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CORPORATIONS ACT 2001 - SECT 1224D

Duties owed by director

Duties owed by a director of any CCIV

             (1)  A director of a CCIV must, in exercising its powers and carrying out its duties:

                     (a)  act honestly; and

                     (b)  act in the best interests of the members of the CCIV and, if there is a conflict between the interests of those members and its own interests, give priority to the members' interests; and

                     (c)  act in the best interests of the members, as a whole, of each sub-fund of the CCIV and:

                              (i)  if there is a conflict between the interests of the members, as a whole, of a sub-fund and its own interests, give priority to the members' interests; and

                             (ii)  if there is a conflict between the interests of the members, as a whole, of a sub-fund and the best interests of the members of the CCIV, give priority to the interests of the members of the CCIV; and

                     (d)  have in place adequate arrangements for the management of conflicts of interest that may arise wholly, or partially, in relation to activities undertaken by the director in exercising those powers and carrying out those duties; and

                     (e)  not make use of information acquired through being a director of the CCIV in order to:

                              (i)  gain an improper advantage for the director or another person; or

                             (ii)  cause detriment to the members of the CCIV.

Note:          This subsection is a civil penalty provision (see section 1317E).

Additional duties owed by a director of a retail CCIV

             (2)  A director of a retail CCIV must, in exercising its powers and carrying out its duties:

                     (a)  exercise the degree of care and diligence that a reasonable person would exercise in the director's position; and

                     (b)  treat members of the CCIV who hold shares of the same class equally; and

                     (c)  treat members of the CCIV who hold shares of different classes fairly; and

                     (d)  treat members of different sub-funds of the CCIV fairly; and

                     (e)  ensure that the CCIV's constitution meets the requirements of this Act; and

                      (f)  ensure that the CCIV's compliance plan meets the requirements of section 1226A ; and

                     (g)  comply with the CCIV's compliance plan; and

                     (h)  ensure that:

                              (i)  assets and liabilities of the sub-funds of the CCIV are clearly identified; and

                             (ii)  any property of the CCIV to which section 1233K (about property that has to be converted) applies is clearly identified; and

                            (iii)  any liabilities of the CCIV to which section 1233M (about liabilities allocated to 2 or more sub-funds) applies is clearly identified; and

                      (i)  ensure that assets of a sub-fund of the CCIV are held in the manner required by section 1234J; and

                      (j)  ensure that the assets of a sub-fund of the CCIV are valued at regular intervals appropriate to the nature of the assets; and

                     (k)  ensure that all payments out of the assets of the CCIV are made in accordance with the CCIV's constitution and this Act; and

                      (l)  carry out or comply with any other duty, not inconsistent with this Act, that is conferred on the director by the CCIV's constitution.

Note:          This subsection is a civil penalty provision (see section 1317E).

Additional duties owed by a director of a wholesale CCIV

             (3)  A director of a wholesale CCIV must, in exercising its powers and carrying out its duties:

                     (a)  exercise the degree of care and diligence that a reasonable person would exercise in the director's position; and

                     (b)  treat members of the CCIV who hold shares of the same class equally; and

                     (c)  treat members of the CCIV who hold shares of different classes fairly; and

                     (d)  treat members of different sub-funds of the CCIV fairly.

             (4)  A director of a wholesale CCIV contravenes this subsection if:

                     (a)  the director contravenes paragraph (3)(a), (b), (c) or (d); and

                     (b)  either:

                              (i)  the constitution of the CCIV does not exempt the director from liability for the contravention; or

                             (ii)  the contravention was dishonest or involved a lack of good faith.

Note:          This subsection is a civil penalty provision (see section 1317E).

Duties under this section prevail in case of conflict

             (5)  If there is a conflict between a duty owed by a director of a CCIV under this section and a duty owed by the director under Part 2D.1, the duty owed under this section prevails.

Interaction with other laws etc.

             (6)  Subsection (1) or (2):

                     (a)  has effect in addition to, and not in derogation of, any rule of law relating to the duty or liability of a person because of their office or employment in relation to a corporation; and

                     (b)  does not prevent the commencement of civil proceedings for a breach of a duty or in respect of a liability referred to in paragraph (a).

Interaction with section 199A

             (7)  Section 199A does not prevent a wholesale CCIV from exempting or indemnifying a director of the CCIV from a liability incurred in relation to a contravention of subsection (3) if the contravention:

                     (a)  is not dishonest; and

                     (b)  does not involve a lack of good faith.

To avoid doubt, this subsection does not affect the operation of section 199A in relation to a contravention of a duty owed under Part 2D.1.

Interaction with section 199B

             (8)  Section 199B applies to a CCIV as if paragraph 199B(1)(b) included a reference to this section.

Note:          There are additional modifications of section 199B, relevant to officers and auditors of the corporate director, in section 1225E.



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