New South Wales Consolidated Acts

LOAN FUND COMPANIES ACT 1976 - SECT 17

17 Allocation of loan priority numbers

(1) A loan fund company shall:

(a) on granting an option to acquire loan entitlement shares in the company,

(b) on allotting qualifying shares in the company, or

(c) on allotting loan entitlement shares in the company without there having previously been granted any such option, or there having previously been allotted any such qualifying shares, with respect to those loan entitlement shares,

allocate in respect of that option or those qualifying shares or loan entitlement shares, as the case may be, a loan priority number in accordance with subsection (3).

(2) Where immediately after the time at which a company becomes a loan fund company there is or are in existence:

(a) any option to acquire loan entitlement shares in the company,

(b) any qualifying shares in the company, or

(c) any loan entitlement shares in the company with respect to which the company has not made an offer of a loan,

not later than 14 days after the date on which the company becomes a loan fund company, the company shall, except as provided in subsection (6), allocate in respect of that option or those qualifying shares or loan entitlement shares, as the case may be, a loan priority number in accordance with subsection (3).

(3) All loan priority numbers allocated by a loan fund company under subsections (1) and (2) shall, whether they are allocated in respect of options to acquire loan entitlement shares or qualifying shares or loan entitlement shares, be consecutive cardinal numbers commencing with the number “1” and each such number:

(a) shall be allocated successively in chronological order by reference:

(i) in the case of an option referred to in subsection (1) (a) or (2) (a), to the time at which the application for the granting of that option was made,

(ii) in the case of qualifying shares referred to in subsection (1) (b) or (2) (b) or loan entitlement shares referred to in subsection (1) (c), to the time at which the application for the allotment of those shares was made, or

(iii) in the case of loan entitlement shares referred to in subsection (2) (c), to the time at which the application for the allotment of those shares was made or, if those shares were acquired pursuant to the exercise of a right conferred by an option granted by the company or by a person referred to in subsection (2) (a) or pursuant to the exercise of a right conferred by qualifying shares in the company, to the time at which the application for the granting of that option or for the allotment of those qualifying shares was made, and

(b) shall, subject to this Act and to the terms and conditions of the memorandum and articles of association of the company and, in the case of a loan priority number allocated or deemed to be allocated in respect of any such option or qualifying shares, subject to the acquisition of the relevant loan entitlement shares pursuant to the right conferred by that option or those qualifying shares, determine the order of priority in which the company is required to offer loans to holders of loan entitlement shares in the company.

(4) Where a person acquires loan entitlement shares in a loan fund company pursuant to the exercise of an option granted, or deemed to have been granted, by the company or pursuant to the exercise of a right conferred by qualifying shares in the company, the loan priority number allocated in respect of that option or, as the case may be, those qualifying shares shall be deemed to have been allocated in respect of the loan entitlement shares so acquired.

(5) Where:

(a) the holder of an option to acquire loan entitlement shares in a loan fund company is subsequently granted a further option by the company to acquire any such shares,

(b) the holder of qualifying shares in a loan fund company is subsequently allotted further qualifying shares in the company, or

(c) the holder of loan entitlement shares in a loan fund company is subsequently allotted further loan entitlement shares in the company,

the company shall not:

(d) allocate in respect of that further option, or those further qualifying shares or loan entitlement shares, the same loan priority number as that allocated in respect of the option, qualifying shares or loan entitlement shares, as the case may be, already held by the holder, or

(e) tack that further option or those further qualifying shares or loan entitlement shares to the option, qualifying shares or loan entitlement shares, as the case may be, already held by the holder so that that further option has or those further qualifying shares or loan entitlement shares have the same loan priority number as that allocated in respect of the option, qualifying shares or loan entitlement shares already held by the holder.

(6) A loan fund company shall not be required to comply with subsection (2) in respect of any option, qualifying shares or loan entitlement shares referred to in that subsection if, before it became a loan fund company, a loan priority number had been allocated in respect of that option or those qualifying shares or loan entitlement shares, as the case may be, and that allocation would have satisfied the requirements of subsection (3) if that subsection had, at the time of the allocation, been in force in respect of the company, and a loan priority number so allocated shall be deemed to have been allocated by the company under subsection (2).

(7) A loan fund company which:

(a) fails to comply with subsection (1) or (2), or

(b) contravenes subsection (5),

is guilty of an offence and is liable on conviction to a penalty not exceeding 5 penalty units.