THE CORPORATIONS LAW

CHAPTER 2E - RELATED PARTY TRANSACTIONS

PART 2E.2 - RELATED PARTIES AND FINANCIAL BENEFITS

SECTION 229   GIVING A FINANCIAL BENEFIT  

229(1)  [Circumstances of financial benefit]  

In determining whether a financial benefit is given for the purposes of this Chapter:

(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.

229(2)  [Definition]  

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)  [Examples]  

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.