New South Wales Consolidated Acts

LOAN FUND COMPANIES ACT 1976 - SECT 15

15 Certain persons prohibited from managing etc affairs or activities of loan fund company

(1) Subject to this section, a loan fund company shall not enter into any contract, agreement, arrangement or understanding with a person by virtue of which the affairs and activities, or any of the affairs or activities, of the company are managed, controlled or promoted by a corporation or by a person who is not employed by the company as an officer under a contract of service.

(2) Any contract, agreement, arrangement or understanding entered into in contravention of subsection (1) shall be void.

(3) Subject to this section, where at the time at which a company becomes a loan fund company any contract, agreement, arrangement or understanding exists between the company and another person which would, if the contract, agreement, arrangement or understanding had been entered into after that date, have been entered into in contravention of subsection (1), that contract, agreement, arrangement or understanding shall, notwithstanding any of its provisions to the contrary, be deemed to be terminated from that time.

(4) Where after a company becomes a loan fund company the affairs and activities, or any of the affairs or activities, of the company are managed, controlled or promoted by a corporation or by a person who is not employed by the company as an officer under a contract of service, the company and that corporation or person are each guilty of an offence and are each liable on conviction to a penalty not exceeding 10 penalty units, and, in the case of a continuing offence, to a further penalty not exceeding 1 penalty unit for each day during which the offence continues.

(5) An offence against subsection (4) is not committed by reason only that a corporation or a person not employed by a loan fund company as an officer under a contract of service undertakes or performs any activity on behalf of the company in the capacity of banker, accountant, auditor, legal adviser, actuary, underwriter or advertising agent or in any other prescribed capacity.

(6) Where under any contract, agreement, arrangement or understanding referred to in subsection (3) any money has become due and payable by or to a loan fund company before the contract, agreement, arrangement or understanding is deemed to have been terminated by that subsection, that money may, to the extent that it might have been recoverable apart from that termination, be recovered in proceedings brought in a court of competent jurisdiction.

(7) Where, immediately before a company becomes a loan fund company there is in existence any contract, agreement, arrangement or understanding between the company and a person whereby the affairs and activities, or any of the affairs or activities, of the company are managed, controlled or promoted by that person and, by virtue of that contract, agreement, arrangement or understanding, that person is holding loan entitlement shares in the company or options over loan entitlement shares in the company, whether allotted or to be allotted, and has granted to any other person an option to acquire any of those loan entitlement shares or, as the case may be, an option nomination in respect of that option, the following provisions shall, on the contract, agreement, arrangement or understanding being deemed to have been terminated, apply with respect to the option or option nomination so granted:

(a) the option or option nomination, as the case may be, shall be deemed to have been granted by the company on the date on which it was granted by the first mentioned person and shall be exercisable against the company subject to and in accordance with the same terms and conditions as those subject to and in accordance with which the option or option nomination was granted by, and would, but for this subsection, be exercisable against, that first mentioned person,

(b) the company shall be deemed to be subrogated to all the rights and remedies of that first mentioned person in the person’s capacity as grantor of the option or option nomination,

(c) in the case of an option to acquire loan entitlement shares held by that first mentioned person, those shares shall be disposable only by or at the direction of the company, and

(d) in the case of an option nomination, the option nomination shall be deemed for the purposes of this Act to be an option to acquire the loan entitlement shares to which the option nomination relates.

(8) Where any contract, agreement, arrangement or understanding between a loan fund company and a person is deemed to be terminated by virtue of subsection (3), all records held by that person which relate to any of the affairs or activities of the company and of the holder of any option to acquire loan entitlement shares in the company or of any option nomination in respect of any such option shall be deemed to belong to the company, and that person shall, within 14 days after that termination, take all practicable steps necessary to transfer those records to the control of the company.

Maximum penalty: 10 penalty units.

(9) A person required to transfer any record to a loan fund company in accordance with subsection (8) shall not:

(a) conceal, destroy, mutilate or alter any such record, or

(b) send, attempt to send or conspire with another person to send such a record out of New South Wales.

Maximum penalty: 20 penalty units or imprisonment for a term of 6 months.

(10) It is a defence to a prosecution under subsection (9) to prove that the person charged did not act with intent to defeat the purposes of this section.