Corporations Act 2001
View history note
Hide history noteCCH note - modifying legislative instruments: The application of Pt 8B.4 is affected by the following legislative instruments that commenced or were amended on or after 1 January 2022: the ASIC Corporations (CCIV Auditors) Instrument 2024/668.
For other legislative instruments or class orders before 1 January 2022 that affect the application of Pt 8B.4, please consult the legislative instruments or class orders directly. These are reproduced in the regulatory-resources section of the company-law practice area in CCH iKnowConnect.
A CCIV may reduce its share capital in a way that is not otherwise authorised by law if: (a) the reduction is permitted by the CCIV ' s constitution; and (b) immediately before the reduction:
(i) each sub-fund that the reduction affects is solvent; and
(c) the reduction complies with any requirements prescribed by regulations made for the purposes of this paragraph.
(ii) there are no reasonable grounds for suspecting that any sub-fund that the reduction affects would become insolvent immediately after the reduction; and
Note: This Subdivision also deals with some other situations (such as share redemptions) in which reductions of share capital are authorised.
When a sub-fund is solvent and insolvent
1231A(2)
A sub-fund is solvent if, and only if, the CCIV is able to pay all the debts that are liabilities of the sub-fund, as and when they become due and payable.
Note: The liabilities of a sub-fund can only be met from assets of the sub-fund: see section 1234A .
1231A(3)
A sub-fund that is not solvent is insolvent .
Regulations
1231A(4)
Without limiting paragraph (1)(c) , regulations made for the purposes of that paragraph may prescribe requirements for reductions of share capital, or classes of reductions of share capital, in relation to one or more of the following: (a) all CCIVs; (b) a specified class of CCIVs; (c) all sub-funds of all CCIVs; (d) a specified class of sub-funds of CCIVs; (e) all sub-funds of a specified class of CCIVs.
Note: An example of a class of a reduction of share capital is an off-market share buy-back.
Certain provisions do not apply to a CCIV
1231A(5)
Division 1 of Part 2J.1 does not apply to a CCIV.
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