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CORPORATIONS ACT 2001

CHAPTER 5 - EXTERNAL ADMINISTRATION  

PART 5.7B - RECOVERING PROPERTY OR COMPENSATION FOR THE BENEFIT OF CREDITORS OF INSOLVENT COMPANY  

Division 5 - Liability of holding company for insolvent trading by subsidiary  

SECTION 588V  WHEN HOLDING COMPANY LIABLE  

588V(1)  [Contravention]  


A corporation contravenes this section if:


(a) the corporation is the holding company of a company at the time when the company incurs a debt; and


(b) the company is insolvent at that time, or becomes insolvent by incurring that debt, or by incurring at that time debts including that debt; and


(c) at that time, there are reasonable grounds for suspecting that the company is insolvent, or would so become insolvent, as the case may be; and


(d) one or both of the following subparagraphs applies:


(i) the corporation, or one or more of its directors, is or are aware at that time that there are such grounds for so suspecting;

(ii) having regard to the nature and extent of the corporation's control over the company's affairs and to any other relevant circumstances, it is reasonable to expect that:

(A) a holding company in the corporation's circumstances would be so aware; or

(B) one or more of such a holding company's directors would be so aware; and


(e) that time is at or after the commencement of this Act.

588V(2)  [No offence]  


A corporation that contravenes this section is not guilty of an offence.

 



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