Commonwealth Numbered Acts

CORPORATIONS ACT 1989 No. 109 of 1989 - SECT 740

740. (1) Subject to subsection (4), this section applies to:

   (a)  an agreement entered into by a body corporate that is a corporation
        for the making of a payment by the body corporate to, or for the
        provision of a benefit by the body corporate for, a person who is a
        director, secretary or executive officer of the body corporate or of a
        body corporate that is related to the body corporate; or

   (b)  a payment or benefit made or provided by a body corporate that is a
        corporation, otherwise than under an agreement, to or for such a
        person; where the agreement is entered into or the payment or benefit
        is made or provided by the body corporate:

   (c)  if the body corporate is a company:

        (i)    before the end of 12 months after the day on which a Part A
               statement has been served on, or a takeover announcement has
               been made in respect of shares in, the body corporate; or

        (ii)   at a time when the directors of the body corporate have reason
               to believe that a takeover offer or takeover announcement is to
               be made in respect of shares in the body corporate; or

   (d)  if the body corporate is not a company:

        (i)    before the end of 12 months after the day on which a Part A
               statement has been served on, or a takeover announcement has
               been made in respect of shares in, a company that is related to
               the body corporate; or

        (ii)   at a time when the directors of the body corporate have reason
               to believe that a takeover offer or takeover announcement is to
               be made in respect of shares in a company that is related to
               the body corporate.

(2) Subject to subsection (4), this section also applies to:

   (a)  an agreement entered into by a body corporate that is not a
        corporation for the making of a payment by the body corporate to, or
        for the provision of a benefit by the body corporate for, a person who
        is a director, secretary or executive officer of the body corporate or
        of a body corporate that is related to the body corporate; or

   (b)  a payment or benefit made or provided by a body corporate that is not
        a corporation, otherwise than under an agreement, to or for such a
        person; where the agreement is entered into or the payment or benefit
        is made or provided by the body corporate:

   (c)  before the end of 12 months after the day on which a Part A statement
        has been served on, or a takeover announcement has been made in
        respect of shares in, a company, being a corporation, that is related
        to the body corporate; or

   (d)  at a time when the directors of the body corporate have reason to
        believe that a takeover offer or takeover announcement is to be made
        in respect of shares in a company, being a corporation, that is
        related to the body corporate.

(3) For the purposes of paragraphs (1) (a) and (2) (a), a body corporate that
enters into an agreement with a person for the employment of, or for the
performance of services by, that person for a fixed period shall be taken to
have entered into an agreement for the provision of a benefit for that person.

(4) This section does not apply to an agreement that has been entered into, or
to a payment or benefit that has been made or provided, by the company (in
this subsection called the "target company") to shares in which the Part A
statement or takeover announcement relates, or in respect of shares in which
the directors believe that a takeover offer or takeover announcement is to be
made, or by a body corporate that is related to the target company, if:

   (a)  the agreement, payment or benefit has been approved by an ordinary
        resolution of the target company (whether before or after the
        agreement was entered into or the payment or benefit was made or
        provided); and

   (b)  where the person who is entitled to receive, or has received, the
        payment or benefit, or an associate of that person, was a member of
        the target company when the resolution was passed-that member did not
        vote, either personally or by proxy, on the resolution.

(5) Where:

   (a)  a body corporate enters into an agreement, or makes or provides a
        payment or benefit, to which this section applies;

   (b)  an application for an order under this subsection is made to the Court
        by:

        (i)    the body corporate;

        (ii)   the Commission;

        (iii)  a person who holds, or persons who together hold, shares in the
               body corporate or in a related body corporate that represent
               not less than 10% of the total of the nominal values of the
               shares in the body corporate or in the related body corporate,
               as the case may be;

   (c)  the application is made within 12 months, or such longer period as the
        Court thinks reasonable in the circumstances, after the day on which
        the agreement was entered into, or the payment or benefit was made or
        provided, as the case may be; and

   (d)  the Court is satisfied that the entering into the agreement, or the
        making or provision of the payment or benefit, was unfair or
        unconscionable having regard to the interests of the body corporate;
        the Court may:

   (e)  in the case of an agreement:

        (i)    make an order declaring the agreement or any part of the
               agreement to be void and, if the Court thinks fit, to have
               always been void; and

        (ii)   if the Court thinks it just to do so-make an order directing
               any person to whom a payment was made or for whom a benefit was
               provided under the agreement, or another person specified in
               the order, to make a payment or transfer property to the body
               corporate or to do any other act for the benefit of the body
               corporate;

   (f)  in the case of a payment or benefit-if the Court thinks it just to do
        so, make an order directing the person to whom the payment was made or
        for whom the benefit was provided, or another person specified in the
        order, to make a payment or transfer property to the body corporate or
        to do any other act for the benefit of the body corporate; and

   (g)  in either case-make any other order that the Court thinks appropriate.