Competition and Consumer Act 2010

For the purposes of paragraph 51ABSA(2)(b), a person (the second person) is an associate of a person (the primary person) in relation to a body corporate (the designated body) if, and only if, one or more of the following paragraphs applies:

the primary person is a body corporate and the second person is:

a body corporate the primary person controls; or

a body corporate that controls the primary person; or

a body corporate that is controlled by an entity that controls the primary person;

the second person is a person with whom the primary person has, or proposes to enter into, a relevant agreement for the purpose of controlling or influencing the outcome of decisions about the designated body’s financial and operating policies;

the second person is a person with whom the primary person is acting, or proposing to act, in concert in relation to controlling or influencing the outcome of decisions about the designated body’s financial and operating policies.

Despite paragraph (1)(b) or (c), the second person is not an associate of the primary person in relation to the designated body merely because:

they have entered or propose to enter into a relevant agreement; and

under the relevant agreement, one of them has or will have one or more rights:

of a class set out in subsection (3); and

whether enforceable presently or in the future, and whether or not on the fulfilment of a condition.

The classes of rights are as follows:

a right to dispose of securities in the designated body;

a right to control the exercise of a power to dispose of securities in the designated body;

a right that is both:

consistent with a right normally accorded to minority shareholders in order to protect their financial interests as investors; and

reasonably appropriate and adapted to achieving the purpose of protecting a minority shareholder’s financial interests, in their capacity as an investor, and not for some other purpose;

a right to the distribution of the profits of the designated body in accordance with a policy for allocating such rights for classes of securities in the designated body;

a right under the relevant agreement if the agreement:

would be reasonable in the circumstances if the parties were dealing at arm’s length; and

is a financing agreement, or a standard shareholder (or member) agreement about governance processes; and

is not of a class determined under paragraph (5)(a);

a right of a class determined under paragraph (5)(b).

For subparagraph (c)(i), rights normally accorded to minority shareholders can include the following:

protections relating to changes to a body corporate’s constitution or capital;

protections relating to the liquidation, sale or winding up of a body corporate;

protections relating to related‑party dealings;

rights to access information consistent with a minority shareholder’s investment;

rights to observe board meetings.

For the application of subparagraph (e)(ii) to a unit trust or managed investment scheme, note the extended meaning of shareholder in subsection (6).

Despite subsection (1), the second person is not an associate of the primary person in relation to the designated body merely because of one or more of the following:

one gives advice to the other, or acts on the other’s behalf, in the proper performance of the functions attaching to a professional capacity or a business relationship;

one, a client, gives specific instructions to the other, whose ordinary business includes dealing in financial products, to acquire financial products on the client’s behalf in the ordinary course of that business;

one has sent, or proposes to send, to the other an offer under a takeover bid for shares held by the other;

one has appointed the other, otherwise than for valuable consideration, to vote as a proxy or representative at a meeting of members, or of a class of members, of a body corporate;

a matter of a class determined under paragraph (5)(c).

The Minister may, by legislative instrument:

determine a class of agreements for the purposes of subparagraph (3)(e)(iii); or

determine a class of rights for the purposes of paragraph (3)(f); or

determine a class of matters for the purposes of paragraph (4)(e).

In this section:

While this section (by defining associate) is modifying what control means for subsection 51ABS(1) of this Act, references in this section to control do not adopt those modifications (of section 50AA of the Corporations Act).

if the body is a company—a person who is a member of the company under section 231 of the Corporations Act 2001;

if because of section 51ABC the body is a unit trust—a person who holds a unit in the trust;

if because of section 51ABC the body is a managed investment scheme—a person who holds an interest in the scheme.

unless paragraph (b) applies—the same meaning as in subsection 92(2) of the Corporations Act 2001;

if because of section 51ABC the body is a unit trust—a unit in the trust.

If because of section 51ABC the body is a managed investment scheme, see paragraph 92(2)(c) of the Corporations Act 2001.