Commonwealth: Corporate Law Reform Act 1992 (Cth)

Corporate Law Reform Act 1992 No. 210 of 1992 TABLE OF PROVISIONS PART 1—PRELIMINARY Section 1. Short title 2. Commencement 3. Meaning of "Corporations Law" and "Principal Act" PART 2—DUTIES OF OFFICERS OF CORPORATIONS Division 1—Amendments of the Corporations Law 4. Dictionary 5. Insertion of new section: 73A. When a court is taken to find a person guilty of an offence 6. Being or becoming subject to a section 229 prohibition, a section 230 or 599 order, a section 600 notice or a civil penalty disqualification 7. Effect of such a prohibition, order, notice or disqualification 8. Vacation of office of director 9. Certain persons not to manage corporations 10. Court may order person not to manage corporation 11. Duty and liability of officer of corporation 12. Register of disqualified company directors and other officers 13. Public companies 14. Contravention of Part 15. References to civil penalty disqualification inserted in certain provisions 16. Penalty notices 17. Insertion of new Part: TABLE OF PROVISIONS—continued Section PART 9.4B—CIVIL AND CRIMINAL CONSEQUENCES OF CONTRAVENING CIVIL PENALTY PROVISIONS Division 1—Preliminary 1317DA. Civil penalty provisions 1317DB. Person involved in contravening a provision taken to have contravened the provision 1317DC. Contravention committed partly in, and partly out of, the jurisdiction 1317DD. Reciprocity in relation to contraventions Division 2—Civil penalty orders 1317EA. Court may make civil penalty orders 1317EB. Who may apply for civil penalty order 1317EC. Time limit for application 1317ED. Application for civil penalty order is a civil proceeding 1317EF. Person must comply with order not to manage corporation 1317EG. Enforcement of order to pay pecuniary penalty 1317EH. Commission may require a person to give assistance in connection with application for civil penalty order Division 3—Criminal proceedings 1317FA. When contravention of civil penalty provision is an offence 1317FB. Application for civil penalty order precludes later criminal proceedings Division 4—Effect of criminal proceedings on application for civil penalty order 1317GA. When Division applies 1317GB. Effect during criminal proceedings 1317GC. Final outcome precluding application for civil penalty order 1317GD. Final outcome not precluding application for civil penalty order 1317GE. After unsuccessful committal proceeding, court may preclude application for civil penalty order 1317GF. Application for civil penalty order based on alternative verdict at jury trial 1317GG. Application for civil penalty order based on alternative finding by court of summary jurisdiction 1317GH. Application for civil penalty order based on alternative finding by appeal court 1317GJ. After setting aside declaration, court may preclude application for civil penalty order 1317GK. On unsuccessful appeal against declaration, Court may make civil penalty orders 1317GL. Appeals under this Division Division 5—Compensation for loss suffered by corporation 1317HA. On application for civil penalty order, Court may order compensation 1317HB. Criminal court may order compensation 1317HC. Enforcement of order under section 1317HA or 1317HB 1317HD. Recovery of profits, and compensation for loss, resulting from contravention 1317HE. Effect of sections 1317HA, 1317HB and 1317HD 1317HF. Certificates evidencing contravention Division 6—Miscellaneous 1317JA. Relief from liability for contravention of civil penalty provision 1317JB. Effect of contravening civil penalty provisions of Corporations Law of 2 or more jurisdictions 1317JC. Part does not limit power to award punitive damages TABLE OF PROVISIONS—continued Section 18. Schedule 3 Division 2—Amendment of the Australian Securities Commission Act 1989 19. Recovery of expenses of investigation Division 3—Amendment of the Bankruptcy Act 1966 20. Debts provable in bankruptcy PART 3—FINANCIAL BENEFITS TO RELATED PARTIES OF PUBLIC COMPANIES 21. How to read references to provisions of this Law 22. Dictionary 23. Effect of certain contraventions of this Law 24. Directors to disclose certain interests 25. Insertion of new sections: 232A. Voting by interested director of public company 232B. Commission may exempt directors from section 232A in appropriate cases 26. Loans to directors 27. Insertion of new Part: PART 3.2A—FINANCIAL BENEFITS TO RELATED PARTIES OF PUBLIC COMPANIES Division 1—Object and outline of Part 243A. Object 243B. Outline Division 2—The meaning of expressions 243C. Entities 243D. Parent entities, child entities and sibling entities 243E. Control 243F. Related party of a public company 243G. Giving a financial benefit Division 3—The prohibitions 243H. Prohibited financial benefits to related parties of public companies Division 4—General exceptions 243J. Financial benefit under contract made before section 243H begins to apply 243K. Remunerating officers 243L. Advances, up to prescribed amount, to director or director's spouse 243M. Financial benefit given to or by closely-held subsidiary 243N. Financial benefit on arm's length terms 243PA. Financial benefits to members as such 243PB. Financial benefit under court order Division 5—Financial benefits approved by general meeting of public company Subdivision A—Exceptions from the prohibitions 243Q. Financial benefit permitted by resolution of members 243R. Financial benefit under contract permitted by resolution of members 243S. Resolution may specify matters by class or kind 243T. Effect of resolution TABLE OF PROVISIONS—continued Section Subdivision B—Conditions to be satisfied 243U. Company must lodge material that will be put to members 243V. Requirements for explanatory statement to members 243W. Commission may comment on proposed resolution 243X. Requirements for notice of meeting 243Y. Other material put to members 243ZA. Proposed resolution cannot be varied 243ZB. Voting on the resolution 243ZC. Notice of resolution to be lodged 243ZD. Declaration by Court of substantial compliance Division 6—Enforcement 243ZE. Consequences of giving financial benefit when not permitted 243ZF. Voting by or on behalf of related party interested in proposed resolution under Division 5 243ZG. Contraventions by an entity that is not a legal person 243ZH. Retaining records made under section 243ZB 243ZI. Effect of Part 28. Schedule 3 PART 4—EXTERNAL ADMINISTRATION OF COMPANIES AND PART 5.7 BODIES Division 1—Amendments of the Corporations Law 29. Dictionary 30. Affairs of a body corporate 31. Insertion of new sections: 53AA. Business affairs of a body corporate 53AB. Business affairs of a natural person. 53AC. Business affairs of a partnership 53AD. Business affairs of a trust 32. Insertion of new sections: 64A. Entities 64B. Entities connected with a corporation 33. Officers of bodies corporate and other entities 34. Insertion of new section: 95A. Solvency and insolvency 35. Interpretation 36. Duty and liability of officer of corporation 37. Substitution of Part heading 38. Application of Part 39. Insertion of new section: 418A. Court may declare whether controller is validly acting 40. Insertion of new section: 419A. Liability of controller under pre-existing agreement about property used by corporation 41. Insertion of new sections: 420A. Controller's duty of care in exercising power of sale 420B. Court may authorise managing controller to dispose of property despite prior charge 420C. Receiver's power to carry on corporation's business during winding up 42. Controller's duties in relation to bank accounts and accounting records 43. Insertion of new section: 421A. Managing controller to report within 2 months about corporation's affairs 44. Supervision of controller TABLE OF PROVISIONS—continued Section 45. Substitution of section: 424. Controller may apply to Court 46. Court's power to fix receiver's remuneration 47. Repeal of section 426 and substitution of new section: 426. Controller has qualified privilege in certain cases 48. Notification of matters relating to controller 49. Statement that receiver appointed or other controller acting 50. Officers to report to controller about corporation's affairs 51. Controller may require reports 52. Controller may inspect books 53. Lodging controller's accounts 54. Enforcing controller's duty to make returns 55. Insertion of new sections: 434A. Court may remove controller for misconduct 434B. Court may remove redundant controller 434C. Effect of sections 434A and 434B 56. Repeal of Part 5.3 and substitution of new Part: PART 5.3A—ADMINISTRATION OF A COMPANY'S AFFAIRS WITH A VIEW TO EXECUTING A DEED OF COMPANY ARRANGEMENT Division 1—Preliminary 435A. Object of Part 435B. Interpretation 435C. When administration begins and ends Division 2—Appointment of administrator and first meeting of creditors 436A. Company may appoint administrator if board thinks it is or will become insolvent 436B. Liquidator may appoint administrator 436C. Chargee may appoint administrator 436D. Company already under administration 436E. Purpose and timing of first meeting of creditors 436F. Functions of committee of creditors 436G. Membership of committee Division 3—Administrator assumes control of company's affairs 437A. Role of administrator 437B. Administrator acts as company's agent 437C. Powers of other officers suspended 437D. Only administrator can deal with company's property 437E. Order for compensation where officer involved in void transaction 437F. Effect of administration on company's members Division 4—Administrator investigates company's affairs 438A. Administrator to investigate affairs and consider possible courses of action 438B. Directors to help administrator 438C. Administrator's rights to company's books 438D. Reports by administrator Division 5—Meeting of creditors decides company's future 439A. Administrator to convene meeting and inform creditors 439B. Conduct of meeting 439C. What creditors may decide TABLE OF PROVISIONS—continued Section Division 6—Protection of company's property during administration 440A. Winding up company 440B. Charge unenforceable 440C. Owner or lessor cannot recover property used by company 440D. Stay of proceedings 440E. Administrator not liable in damages for refusing consent 440F. Suspension of enforcement process 440G. Duties of court officer in relation to property of company 440H. Lis pendens taken to exist. 440J. Administration not to trigger liability of director or relative under guarantee of company's liability Division 7—Rights of chargee, owner or lessor 441A. Where chargee acts before or during decision period 441B. Where enforcement of charge begins before administration 441C. Charge on perishable property 441D. Court may limit powers of chargee, etc. in relation to charged property 441E. Giving a notice under a charge 441F. Where recovery of property begins before administration 441G. Recovering perishable property 441H. Court may limit powers of receiver etc. in relation to property used by company 441J. Giving a notice under an agreement about property 441K. Effect of Division Division 8—Powers of administrator 442A. Additional powers of administrator 442B. Dealing with property subject to a floating charge that has crystallised 442C. When administrator may dispose of encumbered property 442D. Administrator's powers subject to powers of chargee, receiver etc. 442E. Administrator has qualified privilege 442F. Protection of persons dealing with administrator Division 9—Administrator's liability and indemnity for debts of administration Subdivision A—Liability 443A. General debts 443B. Payments for property used or occupied by, or in the possession of, the company 443C. Administrator not otherwise liable for company's debts Subdivision B—Indemnity 443D. Right of indemnity 443E. Right of indemnity has priority over other debts 443F. Lien to secure indemnity Division 10—Execution and effect of deed of company arrangement 444A. Effect of creditors' resolution 444B. Execution of deed 444C. Creditor etc. not to act inconsistently with deed before its execution 444D. Effect of deed on creditors 444E. Protection of company's property from persons bound by deed 444F. Court may limit rights of secured creditor or owner or lessor 444G. Effect of deed on company, officers and members 444H. Extent of release of company's debts TABLE OF PROVISIONS—continued Section Division 11—Variation, termination and avoidance of deed 445A. Variation of deed by creditors 445B. Court may cancel variation 445C. When deed terminates 445D. When Court may terminate deed 445E. Creditors may terminate deed and resolve that company be wound up 445F. Meeting of creditors to consider proposed variation or termination of deed 445G. When Court may void or validate deed 445H. Effect of termination or avoidance Division 12—Transition to creditors' voluntary winding up 446A. Administrator becomes liquidator in certain cases 446B. Regulations may provide for transition in other cases Division 13—Powers of Court 447A. General power to make orders 447B. Orders to protect creditors during administration 447C. Court may declare whether administrator validly appointed 447D. Administrator may seek directions 447E. Supervision of administrator of company or deed 447F. Effect of Division Division 14—Qualifications of administrators 448A. Appointee must consent 448B. Administrator must be registered liquidator 448C. Disqualification of person connected with company 448D. Disqualification of insolvent under administration Division 15—Removal, replacement and remuneration of administrator 449A. Appointment of administrator cannot be revoked 449B. Court may remove administrator 449C. Vacancy in office of administrator of company 449D. Vacancy in office of administrator of deed of company arrangement 449E. Remuneration of administrator Division 16—Notices about steps taken under Part 450A. Appointment of administrator 450B. Execution of deed of company arrangement 450C. Failure to execute deed of company arrangement 450D. Termination of deed of company arrangement 450E. Notice in public documents etc. of company 450F. Effect of contravention of this Division Division 17—Miscellaneous 451A. Appointment of 2 or more administrators of company 451B. Appointment of 2 or more administrators of deed of company arrangement 451C. Effect of things done during administration of company 451D. Time for doing act does not run while act prevented by this Part 57. Insertion of new Part and heading: TABLE OF PROVISIONS—continued Section PART 5.4—WINDING UP IN INSOLVENCY Division 1—When company to be wound up in insolvency 459A. Order that insolvent company be wound up in insolvency 459B. Order made on application under section 260, 462 or 464 459C. Presumptions to be made in certain proceedings 459D. Contingent or prospective liability relevant to whether company solvent Division 2—Statutory demand 459E. Creditor may serve statutory demand on company 459F. When company taken to fail to comply with statutory demand Division 3—Application to set aside statutory demand 459G. Company may apply 459H. Determination of application where there is a dispute or offsetting claim 459J. Setting aside demand on other grounds 459K. Effect of order setting aside demand 459L. Dismissal of application 459M. Order subject to conditions 459N. Costs where company successful Division 4—Application for order to wind up company in insolvency 459P. Who may apply for order under section 459A 459Q. Application relying on failure to comply with statutory demand 459R. Period within which application must be determined 459S. Company may not oppose application on certain grounds 459T. Application to wind up joint debtors in insolvency PART 5.4A—WINDING UP BY THE COURT ON OTHER GROUNDS 58. Repeal of section 460 59. General grounds on which company may be wound up by Court 60. Standing to apply for winding up 61. Repeal of section 463 62. Repeal of section 465 and substitution of headings and new section: PART 5.4B—WINDING UP IN INSOLVENCY OR BY THE COURT Division 1—General 465A. Notice of application 465B. Substitution of applicants 465C. Applicant to be given notice of grounds for opposing application 63. Court's powers on hearing application 64. Insertion of new sections: 467A. Effect of defect or irregularity on application under Part 5.4 or 5.4A 467B. Court may order winding up of company that is being wound up voluntarily 65. Avoidance of dispositions of property, attachments etc. 66. Insertion of Division heading 67. Effect on creditors and contributories 68. Insertion of new sections: 471A. Powers of other officers suspended during winding up 471B. Stay of proceedings and suspension of enforcement process 471C. Secured creditor's rights not affected TABLE OF PROVISIONS—continued Section 69. Court to appoint official liquidator 70. General provisions about liquidators 71. Custody and vesting of company's property 72. References to liquidator in certain provisions to include references to provisional liquidator 73. Powers of liquidator 74. Application of property; list of contributories 75. Orders for release or dissolution 76. Delivery of property to liquidator 77. Insertion of new sections: 486A. Court may make order to prevent officer or related entity from avoiding liability to company 486B. Warrant to arrest person who is absconding, or who has dealt with property or books, in order to avoid obligations in connection with winding up 78. Delegation to liquidator of certain powers of Court 79. Insertion of new section: 490. When company cannot wind up voluntarily 80. Repeal of section 492 81. Duty of liquidator where company turns out to be insolvent 82. Powers and duties of liquidator 83. Arrangement: when binding on creditors 84. Application of Part 85. Insertion of new Division: Division 1A—When winding up taken to begin 513A. Winding up ordered by the Court 513B. Voluntary winding up 513C. Section 513C day in relation to an administration under Part 5.3A 513D. Validity of proceedings in earlier winding up 86. Repeal of section 525 87. Insertion of new sections: 530A. Officers to help liquidator 530B. Liquidator's rights to company's books 530C. Warrant to search for, and seize, company's property or books 88. Books to be kept by liquidator 89. Disqualification of liquidator 90. When liquidator has qualified privilege 91. Books of company 92. Repeal of section 553 and substitution of headings and sections: Subdivision A—Admission to proof of debts and claims 553. Debts or claims that are provable in winding up 553A. Member cannot prove debt unless contributions paid 553B. Insolvent companies—penalties and fines not generally provable 553C. Insolvent companies—mutual credit and set-off 553D. Debts or claims may be proved formally or informally 553E. Application of Bankruptcy Act to winding up of insolvent company Subdivision B—Computation of debts and claims 93. General rule—compute amount as at relevant date 94. Insertion of sections and headings: 554A. Determination of value of debts and claims of uncertain value 554B. Discounting of debts payable after relevant date 554C. Conversion into Australian currency of foreign currency debts or claims Subdivision C—Special provisions relating to secured creditors of insolvent companies 554D. Application of Subdivision TABLE OF PROVISIONS—continued Section 554E. Proof of debt by secured creditor 554F. Redemption of security by liquidator 554G. Amendment of valuation 554H. Repayment of excess 554J. Subsequent realisation of security Subdivision D—Priorities 95. Debts and claims proved to rank equally except as otherwise provided 96. Priority payments 97. Repeal of section 557 98. Debts of a class to rank equally 99. Advances for company to make priority payments in respect of employees 100. Application of proceeds of contracts of insurance 101. Insertion of new section: 562A. Application of proceeds of contracts of reinsurance 102. Insertion of new sections and heading: 563A. Member's debts to be postponed until other debts and claims satisfied Subdivision E—Miscellaneous 563B. Interest on debts and claims from relevant date to date of payment 563C. Debt subordination 103. Substitution of heading 104. Undue preference 105. Effect of floating charge 106. Liquidator's right to recover in respect of certain transactions 107. Insertion of heading 108. Disclaimer by liquidator; application to Court by party to contract 109. Insertion of new sections and heading: 568A. Liquidator must give notice of disclaimer 568B. Application to set aside disclaimer before it takes effect 568C. When disclaimer takes effect 568D. Effect of disclaimer 568E. Application to set aside disclaimer after it has taken effect 568F. Court may dispose of disclaimed property Division 7B—Effect on enforcement process against company's property 110. Insertion of new headings and new sections: Division 1—Application of Part 5.3A to matters arising under corresponding laws 588AA. Application in this jurisdiction 588AB. Enforcement of orders Division 2—Winding up recognised companies 111. Insertion of new Part: PART 5.7B—RECOVERING PROPERTY OR COMPENSATION FOR THE BENEFIT OF CREDITORS OF INSOLVENT COMPANY Division 1—Preliminary 588D. Secured debt may become unsecured 588E. Presumptions to be made in recovery proceedings Division 2—Voidable transactions 588FA. Unfair preferences 588FB. Uncommercial transactions 588FC. Insolvent transactions 588FD. Unfair loans to a company 588FE. Voidable transactions TABLE OF PROVISIONS—continued Section 588FF. Court may make orders about voidable transactions 588FG. Transaction not voidable as against certain persons 588FH. Liquidator may recover from related entity benefit resulting from insolvent transaction 588FI. Creditor who gives up benefit of unfair preference may prove for preferred debt 588FJ. Floating charge created within 6 months before relation-back day Division 3—Director's duty to prevent insolvent trading 588G. Director's duty to prevent insolvent trading by company 588H. Defences Division 4—Director liable to compensate company Subdivision A—Proceedings against director 588J. On application for civil penalty order, Court may order compensation 588K. Criminal court may order compensation 588L. Enforcement of order under section 588J or 588K 588M. Recovery of compensation for loss resulting from insolvent trading 588N. Avoiding double recovery 588P. Effect of sections 588J, 588K and 588M 588Q. Certificates evidencing contravention Subdivision B—Proceedings by creditor 588R. Creditor may sue for compensation with liquidator's consent 588S. Creditor may give liquidator notice of intention to sue for compensation 588T. When creditor may sue for compensation without liquidator's consent 588U. Events preventing creditor from suing Division 5—Liability of holding company for insolvent trading by subsidiary 588V. When holding company liable 588W. Recovery of compensation for loss resulting from insolvent trading 588X. Defences Division 6—Application of compensation under Division 4 or 5 588Y. Application of amount paid as compensation Division 7—Person managing company while disqualified may become liable for company's debts 588Z. Court may make order imposing liability 112. Interpretation and application 113. Offences by officers of certain companies 114. Incurring of certain debts; fraudulent conduct 115. Inducement to be appointed liquidator etc. of company 116. Insertion of heading and new sections: Division 1—Examining a person about a corporation 596A. Mandatory examination 596B. Discretionary examination 596C. Affidavit in support of application under section 596B 596D. Content of summons 596E. Notice of examination 596F. Court may give directions about examination 117. Conduct of examination 118. Insertion of new sections and heading: 597A. When Court is to require affidavit about corporation's examinable affairs 597B. Costs of unnecessary examination or affidavit TABLE OF PROVISIONS—continued Section Division 2—Orders against a person in relation to a corporation 119. Order against person concerned with corporation 120. Insertion of new Division and heading: Division 3—Provisions applying to various kinds of external administration 600A. Powers of Court where outcome of voting at creditors' meeting determined by related entity 600B. Review by Court of resolution of creditors passed on casting vote of chairperson of meeting 600C. Court's powers where proposed resolution of creditors lost on casting vote of chairperson of meeting 600D. Interim order on application under section 600A, 600B or 600C 600E. Order under section 600A or 600B does not affect act already done pursuant to resolution 600F. Limitation on right of suppliers of essential services to insist on payment as condition of supply Division 4—Transitional 121. Insertion of new section: 1091A. Rights of trustee of estate of bankrupt shareholder 122. Schedule 3 123. Consequential amendments of the Corporations Law Division 2—Consequential amendment of the Australian Securities Commission Act 1989 124. Interpretation Division 3—Consequential amendments of other Acts 125. Schedule 2 PART 5—IMPLEMENTING THE CLEARING HOUSE SUBREGISTER SYSTEM 126. Dictionary 127. Application not to be granted unless applications also made under corresponding laws 128. Insertion of new Part: PART 7.2A—THE SECURITIES CLEARING HOUSE 779A. Interpretation 779B. Approval of securities clearing house