Corporations Act 2001

CHAPTER 8B - CORPORATE COLLECTIVE INVESTMENT VEHICLES  

PART 8B.4 - CORPORATE FINANCE AND FINANCIAL REPORTING FOR CCIVs  

Division 2 - Transactions affecting share capital  

Subdivision A - Reductions in share capital and share buy-backs  

SECTION 1231A   CCIV MAY MAKE REDUCTION NOT OTHERWISE AUTHORISED  

1231A(1)    
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

(ii) there are no reasonable grounds for suspecting that any sub-fund that the reduction affects would become insolvent immediately after the reduction; and

(c)    the reduction complies with any requirements prescribed by regulations made for the purposes of this paragraph.

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.