Corporations Act 2001 Act No. 50 of 2001 as amended This compilation was prepared on 16 July 2008 taking into account amendments up to Act No. 73 of 2008 Volume 2 includes: Table of Contents Chapters 2L-5B (ss. 283AA - 601DJ) The text of any of those amendments not in force on that date is appended in the Notes section The operation of amendments that have been incorporated may be affected by application provisions that are set out in the Notes section Contents Chapter 2L-Debentures 1 Part 2L.1-Requirement for trust deed and trustee 1 283AA Requirement for trust deed and trustee 1 283AB Trust deed 2 283AC Who can be a trustee 2 283AD Existing trustee continues to act until new trustee takes office 3 283AE Replacement of trustee 3 Part 2L.2-Duties of borrower 5 283BA Duties of borrower 5 283BB General duties 5 283BC Duty to notify ASIC of name of trustee 5 283BD Duty to replace trustee 6 283BE Duty to inform trustee about charges 6 283BF Duty to give trustee and ASIC quarterly reports 6 283BG Exceptions 9 283BH How debentures may be described 9 283BI Offences for failure to comply with statutory duties 10 Part 2L.3-Duties of guarantor 11 283CA Duties of guarantor 11 283CB General duties 11 283CC Duty to inform trustee about charges 11 283CD Exceptions 12 283CE Offences for failure to comply with statutory duties 12 Part 2L.4-Trustee 13 283DA Trustee's duties 13 283DB Exemptions and indemnifications of trustee from liability 14 283DC Indemnity 15 Part 2L.5-Meetings of debenture holders 16 283EA Borrower's duty to call meeting 16 283EB Trustee's power to call meeting 17 283EC Court may order meeting 17 Part 2L.6-Civil liability 19 283F Civil liability for contravening this Chapter 19 Part 2L.7-ASIC powers 20 283GA ASIC's power to exempt and modify 20 283GB ASIC may approve body corporate to be trustee 21 Part 2L.8-Court 22 283HA General Court power to give directions and determine questions 22 283HB Specific Court powers 22 Part 2L.9-Location of other debenture provisions 24 283I Signpost to other debenture provisions 24 Chapter 2M-Financial reports and audit 25 Part 2M.1-Overview 25 285 Overview of obligations under this Chapter 25 Part 2M.2-Financial records 28 286 Obligation to keep financial records 28 287 Language requirements 28 288 Physical format 29 289 Place where records are kept 29 290 Director access 30 291 Signposts to other relevant provisions 30 Part 2M.3-Financial reporting 32 Division 1-Annual financial reports and directors' reports 32 292 Who has to prepare annual financial reports and directors' reports 32 293 Small proprietary company-shareholder direction 32 294 Small proprietary company-ASIC direction 33 295 Contents of annual financial report 33 295A Declaration in relation to listed entity's financial statements by chief executive officer and chief financial officer 35 296 Compliance with accounting standards and regulations 36 297 True and fair view 37 298 Annual directors' report 37 299 Annual directors' report-general information 38 299A Annual directors' report-additional general requirements for listed public companies 39 300 Annual directors' report-specific information 40 300A Annual directors' report-specific information to be provided by listed companies 46 301 Audit of annual financial report 50 Division 2-Half-year financial report and directors' report 51 302 Disclosing entity must prepare half-year financial report and directors' report 51 303 Contents of half-year financial report 51 304 Compliance with accounting standards and regulations 52 305 True and fair view 52 306 Half-year directors' report 53 Division 3-Audit and auditor's report 54 307 Audit 54 307A Audit to be conducted in accordance with auditing standards 54 307B Audit working papers to be retained for 7 years 55 307C Auditor's independence declaration 57 308 Auditor's report on annual financial report 60 309 Auditor's report on half-year financial report 61 310 Auditor's power to obtain information 62 311 Reporting to ASIC 62 312 Assisting auditor 65 313 Special provisions on audit of debenture issuers and guarantors 66 Division 4-Annual financial reporting to members 67 314 Annual financial reporting to members 67 315 Deadline for reporting to members 69 316 Member's choices for annual financial information 70 317 Consideration of reports at AGM 71 318 Additional reporting by debenture issuers 71 Division 5-Lodging reports with ASIC 73 319 Lodgment of annual reports with ASIC 73 320 Lodgment of half-year reports with ASIC 73 321 ASIC power to require lodgment 73 322 Relodgment if financial statements or directors' reports amended after lodgment 74 Division 6-Special provisions about consolidated financial statements 75 323 Directors and officers of controlled entity to give information 75 323A Auditor's power to obtain information from controlled entity 75 323B Controlled entity to assist auditor 75 323C Application of Division to entity that has ceased to be controlled 76 Division 7-Financial years and half-years 77 323D Financial years and half-years 77 Division 8-Disclosure by listed companies of information filed overseas 79 323DA Listed companies to disclose information filed overseas 79 Division 9-Reference of financial report to the Financial Reporting Panel 80 Subdivision A-Preliminary 80 323EA Financial reports to which Division applies 80 323EB Referral of financial report to Financial Reporting Panel 80 Subdivision B-Referral by ASIC 81 323EC ASIC may refer financial report to the Financial Reporting Panel 81 323ED ASIC to notify lodging entity of proposed referral 81 323EE Lodging entity to respond to ASIC notice 81 323EF Referral to Financial Reporting Panel 82 Subdivision C-Referral by lodging entity 83 323EG Lodging entity may refer financial report to the Financial Reporting Panel with ASIC's consent 83 323EH Lodging entity to apply to ASIC for consent to proposed referral 84 323EI Referral to Financial Reporting Panel 85 Subdivision D-Financial Reporting Panel dealing with reference 85 323EJ Financial Reporting Panel to obtain submissions from ASIC and lodging entity 85 323EK Financial Reporting Panel to consider and report on financial report referred to it under section 323EC or 323EG 86 323EL Power of Financial Reporting Panel to dismiss referral 87 323EM Court, or tribunal of fact, may have regard to Financial Reporting Panel report 87 Part 2M.4-Appointment and removal of auditors 88 Division 1-Entities that may be appointed as an auditor for a company or registered scheme 88 324AA Individual auditors, audit firms and authorised audit companies 88 324AB Effect of appointing firm as auditor-general 88 324AC Effect of appointing firm as auditor-reconstitution of firm 89 324AD Effect of appointing company as auditor 90 324AE Professional members of the audit team 91 324AF Lead and review auditors 91 Division 2-Registration requirements 92 324BA Registration requirements for appointment of individual as auditor 92 324BB Registration requirements for appointment of firm as auditor 92 324BC Registration requirements for appointment of company as auditor 94 324BD Exception from registration requirement for proprietary company 95 Division 3-Auditor independence 97 Subdivision A-General requirement 97 324CA General requirement for auditor independence-auditors 97 324CB General requirement for auditor independence-member of audit firm 100 324CC General requirement for auditor independence-director of audit company 103 324CD Conflict of interest situation 107 Subdivision B-Specific requirements 108 324CE Auditor independence-specific requirements for individual auditor 108 324CF Auditor independence-specific requirements for audit firm 113 324CG Auditor independence-specific requirements for audit company 119 324CH Relevant relationships 126 324CI Special rule for retiring partners of audit firms and retiring directors of authorised audit companies 132 324CJ Special rule for retiring professional member of audit company 133 324CK Multiple former audit firm partners or audit company directors 133 Subdivision C-Common provisions 134 324CL People who are regarded as officers of a company for the purposes of this Division 134 Division 4-Deliberately disqualifying auditor 136 324CM Deliberately disqualifying auditor 136 Division 5-Auditor rotation for listed companies 138 324DA Limited term for eligibility to play significant role in audit of a listed company or listed registered scheme 138 324DB Individual's rotation obligation 139 324DC Audit firm's rotation obligation 139 324DD Audit company's rotation obligation 140 Division 6-Appointment, removal and fees of auditors for companies 143 Subdivision A-Appointment of company auditors 143 325 Appointment of auditor by proprietary company 143 327A Public company auditor (initial appointment of auditor) 143 327B Public company auditor (annual appointments at AGMs to fill vacancies) 143 327C Public company auditor (appointment to fill casual vacancy) 145 327D Appointment to replace auditor removed from office 145 327E ASIC may appoint public company auditor if auditor removed but not replaced 146 327F ASIC's general power to appoint public company auditor 147 327G Restrictions on ASIC's powers to appoint public company auditor 147 327H Effect on appointment of public company auditor of company beginning to be controlled by a corporation 148 327I Remaining auditors may act during vacancy 148 328A Auditor's consent to appointment 148 328B Nomination of auditor 149 Subdivision B-Removal and resignation of company auditors 150 329 Removal and resignation of auditors 150 330 Effect of winding up on office of auditor 152 Subdivision C-Company auditors' fees and expenses 152 331 Fees and expenses of auditors 152 Division 7-Appointment, removal and fees of auditors for registered schemes 153 Subdivision A-Appointment of registered scheme auditors 153 331AAA Registered scheme auditor (initial appointment of auditor) 153 331AAB Registered scheme auditor (appointment to fill vacancy) 155 331AAC ASIC's power to appoint registered scheme auditor 155 331AAD Remaining auditors may act during vacancy 155 Subdivision B-Removal and resignation of registered scheme auditors 155 331AC Removal and resignation of auditors 155 331AD Effect of winding up on office of auditor 157 Subdivision C-Fees and expenses of auditors 157 331AE Fees and expenses of auditors 157 Part 2M.5-Accounting and auditing standards 158 334 Accounting standards 158 335 Equity accounting 158 336 Auditing standards 158 337 Interpretation of accounting and auditing standards 159 338 Evidence of text of accounting standard or auditing standard 159 Part 2M.6-Exemptions and modifications 160 340 Exemption orders-companies, registered schemes and disclosing entities 160 341 Exemption orders-class orders for companies, registered schemes and disclosing entities 160 342 Exemption orders-criteria for orders for companies, registered schemes and disclosing entities 161 342AA Exemption orders-non-auditor members and former members of audit firms; former employees of audit companies 162 342AB Exemption orders-class orders for non-auditor members etc. 163 342AC Exemption orders-criteria for orders for non-auditor members etc. 163 342A ASIC's power to modify the operation of section 324DA 163 342B Auditor to notify company or registered scheme of section 342A declaration 165 343 Modification by regulations 165 Part 2M.7-Sanctions for contraventions of Chapter 166 344 Contravention of Part 2M.2 or 2M.3 166 Chapter 2N-Updating ASIC information about companies and registered schemes 167 Part 2N.1-Review date 167 345A Review date 167 345B Company or responsible entity may change review date 168 345C When choice has effect 168 Part 2N.2-Extract of particulars 169 346A ASIC must give an extract of particulars each year 169 346B ASIC may ask questions 169 346C Requirements in relation to an extract of particulars 169 Part 2N.3-Solvency resolution 171 347A Directors must pass a solvency resolution after each review date 171 347B Notice to ASIC 171 347C Payment of review fee is taken to be a representation by the directors that the company is solvent 172 Part 2N.4-Return of particulars 173 348A ASIC may give a return of particulars 173 348B ASIC may ask questions 173 348C ASIC may require a solvency resolution and statement 173 348D General requirements in relation to a return of particulars 174 Part 2N.5-Notice by proprietary companies of changes to ultimate holding company 176 349A Proprietary companies must notify ASIC of changes to ultimate holding company 176 349B Another company becomes an ultimate holding company 176 349C A company ceases to be an ultimate holding company 176 349D Ultimate holding company changes its name 177 Chapter 2P-Lodgments with ASIC 178 350 Forms for documents to be lodged with ASIC 178 351 Signing documents lodged with ASIC 179 352 Documents lodged with ASIC electronically 179 353 Electronic lodgment of certain documents 179 354 Telephone notice of certain changes 180 Chapter 5-External administration 181 Part 5.1-Arrangements and reconstructions 181 410 Interpretation 181 411 Administration of compromises etc. 181 412 Information as to compromise with creditors 188 413 Provisions for facilitating reconstruction and amalgamation of Part 5.1 bodies 190 414 Acquisition of shares of shareholders dissenting from scheme or contract approved by majority 191 415 Notification of appointment of scheme manager and power of Court to require report 195 Part 5.2-Receivers, and other controllers, of property of corporations 196 416 Definitions 196 417 Application of Part 196 418 Persons not to act as receivers 197 418A Court may declare whether controller is validly acting 197 419 Liability of controller 198 419A Liability of controller under pre-existing agreement about property used by corporation 199 420 Powers of receiver 200 420A Controller's duty of care in exercising power of sale 202 420B Court may authorise managing controller to dispose of property despite prior charge 202 420C Receiver's power to carry on corporation's business during winding up 204 421 Managing controller's duties in relation to bank accounts and financial records 204 421A Managing controller to report within 2 months about corporation's affairs 205 422 Reports by receiver or managing controller 206 423 Supervision of controller 207 424 Controller may apply to Court 208 425 Court's power to fix receiver's remuneration 209 426 Controller has qualified privilege in certain cases 211 427 Notification of matters relating to controller 211 428 Statement that receiver appointed or other controller acting 212 429 Officers to report to controller about corporation's affairs 212 430 Controller may require reports 214 431 Controller may inspect books 215 432 Lodging controller's accounts 215 433 Payment of certain debts, out of property subject to floating charge, in priority to claims under charge 217 434 Enforcing controller's duty to make returns 219 434A Court may remove controller for misconduct 219 434B Court may remove redundant controller 220 434C Effect of sections 434A and 434B 221 434D Appointment of 2 or more receivers of property of a corporation 221 434E Appointment of 2 or more receivers and managers of property of a corporation 221 434F Appointment of 2 or more controllers of property of a corporation 222 434G Appointment of 2 or more managing controllers of property of a corporation 222 Part 5.3A-Administration of a company's affairs with a view to executing a deed of company arrangement 223 Division 1-Preliminary 223 435A Object of Part 223 435B Definitions 223 435C When administration begins and ends 223 Division 2-Appointment of administrator and first meeting of creditors 225 436A Company may appoint administrator if board thinks it is or will become insolvent 225 436B Liquidator may appoint administrator 225 436C Chargee may appoint administrator 226 436D Company already under administration 226 436DA Declarations by administrator-indemnities and relevant relationships 226 436E Purpose and timing of first meeting of creditors 228 436F Functions of committee of creditors 229 436G Membership of committee 229 Division 3-Administrator assumes control of company's affairs 230 437A Role of administrator 230 437B Administrator acts as company's agent 230 437C Powers of other officers suspended 230 437D Only administrator can deal with company's property 231 437E Order for compensation where officer involved in void transaction 232 437F Effect of administration on company's members 232 Division 4-Administrator investigates company's affairs 236 438A Administrator to investigate affairs and consider possible courses of action 236 438B Directors to help administrator 236 438C Administrator's rights to company's books 237 438D Reports by administrator 238 438E Administrator's accounts 239 Division 5-Meeting of creditors decides company's future 241 439A Administrator to convene meeting and inform creditors 241 439B Conduct of meeting 243 439C What creditors may decide 243 Division 6-Protection of company's property during administration 244 440A Winding up company 244 440B Charge unenforceable 244 440BA Liens and pledges 244 440BB Distress for rent must not be carried out 245 440C Owner or lessor cannot recover property used by company 245 440D Stay of proceedings 245 440E Administrator not liable in damages for refusing consent 245 440F Suspension of enforcement process 246 440G Duties of court officer in relation to property of company 246 440H Lis pendens taken to exist 247 440J Administration not to trigger liability of director or relative under guarantee of company's liability 247 440JA Property subject to a banker's lien-exemption from this Division 248 Division 7-Rights of chargee, lienee, pledgee, owner or lessor 250 441A Where chargee acts before or during decision period 250 441B Where enforcement of charge begins before administration 251 441C Charge on perishable property 251 441D Court may limit powers of chargee etc. in relation to charged property 252 441E Giving a notice under a charge 253 441F Where recovery of property begins before administration 253 441G Recovering perishable property 253 441H Court may limit powers of receiver etc. in relation to property used by company 254 441J Giving a notice under an agreement about property 254 441JA Sale of property subject to a lien or pledge 254 441K Effect of Division 255 Division 8-Powers of administrator 256 442A Additional powers of administrator 256 442B Dealing with property subject to a floating charge that has crystallised 256 442C When administrator may dispose of encumbered property 256 442CA Property subject to a lien or pledge-inspection or examination by potential purchasers etc. 258 442CB Property subject to a lien or pledge or to a retention of title clause-administrator's duty of care in exercising power of sale 258 442CC Proceeds of sale of property 259 442D Administrator's powers subject to powers of chargee, receiver etc. 261 442E Administrator has qualified privilege 261 442F Protection of persons dealing with administrator 261 Division 9-Administrator's liability and indemnity for debts of administration 263 Subdivision A-Liability 263 443A General debts 263 443B Payments for property used or occupied by, or in the possession of, the company 263 443BA Certain taxation liabilities 265 443C Administrator not otherwise liable for company's debts 265 Subdivision B-Indemnity 265 443D Right of indemnity 265 443E Right of indemnity has priority over other debts 266 443F Lien to secure indemnity 267 Division 10-Execution and effect of deed of company arrangement 269 444A Effect of creditors' resolution 269 444B Execution of deed 270 444C Creditor etc. not to act inconsistently with deed before its execution 270 444D Effect of deed on creditors 271 444DA Giving priority to eligible employee creditors 271 444DB Superannuation contribution debts not admissible to proof 273 444E Protection of company's property from persons bound by deed 274 444F Court may limit rights of secured creditor or owner or lessor 274 444G Effect of deed on company, officers and members 275 444GA Transfer of shares 276 444H Extent of release of company's debts 276 444J Guarantees and indemnities 276 Division 11-Variation, termination and avoidance of deed 277 445A Variation of deed by creditors 277 445B Court may cancel variation 277 445C When deed terminates 277 445CA When creditors may terminate deed 278 445D When Court may terminate deed 278 445E Creditors may terminate deed and resolve that company be wound up 279 445F Meeting of creditors to consider proposed variation or termination of deed 279 445FA Notice of termination of deed 280 445G When Court may void or validate deed 280 445H Effect of termination or avoidance 281 Division 11A-Deed administrator's accounts 282 445J Deed administrator's accounts 282 Division 12-Transition to creditors' voluntary winding up 284 446A Administrator becomes liquidator in certain cases 284 446B Regulations may provide for transition in other cases 285 446C Liquidator may require submission of a report about the company's affairs 286 Division 13-Powers of Court 288 447A General power to make orders 288 447B Orders to protect creditors during administration 288 447C Court may declare whether administrator validly appointed 289 447D Administrator may seek directions 289 447E Supervision of administrator of company or deed 289 447F Effect of Division 290 Division 14-Qualifications of administrators 291 448A Appointee must consent 291 448B Administrator must be registered liquidator 291 448C Disqualification of person connected with company 291 448D Disqualification of insolvent under administration 293 Division 15-Removal, replacement and remuneration of administrator 294 449A Appointment of administrator cannot be revoked 294 449B Court may remove administrator 294 449C Vacancy in office of administrator of company 294 449CA Declarations by administrator-indemnities and relevant relationships 296 449D Vacancy in office of administrator of deed of company arrangement 297 449E Remuneration of administrator 298 Division 16-Notices about steps taken under Part 302 450A Appointment of administrator 302 450B Execution of deed of company arrangement 303 450C Failure to execute deed of company arrangement 303 450D Termination of deed of company arrangement 303 450E Notice in public documents etc. of company 303 450F Effect of contravention of this Division 304 Division 17-Miscellaneous 305 451A Appointment of 2 or more administrators of company 305 451B Appointment of 2 or more administrators of deed of company arrangement 305 451C Effect of things done during administration of company 306 451D Time for doing act does not run while act prevented by this Part 306 Part 5.4-Winding up in insolvency 307 Division 1-When company to be wound up in insolvency 307 459A Order that insolvent company be wound up in insolvency 307 459B Order made on application under section 234, 462 or 464 307 459C Presumptions to be made in certain proceedings 307 459D Contingent or prospective liability relevant to whether company solvent 308 Division 2-Statutory demand 309 459E Creditor may serve statutory demand on company 309 459F When company taken to fail to comply with statutory demand 310 Division 3-Application to set aside statutory demand 311 459G Company may apply 311 459H Determination of application where there is a dispute or offsetting claim 311 459J Setting aside demand on other grounds 313 459K Effect of order setting aside demand 313 459L Dismissal of application 313 459M Order subject to conditions 313 459N Costs where company successful 313 Division 4-Application for order to wind up company in insolvency 314 459P Who may apply for order under section 459A 314 459Q Application relying on failure to comply with statutory demand 314 459R Period within which application must be determined 315 459S Company may not oppose application on certain grounds 315 459T Application to wind up joint debtors in insolvency 316 Part 5.4A-Winding up by the Court on other grounds 317 461 General grounds on which company may be wound up by Court 317 462 Standing to apply for winding up 318 464 Application for winding up in connection with investigation under ASIC Act 319 Part 5.4B-Winding up in insolvency or by the Court 320 Division 1-General 320 465A Notice of application 320 465B Substitution of applicants 320 465C Applicant to be given notice of grounds for opposing application 321 466 Payment of preliminary costs etc. 321 467 Court's powers on hearing application 321 467A Effect of defect or irregularity on application under Part 5.4 or 5.4A 323 467B Court may order winding up of company that is being wound up voluntarily 323 468 Avoidance of dispositions of property, attachments etc. 323 468A Effect of winding up on company's members 324 469 Application to be lis pendens 327 470 Certain notices to be lodged 327 Division 1A-Effect of winding up order 329 471 Effect on creditors and contributories 329 471A Powers of other officers suspended during winding up 329 471B Stay of proceedings and suspension of enforcement process 330 471C Secured creditor's rights not affected 330 Division 2-Court-appointed liquidators 331 472 Court to appoint official liquidator 331 473 General provisions about liquidators 331 474 Custody and vesting of company's property 335 475 Report as to company's affairs to be submitted to liquidator 335 476 Preliminary report by liquidator 337 477 Powers of liquidator 337 478 Application of property; list of contributories 340 479 Exercise and control of liquidator's powers 341 480 Release of liquidator and deregistration of company 341 481 Orders for release or deregistration 342 Division 3-General powers of Court 344 Subdivision A-General powers 344 482 Power to stay or terminate winding up 344 483 Delivery of property to liquidator 345 484 Appointment of special manager 347 485 Claims of creditors and distribution of property 347 486 Inspection of books by creditors and contributories 347 486A Court may make order to prevent officer or related entity from avoiding liability to company 348 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 350 487 Power to arrest absconding contributory 350 488 Delegation to liquidator of certain powers of Court 351 489 Powers of Court cumulative 351 Subdivision B-Procedures relating to section 486B warrants 351 489A Arrest of person subject to warrant 351 489B Procedure after arrest 352 489C Procedure on remand on bail 352 489D Court's power to make orders under section 486A, 598 or 1323 353 489E Jurisdiction under this Subdivision 353 Part 5.5-Voluntary winding up 354 Division 1-Resolution for winding up 354 490 When company cannot wind up voluntarily 354 491 Circumstances in which company may be wound up voluntarily 354 493 Effect of voluntary winding up 354 493A Effect of voluntary winding up on company's members 354 494 Declaration of solvency 357 Division 2-Members' voluntary winding up 359 495 Liquidators 359 496 Duty of liquidator where company turns out to be insolvent 360 Division 3-Creditors' voluntary winding up 362 497 Meeting of creditors 362 498 Power to adjourn meeting 363 499 Liquidators 364 500 Execution and civil proceedings 367 Division 4-Voluntary winding up generally 368 501 Distribution of property of company 368 502 Appointment of liquidator 368 503 Removal of liquidator 368 504 Review of liquidator's remuneration 368 505 Acts of liquidator valid etc. 369 506 Powers and duties of liquidator 370 506A Declarations by liquidator-relevant relationships 371 507 Power of liquidator to accept shares etc. as consideration for sale of property of company 372 508 Annual obligations of liquidator-meeting or report 374 509 Final meeting and deregistration 375 510 Arrangement: when binding on creditors 376 511 Application to Court to have questions determined or powers exercised 377 Part 5.6-Winding up generally 378 Division 1-Preliminary 378 513 Application of Part 378 Division 1A-When winding up taken to begin 379 513A Winding up ordered by the Court 379 513B Voluntary winding up 379 513C Section 513C day in relation to an administration under Part 5.3A 380 513D Validity of proceedings in earlier winding up 380 Division 2-Contributories 381 514 Where Division applies 381 515 General liability of contributory 381 516 Company limited by shares 381 517 Company limited by guarantee 381 518 Company limited both by shares and by guarantee 381 519 Exceptions for former unlimited company 382 520 Past member: later debts 382 521 Person ceasing to be a member a year or more before winding up 382 522 Present members to contribute first 382 523 Past member of former unlimited company 382 524 Past member of former limited company 383 526 Liability on certain contracts 383 527 Nature of contributory's liability 383 528 Death of contributory 383 529 Bankruptcy of contributory 383 Division 3-Liquidators 385 530 Appointment of 2 or more liquidators of a company 385 530AA Appointment of 2 or more provisional liquidators of a company 385 530A Officers to help liquidator 385 530B Liquidator's rights to company's books 387 530C Warrant to search for, and seize, company's property or books 388 531 Books to be kept by liquidator 388 532 Disqualification of liquidator 389 533 Reports by liquidator 391 534 Prosecution by liquidator of delinquent officers and members 392 535 When liquidator has qualified privilege 392 536 Supervision of liquidators 393 537 Notice of appointment and address of liquidator 393 538 Regulations relating to money etc. received by liquidator 394 539 Liquidator's accounts 395 540 Liquidator to remedy defaults 396 Division 4-General 398 541 Notification that company is in liquidation 398 542 Books of company 398 543 Investment of surplus funds on general account 399 544 Unclaimed money to be paid to ASIC 399 545 Expenses of winding up where property insufficient 400 546 Resolutions passed at adjourned meetings of creditors and contributories 401 547 Meetings to ascertain wishes of creditors or contributories 401 Division 5-Committees of inspection 402 548 Convening of meetings by liquidator for appointment of committee of inspection-company not in pooled group 402 548A Convening of meeting for appointment of committee of inspection-pooled group 403 549 Proceedings of committee of inspection 404 550 Vacancies on committee of inspection 405 551 Member of committee not to accept extra benefit 406 552 Powers of Court where no committee of inspection 406 Division 6-Proof and ranking of claims 407 Subdivision A-Admission to proof of debts and claims 407 553 Debts or claims that are provable in winding up 407 553A Member cannot prove debt unless contributions paid 408 553AA Selling shareholder cannot prove debt unless documents given 408 553AB Superannuation contribution debts not admissible to proof 408 553B Insolvent companies-penalties and fines not generally provable 409 553C Insolvent companies-mutual credit and set-off 409 553D Debts or claims may be proved formally or informally 410 553E Application of Bankruptcy Act to winding up of insolvent company 410 Subdivision B-Computation of debts and claims 411 554 General rule-compute amount as at relevant date 411 554A Determination of value of debts and claims of uncertain value 411 554B Discounting of debts payable after relevant date 412 554C Conversion into Australian currency of foreign currency debts or claims 412 Subdivision C-Special provisions relating to secured creditors of insolvent companies 413 554D Application of Subdivision 413 554E Proof of debt by secured creditor 413 554F Redemption of security by liquidator 414 554G Amendment of valuation 415 554H Repayment of excess 415 554J Subsequent realisation of security 416 Subdivision D-Priorities 416 555 Debts and claims proved to rank equally except as otherwise provided 416 556 Priority payments 416 558 Debts due to employees 423 559 Debts of a class to rank equally 424 560 Advances for company to make priority payments in relation to employees 424 561 Priority of employees' claims over floating charges 425 562 Application of proceeds of contracts of insurance 425 562A Application of proceeds of contracts of reinsurance 426 563 Provisions relating to injury compensation 427 563AA Seller under a buy-back agreement 428 563A Member's debts to be postponed until other debts and claims satisfied 428 563AAA Redemption of debentures 428 Subdivision E-Miscellaneous 429 563B Interest on debts and claims from relevant date to date of payment 429 563C Debt subordination 429 564 Power of Court to make orders in favour of certain creditors 430 Division 7-Effect on certain transactions 431 565 Undue preference 431 566 Effect of floating charge 431 567 Liquidator's right to recover in respect of certain transactions 431 Division 7A-Disclaimer of onerous property 434 568 Disclaimer by liquidator; application to Court by party to contract 434 568A Liquidator must give notice of disclaimer 435 568B Application to set aside disclaimer before it takes effect 436 568C When disclaimer takes effect 437 568D Effect of disclaimer 438 568E Application to set aside disclaimer after it has taken effect 438 568F Court may dispose of disclaimed property 439 Division 7B-Effect on enforcement process against company's property 440 569 Executions, attachments etc. before winding up 440 570 Duties of sheriff after receiving notice of application 441 Division 8-Pooling 444 Subdivision A-Pooling determinations 444 571 Pooling determination 444 572 Variation of pooling determination 447 573 Lodgment of copy of pooling determination etc. 447 574 Eligible unsecured creditors must approve the making or variation of a pooling determination 447 575 Members' voluntary winding up-copy of notice etc. to be given to each member of the company 449 576 Conduct of meeting 449 577 Eligible unsecured creditors may decide to approve the determination or variation 449 578 When pooling determination comes into force etc. 450 579 Duties of liquidator 451 579A Court may vary or terminate pooling determination 452 579B Court may cancel or confirm variation 453 579C When Court may void or validate pooling determination 454 579D Effect of termination or avoidance 455 Subdivision B-Pooling orders 455 579E Pooling orders 455 579F Variation of pooling orders 458 579G Court may make ancillary orders etc. 459 579H Variation of ancillary orders etc. 460 579J Notice of application for pooling order etc. 461 579K Notice of pooling order etc. 462 579L Consolidated meetings of creditors 465 Subdivision C-Other provisions 466 579M When debts or claims are provable in winding up 466 579N Group of companies 466 579P Secured debt may become unsecured 467 579Q Eligible unsecured creditor 467 Division 9-Co-operation between Australian and foreign courts in external administration matters 468 580 Definitions 468 581 Courts to act in aid of each other 468 Part 5.7-Winding up bodies other than companies 470 582 Application of Part 470 583 Winding up Part 5.7 bodies 470 585 Insolvency of Part 5.7 body 471 586 Contributories in winding up of Part 5.7 body 472 587 Power of Court to stay or restrain proceedings 472 588 Outstanding property of defunct registrable body 473 Part 5.7B-Recovering property or compensation for the benefit of creditors of insolvent company 474 Division 1-Preliminary 474 588D Secured debt may become unsecured 474 588E Presumptions to be made in recovery proceedings 474 588F Certain taxation liabilities taken to be debts 476 Division 2-Voidable transactions 478 588FA Unfair preferences 478 588FB Uncommercial transactions 479 588FC Insolvent transactions 479 588FD Unfair loans to a company 480 588FDA Unreasonable director-related transactions 480 588FE Voidable transactions 482 588FF Courts may make orders about voidable transactions 484 588FG Transaction not voidable as against certain persons 486 588FGA Directors to indemnify Commissioner of Taxation if certain payments set aside 488 588FGB Defences in proceedings under section 588FGA 489 588FH Liquidator may recover from related entity benefit resulting from insolvent transaction 490 588FI Creditor who gives up benefit of unfair preference may prove for preferred debt 490 588FJ Floating charge created within 6 months before relation- back day 491 Division 3-Director's duty to prevent insolvent trading 493 588G Director's duty to prevent insolvent trading by company 493 588H Defences 495 Division 4-Director liable to compensate company 497 Subdivision A-Proceedings against director 497 588J On application for civil penalty order, Court may order compensation 497 588K Criminal court may order compensation 497 588L Enforcement of order under section 588J or 588K 498 588M Recovery of compensation for loss resulting from insolvent trading 498 588N Avoiding double recovery 499 588P Effect of sections 588J, 588K and 588M 499 588Q Certificates evidencing contravention 499 Subdivision B-Proceedings by creditor 500 588R Creditor may sue for compensation with liquidator's consent 500 588S Creditor may give liquidator notice of intention to sue for compensation 500 588T When creditor may sue for compensation without liquidator's consent 501 588U Events preventing creditor from suing 501 Division 5-Liability of holding company for insolvent trading by subsidiary 502 588V When holding company liable 502 588W Recovery of compensation for loss resulting from insolvent trading 502 588X Defences 503 Division 6-Application of compensation under Division 4 or 5 505 588Y Application of amount paid as compensation 505 Division 7-Person managing a corporation while disqualified may become liable for corporation's debts 506 588Z Court may make order imposing liability 506 Part 5.8-Offences 507 589 Interpretation and application 507 590 Offences by officers of certain companies 510 592 Incurring of certain debts; fraudulent conduct 512 593 Powers of Court 514 594 Certain rights not affected 515 595 Inducement to be appointed liquidator etc. of company 516 596 Frauds by officers 516 Part 5.8A-Employee entitlements 518 596AA Object and coverage of Part 518 596AB Entering into agreements or transactions to avoid employee entitlements 519 596AC Person who contravenes section 596AB liable to compensate for loss 520 596AD Avoiding double recovery 520 596AE Effect of section 596AC 521 596AF Employee may sue for compensation with liquidator's consent 521 596AG Employee may give liquidator notice of intention to sue for compensation 521 596AH When employee may sue for compensation without liquidator's consent 522 596AI Events preventing employee from suing 522 Part 5.9-Miscellaneous 524 Division 1-Examining a person about a corporation 524 596A Mandatory examination 524 596B Discretionary examination 524 596C Affidavit in support of application under section 596B 525 596D Content of summons 525 596E Notice of examination 525 596F Court may give directions about examination 526 597 Conduct of examination 526 597A When Court is to require affidavit about corporation's examinable affairs 529 597B Costs of unnecessary examination or affidavit 530 Division 2-Orders against a person in relation to a corporation 531 598 Order against person concerned with corporation 531 Division 3-Provisions applying to various kinds of external administration 533 600A Powers of Court where outcome of voting at creditors' meeting determined by related entity 533 600B Review by Court of resolution of creditors passed on casting vote of person presiding at meeting 534 600C Court's powers where proposed resolution of creditors lost as casting vote of person presiding at meeting 535 600D Interim order on application under section 600A, 600B or 600C 536 600E Order under section 600A or 600B does not affect act already done pursuant to resolution 536 600F Limitation on right of suppliers of essential services to insist on payment as condition of supply 536 600G Electronic methods of giving or sending certain notices etc. 537 Chapter 5A-Deregistration, and transfer of registration, of companies 540 Part 5A.1-Deregistration 540 601AA Deregistration-voluntary 540 601AB Deregistration-ASIC initiated 541 601AC Deregistration-following amalgamation or winding up 542 601AD Effect of deregistration 542 601AE What the Commonwealth or ASIC does with the property 544 601AF The Commonwealth's and ASIC's power to fulfil outstanding obligations of deregistered company 546 601AG Claims against insurers of deregistered company 546 601AH Reinstatement 546 Part 5A.2-Transfer of registration 548 601AI Transferring registration 548 601AJ Applying to transfer registration 548 601AK ASIC makes transfer of registration declaration 548 601AL ASIC to deregister company 549 Chapter 5B-Bodies corporate registered as companies, and registrable bodies 550 Part 5B.1-Registering a body corporate as a company 550 Division 1-Registration 550 601BA Bodies corporate may be registered as certain types of companies 550 601BB Bodies registered as proprietary companies 550 601BC Applying for registration under this Part 551 601BD ASIC gives body ACN, registers as company and issues certificate 555 601BE Registered office 555 601BF Name 555 601BG Constitution 556 601BH Modifications of constitution 556 601BJ ASIC may direct company to apply for Court approval for modifications of constitution 556 601BK Establishing registers and minute books 557 601BL Registration of registered bodies 557 Division 2-Operation of this Act 558 601BM Effect of registration under this Part 558 601BN Liability of members on winding up 558 601BP Bearer shares 558 601BQ References in pre-registration contracts and other documents to par value in existing contracts and documents 559 601BR First AGM 560 601BS Modification by regulations 560 Part 5B.2-Registrable bodies 561 Division 1-Registrable Australian bodies 561 601CA When a registrable Australian body may carry on business in this jurisdiction and outside its place of origin 561 601CB Application for registration 561 601CC Cessation of business etc. 562 Division 2-Foreign companies 565 601CD When a foreign company may carry on business in this jurisdiction 565 601CDA Limited disclosure if place of origin is a prescribed country 565 601CE Application for registration 565 601CF Appointment of local agent 566 601CG Local agent: how appointed 567 601CH Local agent: how removed 568 601CJ Liability of local agent 568 601CK Balance-sheets and other documents 568 601CL Cessation of business etc. 570 601CM Register of members of foreign company 573 601CN Register kept under section 601CM 574 601CP Notifying ASIC about register kept under section 601CM 574 601CQ Effect of right to acquire shares compulsorily 575 601CR Index of members and inspection of registers 575 601CS Certificate as to shareholding 575 Division 3-Bodies registered under this Part 576 601CTA Limited disclosure if place of origin is a prescribed country 576 601CT Registered office 576 601CU Certificate of registration 577 601CV Notice of certain changes 577 601CW Body's name etc. must be displayed at office and place of business 578 601CX Service of documents on registered body 578 601CY Power to hold land 580 Division 4-Register of debenture holders for non-companies 581 601CZA Certain documents are debentures 581 601CZB Register of debenture holders to be maintained by non-companies 581 601CZC Location of register 581 601CZD Application of sections 173 to 177 582 Part 5B.3-Names of registrable Australian bodies and foreign companies 583 601DA Reserving a name 583 601DB Acceptable abbreviations 583 601DC When a name is available 584 601DD Registered Australian bodies and registered foreign companies can carry on business with some names only 585 601DE Using a name and ARBN 585 601DF Exception to requirement to have ARBN on receipts 586 601DG Regulations may exempt from requirement to set out information on documents 586 601DH Notice of name change must be given to ASIC 587 601DJ ASIC's power to direct a registered name be changed 587 Chapter 2L-Debentures Part 2L.1-Requirement for trust deed and trustee 283AA Requirement for trust deed and trustee (1) Before a body: (a) makes an offer of debentures in this jurisdiction that needs disclosure to investors under Chapter 6D, or does not need disclosure to investors under Chapter 6D because of subsection 708(14) (disclosure document exclusion for debenture roll overs) or section 708A (sale offers that do not need disclosure); or (b) makes an offer of debentures in this jurisdiction or elsewhere as consideration for the acquisition of securities under an off- market takeover bid; or (c) issues debentures in this jurisdiction or elsewhere under a compromise or arrangement under Part 5.1 approved at a meeting held as a result of an order under subsection 411(1) or (1A); regardless of where any resulting issue, sale or transfer occurs, the body must enter into a trust deed that complies with section 283AB and appoint a trustee that complies with section 283AC. Note: For rules about when an offer of debentures will need disclosure to investors under Chapter 6D, see sections 706, 707, 708, 708AA and 708A. (1A) An offence based on subsection (1) is an offence of strict liability. Note: For strict liability, see section 6.1 of the Criminal Code. (2) The body may revoke the trust deed after it has repaid all amounts payable under the debentures in accordance with the debentures' terms and the trust deed. (3) The body must comply with this Chapter. Note: Sections 168 and 601CZB require a register of debenture holders to be set up and kept. 283AB Trust deed (1) The trust deed must provide that the following are held in trust by the trustee for the benefit of the debenture holders: (a) the right to enforce the borrower's duty to repay; (b) any charge or security for repayment; (c) the right to enforce any other duties that the borrower and any guarantor have under: (i) the terms of the debentures; or (ii) the provisions of the trust deed or this Chapter. Note: For information about the duties that the borrower and any guarantor body have under this Chapter, see sections 283BB to 283CE. (2) An offence based on subsection (1) is an offence of strict liability. Note: For strict liability, see section 6.1 of the Criminal Code. 283AC Who can be a trustee Who can be trustee (1) The trustee must be: (a) the Public Trustee of any State or Territory; or (b) a body corporate authorised by a law of any State or Territory to take in its own name a grant of probate of the will, or letters of administration of the estate, of a deceased person; or (c) a body corporate registered under the Life Insurance Act 1995; or (d) an Australian ADI; or (e) a body corporate, all of whose shares are held beneficially by a body corporate or bodies corporate of the kind referred to in paragraph (b), (c) or (d) if that body or those bodies: (i) are liable for all of the liabilities incurred, or to be incurred, by the trustee as trustee; or (ii) have subscribed for and beneficially hold shares in the trustee and there is an uncalled liability of at least $500,000 in respect of those shares that can only be called up if the trustee becomes an externally-administered body corporate (see section 254N); or (f) a body corporate approved by ASIC (see section 283GB). Note: Section 283BD provides that if the borrower becomes aware that the trustee cannot be a trustee, the trustee must be replaced. Circumstances in which a person cannot be trustee (2) A person may only be appointed or act as trustee (except to the extent provided for by section 283AD) if the appointment or acting will not result in a conflict of interest or duty. This subsection is not intended to affect any rule of law or equity. (3) An offence based on subsection (1) or (2) is an offence of strict liability. Note: For strict liability, see section 6.1 of the Criminal Code. 283AD Existing trustee continues to act until new trustee takes office An existing trustee continues to act as the trustee until a new trustee is appointed and has taken office as trustee, despite any rule of law or equity to the contrary. Note: This section applies even if the existing trustee resigns. 283AE Replacement of trustee Related party of existing trustee may be appointed as a new trustee (1) In addition to any other powers of appointment under the terms of the debentures or provisions of the trust deed, the borrower may appoint a body corporate that is related to the existing trustee as trustee in place of the existing trustee if: (a) the body corporate can be a trustee under section 283AC; and (b) the existing trustee consents in writing to the appointment. The appointment has effect despite any terms of the debentures or provisions of the trust deed. Appointment by Court (2) The Court may: (a) appoint a person who may be a trustee under section 283AC as trustee on the application of the borrower, a debenture holder or ASIC if: (i) a trustee has not been validly appointed; or (ii) the trustee has ceased to exist; or (b) terminate the existing trustee's appointment and appoint a person who may be a trustee under section 283AC as trustee in the existing trustee's place on the application of the borrower, the existing trustee, a debenture holder or ASIC if: (i) the existing trustee cannot be trustee under section 283AC; or (ii) the existing trustee fails, or refuses, to act. Part 2L.2-Duties of borrower 283BA Duties of borrower A borrower that is required to enter into a trust deed under section 283AA has the duties imposed by this Part. 283BB General duties The borrower must: (a) carry on and conduct its business in a proper and efficient manner; and (b) provide a copy of the trust deed to: (i) a debenture holder; or (ii) the trustee; if they request a copy; and (c) make all of its financial and other records available for inspection by: (i) the trustee; or (ii) an officer or employee of the trustee authorised by the trustee to carry out the inspection; or (iii) a registered company auditor appointed by the trustee to carry out the inspection; and give them any information, explanations or other assistance that they require about matters relating to those records. Note: The borrower also has a duty to call a meeting of debenture holders in certain circumstances (see section 283EA). 283BC Duty to notify ASIC of name of trustee The borrower must lodge with ASIC a notice of the name of a trustee within 14 days after they are appointed. The notice must be in the prescribed form. 283BD Duty to replace trustee The borrower must take all reasonable steps to replace the trustee under section 283AE as soon as practicable after the borrower becomes aware that the trustee: (a) has ceased to exist; or (b) has not been validly appointed; or (c) cannot be a trustee under section 283AC; or (d) has failed or refused to act as trustee. 283BE Duty to inform trustee about charges If the borrower creates a charge, it must: (a) give the trustee written details of the charge within 21 days after it is created; and (b) if the total amount to be advanced on the security of the charge is indeterminate and the advances are not merged in a current account with bankers, trade creditors or anyone else- give the trustee written details of the amount of each advance within 7 days after it is made. Note: If the advances are merged in a current account the borrower must give the trustee the details in the quarterly report (see subsection 283BF(4)). 283BF Duty to give trustee and ASIC quarterly reports Quarterly reports (1) Within 1 month after the end of each quarter, the borrower must: (a) give the trustee a quarterly report that sets out the information required by subsections (4), (5) and (6); and (b) lodge a copy of the report with ASIC (see section 351). First quarter (2) The first quarter is the period of 3 months ending on a day fixed by the borrower, by written notice to the trustee. The day must be less than 6 months after the first issue of a debenture under the trust deed. Subsequent quarters (3) Each of the subsequent quarters are periods of 3 months. The trustee may allow a particular quarter to be a period of less than 3 months if the trustee is satisfied that special circumstances justify doing so. Content of quarterly report (4) The report for a quarter must include details of: (a) any failure by the borrower and each guarantor to comply with the terms of the debentures or the provisions of the trust deed or this Chapter during the quarter; and (b) any event that has happened during the quarter that has caused, or could cause, 1 or more of the following: (i) any amount deposited or lent under the debentures to become immediately payable; (ii) the debentures to become immediately enforceable; (iii) any other right or remedy under the terms of the debenture or provisions of the trust deed to become immediately enforceable; and (c) any circumstances that have occurred during the quarter that materially prejudice: (i) the borrower, any of its subsidiaries, or any of the guarantors; or (ii) any security or charge included in or created by the debentures or the trust deed; and (d) any substantial change in the nature of the business of the borrower, any of its subsidiaries, or any of the guarantors that has occurred during the quarter; and (e) any of the following events that happened in the quarter: (i) the appointment of a guarantor; (ii) the cessation of liability of a guarantor body for the payment of the whole or part of the money for which it was liable under the guarantee; (iii) a change of name of a guarantor (if this happens, the report must also disclose the guarantor's new name); and (f) the net amount outstanding on any advances at the end of the quarter if the borrower has created a charge where: (i) the total amount to be advanced on the security of the charge is indeterminate; and (ii) the advances are merged in a current account with bankers, trade creditors or anyone else; and (g) any other matters that may materially prejudice any security or the interests of the debenture holders. Note: Paragraph (f)-the borrower has a duty to inform the trustee about charges as they are created (see section 283BE). (5) If the borrower has deposited money with, or lent money to, a related body corporate during the quarter, the report must also include details of: (a) the total of the money deposited with, or lent to, the related body corporate during the quarter (see subsection (7)); and (b) the total amount of money owing to the borrower at the end of the quarter in respect of the deposits or loans to the related body corporate. Disregard any amount that the borrower deposits with an ADI in the normal course of the borrower's business. (6) If the borrower has assumed a liability of a related body corporate during the quarter, the report must also include details of the extent of the liability assumed during the quarter and the extent of the liability as at the end of the quarter. (7) For the purposes of subsections (5) and (6), the report: (a) must distinguish between deposits, loans and assumptions of liability that are secured and those that are unsecured; and (b) may exclude any deposit, loan or assumption of liability on behalf of the related body corporate if it has: (i) guaranteed the repayment of the debentures of the borrower; and (ii) secured the guarantee by a charge over all of its property in favour of the trustee. Formalities (8) The report must: (a) be made in accordance with a resolution of the directors; and (b) specify the date on which the report is made. 283BG Exceptions Sections 283BE and 283BF do not apply in respect of the borrower while: (a) it is under external administration; or (b) a receiver, or a receiver and manager, of property of the borrower has been appointed and has not ceased to act under that appointment. 283BH How debentures may be described (1) The borrower may describe or refer to the debentures in: (a) any disclosure in relation to the offer of the debentures; or (b) any other document constituting or relating to the offer of the debentures; or (c) the debentures themselves; only in accordance with the following table: |How debentures may be described | |Item |Description |When description may be| | | |used | |1 |mortgage |only if the | | |debenture |circumstances set out | | | |in subsection (2) are | | | |satisfied | |2 |debenture |only if the | | | |circumstances set out | | | |in subsection (2) or | | | |(3) are satisfied | |3 |unsecured note |in any other case | | |or unsecured | | | |deposit note | | (1A) The borrower commits an offence if it intentionally or recklessly contravenes subsection (1). When debentures can be called mortgage debentures or debentures (2) The borrower may describe or refer to the debentures as: (a) mortgage debentures; or (b) debentures; if: (c) the repayment of all money that has been, or may be, deposited or lent under the debentures is secured by a first mortgage given to the trustee over land vested in the borrower or in any of the guarantors; and (d) the mortgage has been registered, or is a registrable mortgage that has been lodged for registration, in accordance with the law relating to the registration of mortgages of land in the place where the land is situated; and (e) the total amount of that money and of all other liabilities (if any) secured by the mortgage of that land ranking equally with the liability to repay that money does not exceed 60% of the value of the borrower's or guarantor's interest in that land as shown in the valuation included in the disclosure document for the debentures. When debentures can be called debentures (3) The borrower may describe or refer to the debentures as debentures if: (a) the repayment of all money that has been, or may be, deposited or lent under the debentures has been secured by a charge in favour of the trustee over the whole or any part of the tangible property of the borrower or of any of the guarantors; and (b) the tangible property that constitutes the security for the charge is sufficient and is reasonably likely to be sufficient to meet the liability for the repayment of all such money and all other liabilities that: (i) have been or may be incurred; and (ii) rank in priority to, or equally with, that liability. 283BI Offences for failure to comply with statutory duties The borrower commits an offence if it intentionally or recklessly contravenes section 283BB, 283BC, 283BD, 283BE, 283BF or 283EA. Part 2L.3-Duties of guarantor 283CA Duties of guarantor If a borrower is required to enter into a trust deed under section 283AA in relation to debentures, a guarantor in respect of the debentures has the duties imposed by this Part. 283CB General duties The guarantor must: (a) carry on and conduct its business in a proper and efficient manner; and (b) make all of its financial and other records available for inspection by: (i) the trustee; or (ii) an officer or employee of the trustee authorised by the trustee to carry out the inspection; or (iii) a registered company auditor appointed by the trustee to carry out the inspection; and give them any information, explanations or other assistance that they require about matters relating to those records. 283CC Duty to inform trustee about charges If the guarantor creates a charge, it must: (a) give the trustee written details of the charge within 21 days after it is created; and (b) if the total amount to be advanced on the security of the charge is indeterminate, give the trustee written details of: (i) the amount of each advance made within 7 days after it is made; or (ii) where the advances are merged in a current account with bankers, trade creditors or anyone else-the net amount outstanding on the advances at the end of every 3 months. 283CD Exceptions Section 283CC does not apply in respect of the guarantor while: (a) it is under external administration; or (b) a receiver, or a receiver and manager, of property of the guarantor has been appointed and has not ceased to act under that appointment. 283CE Offences for failure to comply with statutory duties The guarantor commits an offence if it intentionally or recklessly contravenes paragraph 283CB(b) or section 283CC. Part 2L.4-Trustee 283DA Trustee's duties The trustee of a trust deed entered into under section 283AA must: (a) exercise reasonable diligence to ascertain whether the property of the borrower and of each guarantor that is or should be available (whether by way of security or otherwise) will be sufficient to repay the amount deposited or lent when it becomes due; and (b) exercise reasonable diligence to ascertain whether the borrower or any guarantor has committed any breach of: (i) the terms of the debentures; or (ii) the provisions of the trust deed or this Chapter; and (c) do everything in its power to ensure that the borrower or a guarantor remedies any breach known to the trustee of: (i) any term of the debentures; or (ii) any provision of the trust deed or this Chapter; unless the trustee is satisfied that the breach will not materially prejudice the debenture holders' interests or any security for the debentures; and (d) ensure that the borrower and each guarantor complies with Part 2K to the extent that it applies to the debentures; and (e) notify ASIC as soon as practicable if: (i) the borrower has not complied with section 283BE, 283BF or subsection 318(1) or (4); or (ii) a guarantor has not complied with section 283CC; and (f) notify ASIC and the borrower as soon as practicable if the trustee discovers that it cannot be a trustee under section 283AC; and (g) give the debenture holders a statement explaining the effect of any proposal that the borrower submits to the debenture holders before any meeting that: (i) the Court calls in relation to a scheme under subsection 411(1) or (1A); or (ii) the trustee calls under subsection 283EB(1); and (h) comply with any directions given to it at a debenture holders' meeting referred to in section 283EA, 283EB or 283EC unless: (i) the trustee is of the opinion that the direction is inconsistent with the terms of the debentures or the provisions of the trust deed or this Act or is otherwise objectionable; and (ii) has either obtained, or is in the process of obtaining, an order from the Court under section 283HA setting aside or varying the direction; and (i) apply to the Court for an order under section 283HB if the borrower requests it to do so. Note 1: Paragraph (g)-Section 411 relates to compromises and arrangements. Note 2: Section 283DC deals with indemnification in respect of a trustee's liability to the debenture holders. 283DB Exemptions and indemnifications of trustee from liability (1) A term of a debenture, provision of a trust deed or a term of a contract with holders of debentures secured by a trust deed, is void in so far as the term or provision would have the effect of: (a) exempting a trustee from liability for breach of section 283DA for failure to show the degree of care and diligence required of it as trustee; or (b) indemnifying the trustee against that liability; unless the term or provision: (c) releases the trustee from liability for something done or omitted to be done before the release is given; or (d) enables a meeting of debenture holders to approve the release of the trustee from liability for something done or omitted to be done before the release is given. (2) For the purposes of paragraph (1)(d): (a) a release is approved if the debenture holders who vote for the resolution hold 75% of the nominal value of the debentures held by all the debenture holders who attend the meeting and vote on the resolution; and (b) a debenture holder attends the meeting and votes on the resolution if: (i) they attend the meeting in person and vote on the resolution; or (ii) if proxies are permitted-they are represented at the meeting by a proxy and the proxy votes on the resolution. 283DC Indemnity The trustee is not liable for anything done or omitted to be done in accordance with a direction given to it by the debenture holders at any meeting called under section 283EA, 283EB or 283EC. Part 2L.5-Meetings of debenture holders 283EA Borrower's duty to call meeting Duty to call meeting (1) The borrower must call a meeting of debenture holders if: (a) debenture holders who together hold 10% or more of the nominal value of the issued debentures to which the trust relates direct the borrower to do so; and (b) the direction is given to the borrower in writing at its registered office; and (c) the purpose of the meeting is to: (i) consider the financial statements that were laid before the last AGM of the borrower; or (ii) give the trustee directions in relation to the exercise of any of its powers. Note: The trustee usually must comply with any directions given to it by the debenture holders at the meeting (see paragraph 283DA(h)). Duty to give notification of meeting (2) If the borrower is required to call a meeting, it must give notice of the time and place of the meeting to: (a) the trustee; and (b) the borrower's auditor; and (c) each of the debenture holders whose names are entered on the register of debenture holders. Notice to joint holders of a debenture must be given to the joint holder named first in the register of debenture holders. (3) The borrower may give the notice to a debenture holder: (a) personally; or (b) by sending it by post to the address for the debenture holder in the register of debenture holders; or (c) by sending it to the fax number or electronic address (if any) nominated by the debenture holder; or (d) by any other means that the trust deed or the terms of the debentures permit. Note: A defect in the notice may not invalidate a meeting (see section 1322). When notice by post or fax is given (4) A notice of meeting sent to a debenture holder is taken to be given: (a) 3 days after it is posted, if it is posted; or (b) on the business day after it is sent, if it is sent by fax or other electronic means; unless the trust deed or the terms of the debentures provide otherwise. 283EB Trustee's power to call meeting Trustee may call meeting in event of breach (1) If the borrower or a guarantor fails to remedy any breach of the terms of the debentures or provisions of the trust deed or this Chapter when required by the trustee, the trustee may: (a) call a meeting of debenture holders; and (b) inform the debenture holders of the failure at the meeting; and (c) submit proposals for protection of the debenture holders' interests to the meeting; and (d) ask for directions from the debenture holders in relation to the matter. Trustee may appoint person to chair meeting (2) The trustee may appoint a person to chair a meeting of debenture holders called under subsection (1). If the trustee does not exercise this power, the debenture holders present at the meeting may appoint a person to chair the meeting. 283EC Court may order meeting (1) Without limiting section 283HA or 283HB, the Court may make an order under either of those sections for a meeting of all or any of the debenture holders to be held to give directions to the trustee. The order may direct the trustee to: (a) place before the debenture holders any information concerning their interests; and (b) place before the debenture holders any proposals to protect their interests that the Court directs or the trustee considers appropriate; and (c) obtain the debenture holders' directions concerning the protection of their interests. (2) The meeting is to be held and conducted in the manner the Court directs. The trustee may appoint a person to chair the meeting. If the trustee does not exercise this power, the debenture holders present at the meeting may appoint a person to chair the meeting. Part 2L.6-Civil liability 283F Civil liability for contravening this Chapter (1) A person who suffers loss or damage because a person contravenes a provision of this Chapter may recover the amount of the loss or damage from: (a) the person who contravened the provision; or (b) a person involved in the contravention. This is so even if the person did not commit, and was not involved in, the contravention. (2) An action under subsection (1) may begin at any time within 6 years after the day on which the cause of action arose. (3) This Part does not affect any liability that a person has under any other law. Part 2L.7-ASIC powers 283GA ASIC's power to exempt and modify (1) ASIC may: (a) exempt a person from a provision of this Chapter; or (b) declare that this Chapter applies to a person as if specified provisions were omitted, modified or varied as specified in the declaration. (2) The exemption or declaration may do all or any of the following: (a) apply to all or specified provisions of this Chapter; (b) apply to all persons, specified persons, or a specified class of persons; (c) relate to all debentures, specified debentures or a specified class of debentures; (d) relate to any other matter generally or as specified. (3) An exemption may apply unconditionally or subject to specified conditions. A person to whom a condition specified in an exemption applies must comply with the condition. The Court may order the person to comply with the condition in a specified way. Only ASIC may apply to the Court for the order. (4) The exemption or declaration must be in writing and ASIC must publish notice of it in the Gazette. (5) For the purposes of this section, the provisions of this Chapter include: (a) regulations made for the purposes of this Chapter; and (b) definitions in this Act or the regulations as they apply to references in: (i) this Chapter; or (ii) regulations made for the purposes of this Chapter; and (c) the old Division 12 of Part 11.2 transitionals. 283GB ASIC may approve body corporate to be trustee (1) ASIC may approve a body corporate in writing to be a trustee for the purposes of paragraph 283AC(1)(f). The approval may allow the body corporate to act as trustee: (a) in any circumstances; or (b) in relation to a particular borrower or particular class of borrower; or (c) in relation to a particular trust deed; and may be given subject to conditions. (2) ASIC must publish notice of the approval in the Gazette. Part 2L.8-Court 283HA General Court power to give directions and determine questions If the trustee applies to the Court for any direction in relation to the performance of the trustee's functions or to determine any question in relation to the interests of the debenture holders, the Court may give any direction and make any declaration or determination in relation to the matter that the Court considers appropriate. The Court may also make ancillary or consequential orders. Note: Under this section, the Court may order a meeting of debenture holders to be held, see section 283EC. 283HB Specific Court powers (1) If the trustee or ASIC applies to the Court, the Court may make any or all of the following orders: (a) an order staying an action or other civil proceedings before a court by or against the borrower or a guarantor body; (b) an order restraining the borrower from paying any money to the debenture holders or any holders of any other class of debentures; (c) an order that any security for the debentures be enforceable immediately or at the time the Court directs (even if the debentures are irredeemable or redeemable only on the happening of a contingency); (d) an order appointing a receiver of any property constituting security for the debentures; (e) an order restricting advertising by the borrower for deposits or loans; (f) an order restricting borrowing by the borrower; (g) any other order that the Court considers appropriate to protect the interests of existing or prospective debenture holders. (2) In deciding whether to make an order under subsection (1), the Court must have regard to: (a) the ability of the borrower and each guarantor to repay the amount deposited or lent as and when it becomes due; and (b) any contravention of section 283GA by the borrower; and (c) the interests of the borrower's members and creditors; and (d) the interests of the members of each of the guarantors. Note: The Court may order a meeting of debenture holders to be held (see section 283EC). Part 2L.9-Location of other debenture provisions 283I Signpost to other debenture provisions There are other rules relating to debentures in paragraph 124(1)(b) and section 563AAA. Chapter 2M-Financial reports and audit Part 2M.1-Overview 285 Overview of obligations under this Chapter Obligations under this Chapter (1) Under this Chapter, all companies, registered schemes and disclosing entities must keep financial records (see sections 286-291)-and some must prepare financial reports (see sections 292- 323D). All those that have to prepare financial reports have to prepare them annually; disclosing entities have to prepare half- year financial reports as well. The following table sets out what is involved in annual financial reporting: |Annual financial reporting | | |steps |sections |comments | |1 |prepare financial|s. 295 |The financial | | |report | |report includes: | | | | |. financial | | | | |statements | | | | |. disclosures and | | | | |notes | | | | |. directors' | | | | |declaration. | |2 |prepare |s. 298 |The report has a | | |directors' report| |general component | | | | |(sections 299 and | | | | |299A), a specific | | | | |component | | | | |(section 300) and a| | | | |special component | | | | |for listed | | | | |companies | | | | |(section 300A). | |3 |have the |s. 301, 307, |A small proprietary| | |financial report |308 |company preparing a| | |audited and | |financial report in| | |obtain auditor's | |response to a | | |report | |shareholder | | | | |direction under s. | | | | |293 only has to | | | | |have an audit if | | | | |the direction asks | | | | |for it. | | | | |Under s. 312, | | | | |officers must | | | | |assist the auditor | | | | |in the conduct of | | | | |the audit. | | | | |ASIC may use its | | | | |exemption powers | | | | |under s. 340 and | | | | |341 to relieve | | | | |large proprietary | | | | |companies from the | | | | |audit requirements | | | | |in appropriate | | | | |cases (s. 342(2) | | | | |and (3)). | |4 |provide the |s. 314 |A concise financial| | |financial report,| |report may be | | |directors' report| |provided to members| | |and auditor's | |instead of the full| | |report to members| |financial | | | | |statements (s. | | | | |314(1)-(2)). | | | | |For deadline see s.| | | | |315(1)-(4). | |5 |lodge the |s. 319 |For deadline see s.| | |financial report,| |319(3). | | |directors' report| |Companies that have| | |and auditor's | |the benefit of the | | |report with ASIC | |grandfathering in | | | | |the relevant | | | | |Part 10.1 | | | | |transitionals do | | | | |not have to lodge. | |6 |[public companies|s. 317 |For the AGM | | |only] lay | |deadline see s. | | |financial report,| |250N. | | |directors' report| | | | |and auditor's | | | | |report before AGM| | | Application to disclosing entities (2) This Chapter covers all disclosing entities: (a) incorporated or formed in Australia; and (b) whether or not they are companies or registered schemes. Application to registered schemes (3) For the purposes of applying this Chapter to a registered scheme: (a) the scheme's responsible entity is responsible for the performance of obligations in respect of the scheme; and (b) the directors and officers of the responsible entity are taken to be the directors and officers of the scheme; and (c) the debts incurred in operating the scheme are taken to be the debts of the scheme. Part 2M.2-Financial records 286 Obligation to keep financial records (1) A company, registered scheme or disclosing entity must keep written financial records that: (a) correctly record and explain its transactions and financial position and performance; and (b) would enable true and fair financial statements to be prepared and audited. The obligation to keep financial records of transactions extends to transactions undertaken as trustee. Note: Section 9 defines financial records. Period for which records must be retained (2) The financial records must be retained for 7 years after the transactions covered by the records are completed. Strict liability offences (3) An offence based on subsection (1) or (2) is an offence of strict liability. Note: For strict liability, see section 6.1 of the Criminal Code. 287 Language requirements (1) The financial records may be kept in any language. (2) An English translation of financial records not kept in English must be made available within a reasonable time to a person who: (a) is entitled to inspect the records; and (b) asks for the English translation. (3) An offence based on subsection (2) is an offence of strict liability. Note: For strict liability, see section 6.1 of the Criminal Code. 288 Physical format (1) If financial records are kept in electronic form, they must be convertible into hard copy. Hard copy must be made available within a reasonable time to a person who is entitled to inspect the records. (2) An offence based on subsection (1) is an offence of strict liability. Note: For strict liability, see section 6.1 of the Criminal Code. 289 Place where records are kept (1) A company, registered scheme or disclosing entity may decide where to keep the financial records. Records kept outside this jurisdiction (2) If financial records about particular matters are kept outside this jurisdiction, sufficient written information about those matters must be kept in this jurisdiction to enable true and fair financial statements to be prepared. The company, registered scheme or disclosing entity must give ASIC written notice in the prescribed form of the place where the information is kept. (2A) An offence based on subsection (2) is an offence of strict liability. Note: For strict liability, see section 6.1 of the Criminal Code. (3) ASIC may direct a company, registered scheme or disclosing entity to produce specified financial records that are kept outside this jurisdiction. (4) The direction must: (a) be in writing; and (b) specify a place in this jurisdiction where the records are to be produced (the place must be reasonable in the circumstances); and (c) specify a day (at least 14 days after the direction is given) by which the records are to be produced. 290 Director access Personal access (1) A director of a company, registered scheme or disclosing entity has a right of access to the financial records at all reasonable times. Court order for inspection on director's behalf (2) On application by a director, the Court may authorise a person to inspect the financial records on the director's behalf. (3) A person authorised to inspect records may make copies of the records unless the Court orders otherwise. (4) The Court may make any other orders it consider appropriate, including either or both of the following: (a) an order limiting the use that a person who inspects the records may make of information obtained during the inspection; (b) an order limiting the right of a person who inspects the records to make copies in accordance with subsection (3). 291 Signposts to other relevant provisions The following table sets out other provisions that are relevant to access to financial records. |Other provisions relevant to access to | | | |financial records | | | | | |members | |1 |section 247A |A member may apply to the Court for | | | |an order to inspect the records. | | | |auditor | |2 |section 310 |The auditor has a right of access to| | | |the records. | | | |controllers | |3 |section 431 |A controller of a corporation's | | | |property (for example, a receiver or| | | |receiver and manager) has a right of| | | |access to the records. | | | |ASIC | |4 |sections 28 to|ASIC has power to inspect the | | |39 of the ASIC|records. It also has power under | | |Act |subsection 289(3) of this Act to | | | |call for the production of financial| | | |records kept outside this | | | |jurisdiction. | Part 2M.3-Financial reporting Division 1-Annual financial reports and directors' reports 292 Who has to prepare annual financial reports and directors' reports (1) A financial report and a directors' report must be prepared for each financial year by: (a) all disclosing entities; and (b) all public companies; and (c) all large proprietary companies; and (d) all registered schemes. Note: This Chapter only applies to disclosing entities incorporated or formed in Australia (see subsection 285(2)). (2) A small proprietary company has to prepare the financial report and directors' report only if: (a) it is directed to do so under section 293 or 294; or (b) it was controlled by a foreign company for all or part of the year and it is not consolidated for that period in financial statements for that year lodged with ASIC by: (i) a registered foreign company; or (ii) a company, registered scheme or disclosing entity. The rest of this Part does not apply to any other small proprietary company. 293 Small proprietary company-shareholder direction (1) Shareholders with at least 5% of the votes in a small proprietary company may give the company a direction to: (a) prepare a financial report and directors' report for a financial year; and (b) send them to all shareholders. (2) The direction must be: (a) signed by the shareholders giving the direction; and (b) made no later than 12 months after the end of the financial year concerned. (3) The direction may specify all or any of the following: (a) that the financial report does not have to comply with some or all of the accounting standards; (b) that a directors' report or a part of that report need not be prepared; (c) that the financial report is to be audited. 294 Small proprietary company-ASIC direction (1) ASIC may give a small proprietary company a direction to comply with requirements of this Division and Divisions 3, 4, 5 and 6 for a financial year. (1A) An offence based on subsection (1) is an offence of strict liability. Note: For strict liability, see section 6.1 of the Criminal Code. (2) The direction may be general or may specify the particular requirements that the company is to comply with. (3) The direction must specify the date by which the documents have to be prepared, sent or lodged. The date must be a reasonable one in view of the nature of the direction. (4) The direction must: (a) be made in writing; and (b) specify the financial year concerned; and (c) be made no later than 6 years after the end of that financial year. 295 Contents of annual financial report Basic contents (1) The financial report for a financial year consists of: (a) the financial statements for the year; and (b) the notes to the financial statements; and (c) the directors' declaration about the statements and notes. Financial statements (2) The financial statements for the year are: (a) the financial statements in relation to the entity reported on that are required by the accounting standards; and (b) if required by the accounting standards-the financial statements in relation to the consolidated entity that are required by the accounting standards. Notes to financial statements (3) The notes to the financial statements are: (a) disclosures required by the regulations; and (b) notes required by the accounting standards; and (c) any other information necessary to give a true and fair view (see section 297). Directors' declaration (4) The directors' declaration is a declaration by the directors: (c) whether, in the directors' opinion, there are reasonable grounds to believe that the company, registered scheme or disclosing entity will be able to pay its debts as and when they become due and payable; and (d) whether, in the directors' opinion, the financial statement and notes are in accordance with this Act, including: (i) section 296 (compliance with accounting standards); and (ii) section 297 (true and fair view); and (e) if the company, disclosing entity or registered scheme is listed-that the directors have been given the declarations required by section 295A. Note: See paragraph 285(3)(c) for the reference to the debts of a registered scheme. (5) The declaration must: (a) be made in accordance with a resolution of the directors; and (b) specify the date on which the declaration is made; and (c) be signed by a director. 295A Declaration in relation to listed entity's financial statements by chief executive officer and chief financial officer (1) If the company, disclosing entity or registered scheme is listed, the directors' declaration under subsection 295(4) must be made only after each person who performs: (a) a chief executive function; or (b) a chief financial officer function; in relation to the company, disclosing entity or registered scheme has given the directors a declaration under subsection (2) of this section. (2) The declaration is a declaration whether, in the person's opinion: (a) the financial records of the company, disclosing entity or registered scheme for the financial year have been properly maintained in accordance with section 286; and (b) the financial statements, and the notes referred to in paragraph 295(3)(b), for the financial year comply with the accounting standards; and (c) the financial statements and notes for the financial year give a true and fair view (see section 297); and (d) any other matters that are prescribed by the regulations for the purposes of this paragraph in relation to the financial statements and the notes for the financial year are satisfied. (3) The declaration must: (a) be made in writing; and (b) specify the date on which the declaration is made; and (c) specify the capacity in which the person is making the declaration; and (d) be signed by the person making the declaration. A person who performs both a chief executive function and a chief financial officer function may make a single declaration in both capacities. (4) A person performs a chief executive function in relation to the company, disclosing entity or registered scheme if the person is the person who is primarily and directly responsible to the directors for the general and overall management of the company, disclosing entity or registered scheme. (5) If there is no one person who performs a chief executive function in relation to the company, disclosing entity or registered scheme under subsection (4), a person performs a chief executive function in relation to the company, disclosing entity or registered scheme if the person is one of a number of people who together are primarily and directly responsible to the directors for the general and overall management of the company, disclosing entity or registered scheme. (6) A person performs a chief financial officer function in relation to the company, disclosing entity or registered scheme if that person is the person who is: (a) primarily responsible for financial matters in relation to the company, disclosing entity or registered scheme; and (b) directly responsible for those matters to either: (i) the directors; or (ii) the person or persons who perform the chief executive function in relation to the company. (7) If there is no one person who performs a chief financial officer function in relation to the company, disclosing entity or registered scheme under subsection (6), a person performs a chief financial officer function in relation to the company, disclosing entity or registered scheme if the person is one of a number of people who together are: (a) primarily responsible for financial matters in relation to the company, disclosing entity or registered scheme; and (b) directly responsible for those matters to either: (i) the directors; or (ii) the person or persons who perform the chief executive function in relation to the company. (8) Nothing in this section derogates from the responsibility that a director has for ensuring that financial statements comply with this Act. 296 Compliance with accounting standards and regulations (1) The financial report for a financial year must comply with the accounting standards. However, a small proprietary company's report does not have to comply with particular accounting standards if: (a) the report is prepared in response to a shareholder direction under section 293; and (b) the direction specifies that the report does not have to comply with those accounting standards. (2) The financial report must comply with any further requirements in the regulations. 297 True and fair view The financial statements and notes for a financial year must give a true and fair view of: (a) the financial position and performance of the company, registered scheme or disclosing entity; and (b) if consolidated financial statements are required-the financial position and performance of the consolidated entity. This section does not affect the obligation under section 296 for a financial report to comply with accounting standards. Note: If the financial statements and notes prepared in compliance with the accounting standards would not give a true and fair view, additional information must be included in the notes to the financial statements under paragraph 295(3)(c). 298 Annual directors' report (1) The company, registered scheme or disclosing entity must prepare a directors' report for each financial year. The report must include: (a) the general information required by sections 299 (all entities) and 299A (additional requirements for listed public companies); and (b) the specific information required by sections 300 and 300A; and (c) a copy of the auditor's declaration under section 307C in relation to the audit for the financial year. (1A) If the financial report for a financial year includes additional information under paragraph 295(3)(c) (information included to give true and fair view of financial position and performance), the directors' report for the financial year must also: (a) set out the directors' reasons for forming the opinion that the inclusion of that additional information was necessary to give the true and fair view required by section 297; and (b) specify where that additional information can be found in the financial report. (2) The report must: (a) be made in accordance with a resolution of the directors; and (b) specify the date on which the report is made; and (c) be signed by a director. (3) A small proprietary company does not have to comply with subsection (1) for a financial year if: (a) it is preparing financial statements for that year in response to a shareholder direction under section 293; and (b) the direction specified that a directors' report need not be prepared. 299 Annual directors' report-general information General information about operations and activities (1) The directors' report for a financial year must: (a) contain a review of operations during the year of the entity reported on and the results of those operations; and (b) give details of any significant changes in the entity's state of affairs during the year; and (c) state the entity's principal activities during the year and any significant changes in the nature of those activities during the year; and (d) give details of any matter or circumstance that has arisen since the end of the year that has significantly affected, or may significantly affect: (i) the entity's operations in future financial years; or (ii) the results of those operations in future financial years; or (iii) the entity's state of affairs in future financial years; and (e) refer to likely developments in the entity's operations in future financial years and the expected results of those operations; and (f) if the entity's operations are subject to any particular and significant environmental regulation under a law of the Commonwealth or of a State or Territory-give details of the entity's performance in relation to environmental regulation. (2) The entity reported on is: (a) the company, registered scheme or disclosing entity (if consolidated financial statements are not required); or (b) the consolidated entity (if consolidated financial statements are required). Prejudicial information need not be disclosed (3) The report may omit material that would otherwise be included under paragraph (1)(e) if it is likely to result in unreasonable prejudice to: (a) the company, registered scheme or disclosing entity; or (b) if consolidated financial statements are required-the consolidated entity or any entity (including the company, registered scheme or disclosing entity) that is part of the consolidated entity. If material is omitted, the report must say so. 299A Annual directors' report-additional general requirements for listed public companies (1) The directors' report for a financial year for a company or disclosing entity that is a listed public company must also contain information that members of the company would reasonably require to make an informed assessment of: (a) the operations of the entity reported on; and (b) the financial position of the entity; and (c) the entity's business strategies and its prospects for future financial years. (2) The entity reported on is: (a) the company or disclosing entity that is a listed public company (if consolidated financial statements are not required); or (b) the consolidated entity (if consolidated financial statements are required). (3) The report may omit material that would otherwise be included under paragraph (1)(c) if it is likely to result in unreasonable prejudice to: (a) the company or disclosing entity; or (b) if consolidated financial statements are required-the consolidated entity or any entity (including the company or disclosing entity) that is part of the consolidated entity. If material is omitted, the report must say so. 300 Annual directors' report-specific information (1) The directors' report for a financial year must include details of: (a) dividends or distributions paid to members during the year; and (b) dividends or distributions recommended or declared for payment to members, but not paid, during the year; and (c) the name of each person who has been a director of the company, registered scheme or disclosing entity at any time during or since the end of the year and the period for which they were a director; and (ca) the name of each person who: (i) is an officer of the company, registered scheme or disclosing entity at any time during the year; and (ii) was a partner in an audit firm, or a director of an audit company, that is an auditor of the company, disclosing entity or registered scheme for the year; and (iii) was such a partner or director at a time when the audit firm or the audit company undertook an audit of the company, disclosing entity or registered scheme; and (d) options that are: (i) granted over unissued shares or unissued interests during or since the end of the year; and (ii) granted to any of the directors or any of the 5 most highly remunerated officers of the company (other than the directors); and (iii) granted to them as part of their remuneration; (see subsections (3), (4) and (5)); and (e) unissued shares or interests under option as at the day the report is made (see subsections (3) and (6)); and (f) shares or interests issued during or since the end of the year as a result of the exercise of an option over unissued shares or interests (see subsections (3) and (7)); and (g) indemnities given and insurance premiums paid during or since the end of the year for a person who is or has been an officer or auditor (see subsections (8) and (9)). Public companies, listed companies and registered schemes must include additional information under subsections (10), (11), (11A), (11B), (12) and (13) of this section and section 300A. (2) Details do not have to be included in the directors' report under this section if they are included in the company's financial report for the financial year. (2A) If subsection (2) is relied on to not include in the directors' report for a financial year details that would otherwise be required to be included in that report under paragraph (11B)(a) or (11C)(b), that report must specify, in the section headed "Non- audit services", where those details may be found in the company's financial report for that financial year. (3) Paragraphs (1)(d), (e) and (f) cover: (a) options over unissued shares and interests of the company, registered scheme or disclosing entity; and (b) if consolidated financial statements are required-options over unissued shares and interests of any controlled entity that is a company, registered scheme or disclosing entity. Options details (5) The details of an option granted are: (a) the company, registered scheme or disclosing entity granting the option; and (b) the name of the person to whom the option is granted; and (c) the number and class of shares or interests over which the option is granted. (6) The details of unissued shares or interests under option are: (a) the company, registered scheme or disclosing entity that will issue shares or interests when the options are exercised; and (b) the number and classes of those shares or interests; and (c) the issue price, or the method of determining the issue price, of those shares or interests; and (d) the expiry date of the options; and (e) any rights that option holders have under the options to participate in any share issue or interest issue of the company, registered scheme or disclosing entity or of any other body corporate or registered scheme. Shares or interests issued as a result of exercise of option (7) The details of shares or interests issued as a result of the exercise of an option are: (a) the company, registered scheme or disclosing entity issuing the shares or interests; and (b) the number of shares or interests issued; and (c) if the company, registered scheme or disclosing entity has different classes of shares or interests-the class to which each of those shares or interests belongs; and (d) the amount unpaid on each of those shares or interests; and (e) the amount paid, or agreed to be considered as paid, on each of those shares or interests. Indemnities and insurance premiums for officers or auditors (8) The report for a company must include details of: (a) any indemnity that is given to a current or former officer or auditor against a liability and that is covered by subsection 199A(2) or (3), or any relevant agreement under which an officer or auditor may be given an indemnity of that kind; and (b) any premium that is paid, or agreed to be paid, for insurance against a current or former officer's or auditor's liability for legal costs. Note: Sections 199A and 199B contain general prohibitions against giving certain indemnities and paying certain insurance premiums. This subsection requires transactions that are exceptions to these prohibitions to be reported. (9) The details required under subsection (8) are: (a) for an officer-their name or the class of officer to which they belong or belonged; and (b) for an auditor-their name; and (c) the nature of the liability; and (d) for an indemnity given-the amount the company paid and any other action the company took to indemnify the officer or auditor; and (e) for an agreement to indemnify-the amount that the relevant agreement requires the company to pay and any other action the relevant agreement requires the company to take to indemnify the officer or auditor; and (f) for an insurance premium-the amount of the premium. The report need not give details of the nature of the liability covered by, or the amount of the premium payable under, a contract of insurance to the extent that disclosure of those details is prohibited by the insurance contract. Special rules for public companies (10) The report for a public company that is not a wholly-owned subsidiary of another company must also include details of: (a) each director's qualifications, experience and special responsibilities; and (b) the number of meetings of the board of directors held during the year and each director's attendance at those meetings; and (c) the number of meetings of each board committee held during the year and each director's attendance at those meetings; and (d) the qualifications and experience of each person who is a company secretary of the company as at the end of the year. Special rules for listed companies (11) The report for a listed company must also include the following details for each director: (a) their relevant interests in shares of the company or a related body corporate; (b) their relevant interests in debentures of, or interests in a registered scheme made available by, the company or a related body corporate; (c) their rights or options over shares in, debentures of or interests in a registered scheme made available by, the company or a related body corporate; (d) contracts: (i) to which the director is a party or under which the director is entitled to a benefit; and (ii) that confer a right to call for or deliver shares in, or debentures of or interests in a registered scheme made available by the company or a related body corporate; (e) all directorships of other listed companies held by the director at any time in the 3 years immediately before the end of the financial year and the period for which each directorship has been held. Note: Directors must also disclose interests of these kinds to a relevant market operator under section 205G as they are acquired. (11A) If a registered company auditor plays a significant role in the audit of a listed company for the financial year in reliance on a declaration made under section 342A, the report for the company must also include details of the declaration. Listed companies-non-audit services and auditor independence (11B) The report for a listed company must also include the following in relation to each auditor: (a) details of the amounts paid or payable to the auditor for non- audit services provided, during the year, by the auditor (or by another person or firm on the auditor's behalf); (b) a statement whether the directors are satisfied that the provision of non-audit services, during the year, by the auditor