Corporations Act 2001

CHAPTER 2E - RELATED PARTY TRANSACTIONS  

Note: This Chapter applies to a CCIV with modifications: see Division 5 of Part 8B.3 .

SECTION 207  

207   PURPOSE  
The rules in this Chapter are designed to protect the interests of a public company's members as a whole, by requiring member approval for giving financial benefits to related parties that could endanger those interests.

PART 2E.2 - RELATED PARTIES AND FINANCIAL BENEFITS  

SECTION 228   RELATED PARTIES  

228(1)   Controlling entities.  

An entity that controls a public company is a related party of the public company.

228(2)   Directors and their spouses.  

The following persons are related parties of a public company:

(a) directors of the public company;

(b) directors (if any) of an entity that controls the public company;

(c) if the public company is controlled by an entity that is not a body corporate - each of the persons making up the controlling entity;

(d) spouses of the persons referred to in paragraphs (a), (b) and (c).

228(3)   Relatives of directors and spouses.  

The following relatives of persons referred to in subsection (2) are related parties of the public company:

(a) parents;

(b) children.

228(4)   Entities controlled by other related parties.  

An entity controlled by a related party referred to in subsection (1), (2) or (3) is a related party of the public company unless the entity is also controlled by the public company.

228(5)   Related party in previous 6 months.  

An entity is a related party of a public company at a particular time if the entity was a related party of the public company of a kind referred to in subsection (1), (2), (3) or (4) at any time within the previous 6 months.

228(6)   Entity has reasonable grounds to believe it will become related party in future.  

An entity is a related party of a public company at a particular time if the entity believes or has reasonable grounds to believe that it is likely to become a related party of the public company of a kind referred to in subsection (1), (2), (3) or (4) at any time in the future.

228(7)   Acting in concert with related party.  

An entity is a related party of a public company if the entity acts in concert with a related party of the public company on the understanding that the related party will receive a financial benefit if the public company gives the entity a financial benefit.

SECTION 229   GIVING A FINANCIAL BENEFIT  

229(1)    

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

(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)    
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)    
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.