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CORPORATIONS ACT 2001 No. 50, 2001 - SECT 588FG

Transaction not voidable as against certain persons

(1) A court is not to make under section 588FF an order materially prejudicing a right or interest of a person other than a party to the transaction if it is proved that:

(a)
the person received no benefit because of the transaction; or

(b)
in relation to each benefit that the person received because of the transaction:

(i)
the person received the benefit in good faith; and
(ii)
at the time when the person received the benefit:

(A) the person had no reasonable grounds for suspecting that the company was insolvent at that time or would become insolvent as mentioned in paragraph 588FC(b); and (B) a reasonable person in the person's circumstances would have had no such grounds for so suspecting.

(2) A court is not to make under section 588FF an order materially prejudicing a right or interest of a person if the transaction is not an unfair loan to the company and it is proved that:

(a)
the person became a party to the transaction in good faith; and

(b)
at the time when the person became such a party:

(i)
the person had no reasonable grounds for suspecting that the company was insolvent at that time or would become insolvent as mentioned in paragraph 588FC(b); and
(ii)
a reasonable person in the person's circumstances would have had no such grounds for so suspecting; and
(c)
the person has provided valuable consideration under the transaction or has changed his, her or its position in reliance on the transaction.

(3) For the purposes of paragraph (2)(c), if an amount has been paid or applied towards discharging to a particular extent a liability to pay tax, the discharge is valuable consideration provided:

(a)
by the person to whom the tax is payable; and

(b)
under any transaction that consists of, or involves, the payment or application.

(4) In subsection (3):

"tax" means tax (however described) payable under a law of the Commonwealth or of a State or Territory, and includes, for example, a levy, a charge, and municipal or other rates.

(5) For the purposes of paragraph (2)(c), if an amount has been paid or applied towards discharging to a particular extent a liability to the Commonwealth, or to the Commissioner of Taxation, that arose under or because of an Act of which the Commissioner has the general administration, the discharge is valuable consideration provided by the Commonwealth, or by the Commissioner, as the case requires, under any transaction that consists of, or involves, the payment or application. (6) Subsections (3) and (5):

(a)
are to avoid doubt and are not intended to limit the cases where a person may be taken to have provided valuable consideration under a transaction; and

(b)
apply to an amount even if it was paid or applied before the commencement of this Act.


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