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CORPORATIONS ACT 2001 - SECT 588FD

Unfair loans to a company

             (1)  A loan to a company is unfair if, and only if:

                     (a)  the interest on the loan was extortionate when the loan was made, or has since become extortionate because of a variation; or

                     (b)  the charges in relation to the loan were extortionate when the loan was made, or have since become extortionate because of a variation;

even if the interest is, or the charges are, no longer extortionate.

             (2)  In determining:

                     (a)  whether interest on a loan was or became extortionate at a particular time as mentioned in paragraph (1)(a); or

                     (b)  whether charges in relation to a loan were or became extortionate at a particular time as mentioned in paragraph (1)(b);

regard is to be had to the following matters as at that time:

                     (c)  the risk to which the lender was exposed; and

                     (d)  the value of any security in respect of the loan; and

                     (e)  the term of the loan; and

                      (f)  the schedule for payments of interest and charges and for repayments of principal; and

                     (g)  the amount of the loan; and

                     (h)  any other relevant matter.



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