public company or entity giving the benefit.

Note:

Sections 199A to 199C may prohibit giving an indemnity or exemption or paying an insurance premium for an officer.

212(2)  Payments in respect of legal costs.  

Member approval is not needed to give a financial benefit if:

(a)  the benefit is for a related party who is an officer of the public company or entity; and

(b)  the benefit is the making of, or an agreement to make, a payment (whether by way of advance, loan or otherwise) in respect of legal costs incurred by the officer in defending an action for a liability incurred as an officer of the public company or entity; and

(c)  either:

(i) section 199A does not apply to the costs; or

(ii) if section 199A applies to the costs - the officer must repay the amount paid if the costs become costs for which the company must not give the officer an indemnity under that section; and

(d)  to give the benefit would be reasonable in the circumstances of the public company or entity giving the benefit.

212(3)  [Relevant criteria]  

In working out for the purposes of subsection (1) or (2) whether giving the benefit is reasonable in the circumstances:

(a)  assess whether it would be reasonable on the basis of the circumstances existing:

(i) if the benefit is given under an agreement - at the time when the agreement is or was made; or

(ii) if the benefit is not given under an agreement - at the time when the benefit is or was given; and

(b)  disregard any other financial benefit given or payable to the officer by the public company or entity.