New South Wales Consolidated Acts

LOAN FUND COMPANIES ACT 1976 - SECT 46

46 Payment of amounts by loan fund company in respect of forfeited or surrendered options and shares etc

(1) Where, after a company has become a loan fund company, any option to acquire loan entitlement shares has, or any qualifying shares or loan entitlement shares have, been forfeited or surrendered to the company under section 42 or 43, there shall be payable by the company to the person whose option was, or shares were, forfeited or surrendered, or if that person is dead or under a legal disability, to such person as appears to the company to be the person’s lawful representative:

(a) the total amount that was paid in respect of the option, qualifying shares or loan entitlement shares (including any amount so paid as a premium) after deducting:

(i) any fee or penalty paid or payable in respect of the option, qualifying shares or loan entitlement shares before or at the date of the forfeiture or surrender,

(ii) in the case of a forfeited option or forfeited qualifying shares or loan entitlement shares, an amount equal to the prescribed proportion of the nominal value of the loan entitlement shares to which the forfeited option relates or, as the case may be, of the forfeited qualifying shares or loan entitlement shares, and

(iii) if the balance sheet of the company as at the end of the financial year of the company last preceding the date of the forfeiture or surrender discloses an accumulated loss, an amount, which shall be offset against that loss, calculated by reference to the following formula:

"a" = the amount to be deducted under this subparagraph,
"b" = the amount of the accumulated loss,
"c" = the total nominal value of the loan entitlement shares to which the forfeited or surrendered option relates or, as the case may be, of the forfeited or surrendered qualifying shares or loan entitlement shares, and
"d" = the total nominal value of all issued shares of the company as at the end of the financial year of the company last preceding the date of the forfeiture or surrender, or

(b) if:

(i) any provision of the memorandum or articles of association of the company provides, or

(ii) the prospectus under which the option was granted or, as the case may be, the qualifying shares or loan entitlement shares were allotted provided,

for an amount to be payable by the company in respect of forfeited or surrendered options to acquire loan entitlement shares in the company or, as the case may be, forfeited or surrendered qualifying shares or loan entitlement shares in the company which is greater than that which would, but for this paragraph, be payable under paragraph (a), that amount,

but the amount so payable shall not become due:

(c) until the expiration of a period of 3 years after the date of the forfeiture or surrender or, if any provision of the memorandum or articles of association of the company, or any relevant prospectus, provides for that amount to become due at a date before the expiration of that period, until that date has arrived, and

(d) in the case of forfeited or surrendered loan entitlement shares in respect of which the company has made a loan which has been discharged, unless no money is payable (whether or not due for payment) by the company under this subsection or subsection (2) in respect of any forfeited or surrendered options, option nominations or shares (not being shares in respect of which the company has made a loan which has been discharged).

(2) Where:

(a) in relation to a company that has become a loan fund company, any option to acquire loan entitlement shares in the company, or any option nomination relating to any such shares, has, before the company became a loan fund company, been surrendered to the company or to any person managing, controlling or promoting the affairs and activities, or any of the affairs or activities, of the company,

(b) the prospectus under which the option or option nomination was granted provided for an amount, ascertainable by reference to the prospectus, to be payable in respect of the option or option nomination in the event of its being surrendered, and

(c) the amount referred to in paragraph (b) has not, before the company became a loan fund company, been paid in accordance with the terms and conditions of the prospectus to any person entitled to receive it,

that amount shall be payable by the company to the person whose option or option nomination was surrendered or, if the person has died or is under a legal disability, to such person as appears to the company to be the lawful representative of that person, but shall not become due from the company until the expiration of a period of 3 years after the date on which the company became a loan fund company or, if the prospectus referred to in paragraph (b) provides for the amount to become due at a date before the expiration of that period, until that date has arrived.

(3) If at any time amounts are payable to 2 or more persons by a loan fund company either under subsection (1) in respect of forfeited or surrendered options, qualifying shares or loan entitlement shares or under subsection (2) in respect of surrendered options or option nominations, the company shall pay those amounts to those persons only according to the order in which the forfeiture or surrender of those options, qualifying shares or loan entitlement shares, or, as the case may be, the surrender of those options or option nominations, occurred and not otherwise.

(4) Subject to this section, a loan fund company may, notwithstanding that its memorandum of association does not, or its articles of association do not, so provide or provides or provide to the contrary, pay an amount payable under subsection (1) or (2) before it becomes due, but only if it is paid out of money received from members as repayments of the principal of loans made by the company to those members or out of the reserve kept under section 44.

(4A) A loan fund company shall not pay an amount payable under subsection (1) in the case of forfeited or surrendered loan entitlement shares in respect of which the company has made a loan which has been discharged, unless no money is payable (whether or not due for payment) by the company under subsection (1) or (2) in respect of any forfeited or surrendered options, option nominations or shares (not being shares in respect of which the company has made a loan which has been discharged).

(5) If a loan fund company has not paid an amount payable by it under subsection (1) or (2) before the date on which the amount becomes due thereunder, the following provisions shall apply:

(a) all of the company’s funds shall be available for the payment of the amount,

(b) the company shall not, until the amount has been paid, offer or make any further loans to members or to any other persons, and

(c) without prejudice to any prosecution for an offence against subsection (6), the amount shall, on and after that date, be recoverable from the company as a debt in a court of competent jurisdiction by the person to whom the amount is payable.

(6) Any loan fund company which:

(a) fails to pay any amount payable under subsection (1) or (2) within 3 months after the date on which the amount becomes due,

(b) pays any amount in contravention of subsection (3) or (4), or

(c) contravenes subsection (5) (b),

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