Commonwealth Numbered Acts

CORPORATIONS ACT 1989 No. 109 of 1989 - SECT 234

234. (1) Subject to this section, a company shall not, whether directly or
indirectly:

   (a)  make a loan to:

        (i)    a director of the company, a spouse of such a director, or a
               relative of such a director or spouse;

        (ii)   a director of a body corporate that is related to the company,
               a spouse of such a director, or a relative of such a director
               or spouse;

        (iii)  a trustee of a trust under which a person referred to in
               subparagraph (i) or (ii) has a beneficial interest where the
               loan is made to the trustee in the capacity as trustee;

        (iv)   a trustee of a trust under which a body corporate has a
               beneficial interest, where a person referred to in subparagraph
               (i) or (ii) has, or 2 or more such persons together have, a
               relevant interest or relevant interests in shares in the body
               corporate the nominal value of which is not less than 10% of
               the nominal value of the issued share capital of the body
               corporate, being a loan made to the trustee in the capacity as
               trustee; or

        (v)    a body corporate, where a person referred to in subparagraph
               (i) or (ii) has, or 2 or more such persons together have, a
               relevant interest or relevant interests in shares in the body
               corporate the nominal value of which is not less than 10% of
               the nominal value of the issued share capital of the body
               corporate; or

   (b)  give a guarantee or provide security in connection with a loan made or
        to be made by another person to a natural person or body corporate
        referred to in paragraph (a).

(2) For the purposes of subsection (1), where:

   (a)  a company:

        (i)    makes a loan to a body corporate or gives a guarantee or
               provides security in connection with a loan made to a body
               corporate; or

        (ii)   makes a loan to a trustee of a trust under which a body
               corporate has a beneficial interest, or gives a guarantee or
               provides security in connection with a loan made to a trustee
               of a trust under which a body corporate has a beneficial
               interest;

   (b)  the company has a relevant interest or relevant interests in shares in
        the body corporate; and

   (c)  a person has, or 2 or more persons together have, a relevant interest
        or relevant interests in shares in the company; the matters referred
        to in paragraphs (b) and (c) shall be disregarded for the purpose of
        determining whether the person has, or the persons together have, as
        the case may be, a relevant interest or relevant interests in the
        shares referred to in paragraph (b).

(3) Nothing in subsection (1) applies:

   (a)  to anything done by a company that is an exempt proprietary company;

   (b)  to a loan made by a company to, or a guarantee given or security
        provided by a company in relation to, a body corporate that is related
        to the company if the making of the loan, the giving of the guarantee
        or the provision of the security has been authorised by a resolution
        of the directors;

   (c)  subject to subsection (4), to anything done by a company to provide a
        person with funds to meet expenditure incurred or to be incurred by
        the person for the purposes of the company or for the purpose of
        enabling the person properly to perform duties as an officer of the
        company;

   (d)  subject to subsection (4), to anything done by a company to provide a
        person who is engaged in the full-time employment of the company or of
        a body corporate that is related to the company with funds to meet
        expenditure incurred or to be incurred by the person in purchasing or
        otherwise acquiring premises to be used by the person as the person's
        principal place of residence;

   (e)  to a loan made by a company to a person who is engaged in the
        full-time employment of the company or of a body corporate that is
        related to the company, where:

        (i)    if neither subparagraph (ii) nor (iii) applies-the company has
               at a general meeting;

        (ii)   if the company is a subsidiary of a listed company or listed
               companies-the company and the listed company or listed
               companies have at general meetings; or

        (iii)  if the company is not a subsidiary of a listed company but is a
               subsidiary whose ultimate holding company is incorporated in
               Australia or an external Territory-the company and the ultimate
               holding company have at general meetings;
approved a scheme for the making of such loans and the loan is made in
accordance with the scheme; or

   (f)  to a loan made, guarantee given or security provided by a company in
        the ordinary course of its ordinary business where:

        (i)    that business includes the lending of money or the giving of
               guarantees or the provision of security in connection with
               loans made by other persons; and

        (ii)   the loan that is made by the company or in respect of which the
               company gives the guarantee or provides the security is made on
               ordinary commercial terms as to the rate of interest, the terms
               of repayment of principal and payment of interest, the security
               to be provided and otherwise.

(4) Paragraph (3) (c) or (d) does not authorise the making of any loan, the
entering into any guarantee or the provision of any security except:

   (a)  with the prior approval of:

        (i)    if neither subparagraph (ii) or (iii) applies-the company;

        (ii)   if the company is a subsidiary of a listed company or listed
               companies-the company and the listed company or listed
               companies; or

        (iii)  if the company is not a subsidiary of a listed company but is a
               subsidiary whose ultimate holding company is incorporated in
               Australia or an external Territory-the company and the ultimate
               holding company;
given at a general meeting of the company or at general meetings of the
company and the listed company or listed companies or of the company and the
ultimate holding company, as the case may be, at which the purposes of the
expenditure and the amount of the loan or the extent of the guarantee or
security, as the case may be, are disclosed; or

   (b)  on condition that, if the making of the loan, the giving of the
        guarantee or the provision of the security is not approved:

        (i)    if neither subparagraph (ii) nor (iii) applies-by the company
               at or before the next annual general meeting of the company;

        (ii)   if the company is a subsidiary of a listed company or listed
               companies-by the company at or before the next annual general
               meeting of the company or by the listed company or by each
               listed company at or before the next annual general meeting of
               the listed company concerned; or

        (iii)  if the company is not a subsidiary of a listed company but is a
               subsidiary whose ultimate holding company is incorporated in
               Australia or an external Territory-by the company at or before
               the next annual general meeting of the company or by the
               ultimate holding company at or before the next annual general
               meeting of the ultimate holding company;
the loan be repaid or the liability under the guarantee or security be
discharged, as the case may be, within 6 months after the conclusion of that
meeting.

(5) A company that makes a loan, gives a guarantee or provides security in
contravention of this section is not guilty of an offence, but a person
involved in the contravention contravenes this subsection.

(6) The penalty applicable to a contravention of subsection (5) is:

   (a)  if it was committed with intent to deceive or defraud the company,
        members or creditors of the company or creditors of any other person
        or for any other fraudulent purpose-$20,000 or imprisonment for 5
        years, or both; or

   (b)  otherwise-$5,000.

(7) Where a company makes a loan, gives a guarantee or provides security in
contravention of this section:

   (a)  in the case of a loan made to, or a guarantee given or security
        provided in relation to a loan made to, a director of the company or
        of a body corporate that is related to the company or a spouse of such
        a director, or a relative of such a director or spouse:

        (i)    the directors of the company; and

        (ii)   any officers of the company who are liable to be prosecuted in
               respect of the contravention, whether or not they, or any of
               them, have been convicted of an offence or offences in respect
               of the contravention;
are jointly and severally liable to indemnify the company against any loss
arising from the making of the loan, the giving of the guarantee or the
providing of the security, as the case may be;

   (b)  in the case of a loan made to, or a guarantee given or security
        provided in relation to a loan made to, a trustee of a trust referred
        to in subparagraph (1) (a) (iii):

        (i)    any director of the company, or of a body corporate that is
               related to the company, by virtue of whose beneficial interest
               under the trust the making of the loan, the giving of the
               guarantee or the provision of the security contravened this
               section; and

        (ii)   any other officers of the company who are liable to be
               prosecuted in respect of the contravention, whether or not
               they, or any of them have been convicted of an offence or
               offences in respect of the contravention;
are jointly and severally liable to indemnify the company against any loss
arising from the making of the loan, the giving of the guarantee or the
providing of the security, as the case may be;

   (c)  in the case of a loan made to, or a guarantee given or security
        provided in relation to a loan made to, a trustee of a trust under
        which a
body corporate (in this paragraph called the "relevant body corporate") has a
beneficial interest in circumstances referred to in subparagraph (1) (a) (iv):

        (i)    any director of the company, or of a body corporate that is
               related to the company, by virtue of whose relevant interest or
               relevant interests in shares in the relevant body corporate the
               making of the loan, the giving of the guarantee or the
               provision of the security contravened this section; and

        (ii)   any other officers of that company or of the relevant body
               corporate who are liable to be prosecuted in respect of the
               contravention, whether or not they, or any of them, have been
               convicted of an offence or offences in respect of the
               contravention;
are jointly and severally liable to indemnify the company against any loss
arising from the making of the loan, the giving of the guarantee or the
providing of the security, as the case may be; or

   (d)  in a case of a loan made to, or a guarantee given or security provided
        in relation to a loan made to, a body corporate referred to in
        subparagraph
(1) (a) (v) (in this paragraph called the "relevant body corporate"):

        (i)    any director of the company, or of a body corporate that is
               related to the company, by virtue of whose relevant interest or
               relevant interests in shares in the relevant body corporate the
               making of the loan, the giving of the guarantee or the
               provision of the security contravened this section; and

        (ii)   any other officers of that company or of the relevant body
               corporate who are liable to be prosecuted in respect of the
               contravention, whether or not they, or any of them, have been
               convicted of an offence or offences in respect of the
               contravention;
are jointly and severally liable to indemnify the company against any loss
arising from the making of the loan, the giving of the guarantee or the
providing of the security, as the case may be.

(8) It is a defence to a prosecution for a contravention of subsection (1) or
(5) or to a proceeding instituted in respect of a liability under subsection
(7) if it is proved that the defendant had no knowledge of the making of the
loan, the giving of the guarantee or the provision of the security.

(9) Nothing in this section prevents the company from recovering the amount
of, or of any interest on, any loan made, or any amount for which it becomes
liable under any guarantee given or in respect of any security provided,
contrary to this section.

(10) If a person has made a loan in relation to which a company has given a
guarantee or provided security in contravention of this section, the person
may enforce the guarantee or security against the company if, and only if:

   (a)  where the company is a proprietary company-a certificate signed by a
        director and a secretary of the company certifying that the company
        was an exempt proprietary company was given to the person before the
        guarantee was given or the security was provided; or

   (b)  in any case-a certificate signed by a director and a secretary of the
        company certifying that the company was not prohibited by this section
        from giving the guarantee or providing the security was given to the
        person before the guarantee was given or the security was provided and
        the person did not know, and had no reason to believe, that the
        certificate was incorrect.

(11) A director or secretary of a company shall not give to a person a
certificate referred to in subsection (10) that is false.

(12) This section is in addition to, and not in derogation of, any other law
in force in Australia.