Corporations Act 2001
Where a meeting is convened under section 411 , the body must: (a) with every notice convening the meeting that is sent to a creditor or member, send a statement (in this section called the explanatory statement ):
(i) explaining the effect of the compromise or arrangement and, in particular, stating any material interests of the directors, whether as directors, as members or creditors of the body or otherwise, and the effect on those interests of the compromise or arrangement in so far as that effect is different from the effect on the like interests of other persons; and
(ii) setting out such information as is prescribed and any other information that is material to the making of a decision by a creditor or member whether or not to agree to the compromise or arrangement, being information that is within the knowledge of the directors and has not previously been disclosed to the creditors or members; and
In the case of a creditor whose debt does not exceed $200, paragraph (1)(a) does not apply unless the Court otherwise orders but the notice convening the meeting that is sent to such a creditor must specify a place at which a copy of the explanatory statement can be obtained on request and, where the creditor makes such a request, the body must as soon as practicable comply with the request. 412(3)
Where the compromise or arrangement affects the rights of debenture holders, the explanatory statement must specify any material interests of the trustees for the debenture holders, whether as such trustees, as members or creditors of the body or otherwise, and the effect on those interests of the compromise or arrangement in so far as that effect is different from the effect on the like interests of other persons. 412(4)
Where a notice given by advertisement, or published in the prescribed manner, includes a notification that copies of the explanatory statement can be obtained in a particular manner, every creditor or member entitled to attend the meeting must, on making application in that matter, be furnished by the body free of charge with a copy of the explanatory statement.
Each person who is a director or trustee for debenture holders must give notice to the body of such matters relating to the person as are required to be included in the explanatory statement. 412(6)
In the case of a compromise or arrangement that is not, or does not include, a compromise or arrangement between a Part 5.1 body and its creditors or any class of them, the body must not send out an explanatory statement pursuant to subsection (1) unless a copy of that statement has been registered by ASIC.
[ CCH Note: S 412(6) will be amended by No 69 of 2020, s 3, Sch 1, by inserting " by the Registrar pursuant to a direction " after " registered " , (effective 1 July 2026 or a day or days to be fixed by Proclamation).]
Where an explanatory statement sent out under subsection (1) is not required by subsection (6) to be registered by ASIC, the Court must not make an order approving the compromise or arrangement unless it is satisfied that ASIC has had a reasonable opportunity to examine the explanatory statement and to make submissions to the Court in relation to that statement.
[ CCH Note: S 412(7) will be amended by No 69 of 2020, s 3, Sch 1, by substituting " the Registrar " for " ASIC " (first occurring) (effective 1 July 2026 or a day or days to be fixed by Proclamation).]
Where a copy of an explanatory statement is lodged with ASIC for registration under subsection (6) , ASIC must not register the copy of the statement unless the statement appears to comply with this Act and ASIC is of the opinion that the statement does not contain any matter that is false in a material particular or materially misleading in the form or context in which it appears.
[ CCH Note: S 412(8) will be amended by No 69 of 2020, s 3, Sch 1 [ 684] and , by substituting " the Registrar " for " ASIC " (first occurring) and inserting " direct the Registrar to " after " ASIC must not " , (effective 1 July 2026 or a day or days to be fixed by Proclamation).]
Where a body contravenes this section, a person involved in the contravention contravenes this subsection. 412(10)
It is a defence to a prosecution for a contravention of this section if it is proved that the contravention was due to the failure of a person (other than the defendant), being a director of the body or a trustee for debenture holders of the body, to supply for the purposes of the explanatory statement particulars of the person ' s interests.