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This is a Bill, not an Act. For current law, see the Acts databases.
2002
The Parliament of
the
Commonwealth of
Australia
HOUSE OF
REPRESENTATIVES
Presented and read a first
time
Corporations
Amendment (Repayment of Directors’ Bonuses) Bill
2002
No. ,
2002
(Treasury)
A Bill
for an Act to amend the Corporations Act 2001, and for related
purposes
Contents
Corporations Act
2001 3
A Bill for an Act to amend the Corporations Act
2001, and for related purposes
The Parliament of Australia enacts:
This Act may be cited as the Corporations Amendment (Repayment of
Directors’ Bonuses) Act 2002.
This Act commences on the day on which it receives the Royal
Assent.
Each Act that is specified in a Schedule to this Act is amended or
repealed as set out in the applicable items in the Schedule concerned, and any
other item in a Schedule to this Act has effect according to its
terms.
1 Section 9
Insert:
close associate of a director means:
(a) a relative or de facto spouse of the director; or
(b) a relative of a spouse, or of a de facto spouse, of the
director.
2 Section 9
Insert:
unreasonable director-related transaction has the meaning
given by section 588FDA.
3 After section 588FD
Insert:
(1) A transaction of a company is an unreasonable director-related
transaction of the company if, and only if:
(a) the transaction is:
(i) a payment made by the company; or
(ii) a conveyance, transfer or other disposition by the company of
property of the company; or
(iii) the issue of securities by the company; or
(iv) the incurring by the company of an obligation to make such a payment,
disposition or issue; and
(b) the payment, disposition or issue is, or is to be, made to:
(i) a director of the company; or
(ii) a close associate of a director of the company; or
(iii) a person on behalf of, or for the benefit of, a person mentioned in
subparagraph (i) or (ii); and
(c) it may be expected that a reasonable person in the company’s
circumstances would not have entered into the transaction, having regard
to:
(i) the benefits (if any) to the company of entering into the transaction;
and
(ii) the detriment to the company of entering into the transaction;
and
(iii) the respective benefits to other parties to the transaction of
entering into it; and
(iv) any other relevant matter.
The obligation referred to in subparagraph (a)(iv) may be a contingent
obligation.
Note: Subparagraph (a)(iv)—This would include,
for example, granting options over shares in the company.
(2) To avoid doubt, if:
(a) the transaction is a payment, disposition or issue; and
(b) the transaction is entered into for the purpose of meeting an
obligation the company has incurred;
the test in paragraph (1)(c) applies to the transaction taking into
account the circumstances as they exist at the time when the transaction is
entered into (rather than as they existed at the time when the obligation was
incurred).
(3) A transaction may be an unreasonable director-related transaction
because of subsection (1):
(a) whether or not a creditor of the company is a party to the
transaction; and
(b) even if the transaction is given effect to, or is required to be given
effect to, because of an order of an Australian court or a direction by an
agency.
4 Subsection 588FE(1)
Repeal the subsection, substitute:
(1) If a company is being wound up:
(a) a transaction of the company may be voidable because of any one or
more of subsections (2) to (6) if the transaction was entered into on or
after 23 June 1993; and
(b) a transaction of the company may be voidable because of
subsection (6A) if the transaction was entered into on or after the
commencement of the Corporations Amendment (Repayment of Directors’
Bonuses) Act 2002.
5 After subsection 588FE(6)
Insert:
(6A) The transaction is voidable if:
(a) it is an unreasonable director-related transaction of the company;
and
(b) it was entered into, or an act was done for the purposes of giving
effect to it:
(i) during the 4 years ending on the relation-back day; or
(ii) after that day but on or before the day when the winding up
began.
6 At the end of
section 588FF
Add:
(4) If the transaction is a voidable transaction solely because it is an
unreasonable director-related transaction, the court may make orders under
subsection (1) only for the purpose of recovering for the benefit of the
creditors of the company the difference between:
(a) the total value of the benefits provided by the company under the
transaction; and
(b) the value (if any) that it may be expected that a reasonable person in
the company’s circumstances would have provided having regard to the
matters referred to in paragraph 588FDA(1)(c).
7 Subsection 588FG(2)
After “unfair loan to the company”, insert “, or an
unreasonable director-related transaction of the company,”.