A T O home
Legal Database
Search   
for 
 
Access the database 
Browse database
Searches  
View last document
Quick access 
View legislation
View a document
Email Cross Reference Material Previous/Next Section Contents Previous/Next Result
Printable version
Printable
version

CORPORATIONS ACT 2001

SCHEDULE 2 - INSOLVENCY PRACTICE SCHEDULE (CORPORATIONS)    View history reference

Note: See section 600K.

PART 3 - GENERAL RULES RELATING TO EXTERNAL ADMINISTRATIONS  

Division 60 - Remuneration and other benefits received by external administrators  

Subdivision E - Duties of external administrators relating to remuneration and benefits etc.  

CLAUSE 60-20  EXTERNAL ADMINISTRATOR MUST NOT DERIVE PROFIT OR ADVANTAGE FROM THE ADMINISTRATION OF THE COMPANY  

Deriving profit or advantage from the company

60-20(1)  

An external administrator of a company must not directly or indirectly derive any profit or advantage from the external administration of the company.

Circumstances in which profit or advantage is taken to be derived

60-20(2)  

To avoid doubt, an external administrator of a company is taken to derive a profit or advantage from the external administration of the company if:


(a) the external administrator directly or indirectly derives a profit or advantage from a transaction (including a sale or purchase) entered into for or on account of the company; or


(b) the external administrator directly or indirectly derives a profit or advantage from a creditor or member of the company; or


(c) a related entity of the external administrator directly or indirectly derives a profit or advantage from the external administration of the company.

Exceptions

60-20(3)  

Subsection (1) does not apply to the extent that:


(a) another provision of this Act, or of another law, requires or permits the external administrator to derive the profit or advantage; or


(b) the Court gives leave to the external administrator to derive the profit or advantage.

Note: Subsection (1) would not, for example, prevent the external administrator from recovering remuneration for necessary work properly performed by the external administrator in relation to the external administration of the company, as the external administrator is permitted to do so under other provisions of this Act.

60-20(4)  

Despite paragraph (2)(c), subsection (1) does not apply to the extent that:


(a) the external administrator employs or engages a person to provide services in connection with the external administration of the company; and
 View history reference


(b) a related entity of the external administrator directly or indirectly derives a profit or advantage as a result of that employment or engagement; and
 View history reference


(c) one of the following is satisfied:

(i) the external administrator does not know, and could not reasonably be expected to know, that the related entity would derive that profit or advantage;

(ii) the creditors, by resolution, agree to the related entity deriving the profit or advantage;

(iii) it is not reasonably practicable in all the circumstances to obtain the agreement, by resolution, of the creditors to the related entity deriving the profit or advantage and the cost of employing or engaging the person to provide the services is reasonable in all the circumstances.
 View history reference

60-20(4A)  

 View history reference
Despite paragraph (2)(c), subsection (1) does not apply to the extent that a related entity of the external administrator directly or indirectly derives a profit or advantage:


(a) from remuneration paid to the external administrator in accordance with section 60-5 of this Schedule; or


(b) from a profit or advantage covered by subsection (4).

60-20(5)  

Subsection (1) does not apply to the extent that the profit or advantage is a payment that:


(a) is made to the external administrator by or on behalf of the Commonwealth or an agency or authority of the Commonwealth; and


(b) is of a kind prescribed.

Offence

60-20(6)  

A person commits an offence of strict liability if:


(a) the person is subject to a requirement under subsection (1); and


(b) the person fails to comply with the requirement.

Penalty: 50 penalty units.

Note: A defendant bears an evidential burden in relation to the matters in subsections (3), (4) and (5) (see subsection 13.3(3) of the Criminal Code).

Effect of contravention of this section

60-20(7)  

A transaction or any other arrangement entered into in contravention of this section may be set aside by the Court.

 



This information is provided by CCH Australia Limited. View the disclaimer and notice of copyright.
Top of page
More information on page