Commonwealth Numbered Acts

FIRST CORPORATE LAW SIMPLIFICATION ACT 1995 No. 115 of 1995 - SCHEDULE 2

                          SCHEDULE 2                      Section 3

Other share buy-back amendments 1. Section 9
Insert the following definitions:

"ASC" means the Australian Securities Commission;

"buy-back" by a company means the acquisition by the company of shares in
itself;

"buy-back agreement" by a company means an agreement by the company to buy
back its own shares (whether the agreement is conditional or not);

"employee share scheme buy-back" means a buy-back under a scheme that:

   (a)  has as its purpose the acquisition of shares in a company by or on
        behalf of participating employees; and

   (b)  has been approved by the company in general meeting; Note:
        "participating employee" is defined below in this section.

"equal access scheme" has the meaning given by subsections 206C(2) and (3);

"marketable parcel" of shares in a listed corporation means a marketable
parcel within the meaning of the rules of the relevant securities exchange;

"odd lot buy-back" means a buy-back of shares in a listed corporation if the
parcel of shares bought back is smaller than a marketable parcel;

"on-market buy-back" means a buy-back by a listed corporation at an official
meeting of a securities exchange in the ordinary course of trading on a stock
market of the exchange;

"selective buy-back" means a buy-back that is none of the following:

   (a)  a buy-back under an equal access scheme within the meaning of
        subsections 206C(2) and (3)

   (b)  an odd lot buy-back

   (c)  an on-market buy-back

   (d)  an employee share scheme buy-back; 2. Section 9 (paragraph (b) of the
        definition of "voting share")
After the paragraph, insert:

   (ba) on a resolution to approve the terms of a buy-back agreement; 3. After
        section 42
Insert: 42A Shares covered by buy-back agreements
For the purposes of Chapter 6, disregard any effect that a buy-back agreement
has on relevant interests in the shares being bought back. Note: This section
does not deal with the effect on relevant interests of the cancellation of
shares under subsection 206I(3). 4. Paragraph 191(2)(ea)
Omit, substitute:

   (ea) in providing for consideration payable by the company on a buy-back of
        its shares; or 5. After subsection 205(1)
Insert:

(1A) A buy-back authorised by section 206B does not contravene subparagraph
(1)(b)(i). 6. Subsection 206(1)
Omit, insert:

(1) Except as provided by this section, the validity of a contract or
transaction is not affected by a contravention of:

   (a)  paragraph 205(1)(a); or

   (b)  paragraph 205(1)(b)-unless the contract or transaction effects the
        acquisition that constitutes the contravention; or

   (c)  paragraph 205(1)(c)-unless the contract or transaction effects the
        acquisition that constitutes the contravention.

(1A) If the contract or transaction is constituted by:

   (a)  a buy-back of shares by a company; or

   (b)  the transfer of shares to a company under a buy-back; paragraph (1)(b)
        does not apply and the validity of a contract or transaction is not
        affected by a contravention of paragraph 205(1)(b) (even if the
        contract or transaction is the one that effects the acquisition that
        constitutes the contravention). 7. After section 553A
Insert: 553AA Selling shareholder cannot prove debt unless documents given
The selling shareholder in a share buy-back may claim in a winding up of the
company but is not entitled to a distribution of money or property unless the
shareholder has discharged the shareholder's obligations to give documents in
connection with the buy-back. Note: The selling shareholder's claim ranks
after those of non-member creditors and before those of other member creditors
(see section 563AA). 8. Section 553E
Omit "sections 206RD and 279", substitute "section 279". 9. After section 563
Insert: 563AA Seller under a buy-back agreement

(1) The selling shareholder's claim under a buy-back agreement is postponed
until all debts owed to people otherwise than as members of the company have
been satisfied.

(2) The shareholder's claim is not a debt owed by the company to the seller in
the shareholder's capacity as a member of the company for the purposes of
section 563A. 10. After subsection 568(1)
Insert:

(1AA) This section does not apply to an agreement by the company to buy back
its own shares. 11. After subsection 588G(1)
Insert:

(1A) For the purposes of this section, a company that buys back shares incurs
a debt (even if the consideration is not a sum certain in money). The debt is
incurred at the time when the buy-back agreement is entered into. 12. Section
603 (paragraph (b) of the definition of "prescribed occurrence")
After the paragraph, insert:

   (ba) the target company or a subsidiary:

        (i)    entering into a buy-back agreement; or

        (ii)   resolving to approve the terms of a buy-back agreement under
               subsection 206D(1) or 206E(1); 13. After section 632
Insert: 632A Acquisition by way of buy-back
Section 615 does not apply to a buy-back authorised by section 206B. 14.
Subsection 732(1)
Add at the end:
; or (e) a company carries out, or proposes to carry out, a buy-back that is
unreasonable having regard to:

        (i)    the effect of the buy-back on the control of that company or of
               another company; and

        (ii)   the fact that the disclosure and other procedural safeguards of
               this Chapter do not apply to the buy-back because of section
               632A. 15. After subsection 1324(1)
Insert:

(1A) For the purposes of subsection (1), a contravention of the Law affects
the interests of a creditor or member of a company if the insolvency of the
company is an element of the contravention. This subsection does not limit
subsection (1) in any way.