Commonwealth Consolidated Acts

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CORPORATIONS ACT 2001 - SECT 259E

When a company controls an entity

             (1)  For the purposes of this Part, a company controls an entity if the company has the capacity to determine the outcome of decisions about the entity's financial and operating policies.

             (2)  In determining whether a company has this capacity:

                     (a)  the practical influence the company can exert (rather than the rights it can enforce) is the issue to be addressed; and

                     (b)  any practice or pattern of behaviour affecting the entity's financial or operating policies is to be taken into account (even if it involves a breach of an agreement or a breach of trust).

             (3)  Merely because the company and an unrelated entity jointly have the capacity to determine the outcome of decisions about another entity's financial and operating policies, the company does not control the other entity.

             (4)  A company is not taken to control an entity merely because of a capacity that it is under a legal obligation to exercise for the benefit of someone other than its shareholders.

Note:          This situation could arise, for example, if the company holds shares as a trustee or is performing duties as a liquidator.



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