198G

Exercise of powers while company under external administration

In force

Powers of officers while company under external administration

(1)

While a company is under external administration, an officer of the company must not perform or exercise a function or power of that office.

Note:

For a CCIV, section 1224Q applies instead of this section.

Offence

(2)

A person commits an offence if:

(a)

the person is an officer of a company; and

(b)

the company is under external administration; and

(c)

the person purports to perform or exercise a function or power of that office.

Penalty: 30 penalty units.

Exceptions

(3)

Subsections (1) and (2) do not apply to the extent that the officer of the company is acting:

(a)

as the external administrator of the company; or

(b)

with the written approval of the external administrator of the company or the Court; or

(c)

in circumstances in which, despite the fact that the company is under external administration, the officer is permitted by this Act to act.

Note:

In proceedings to determine whether a person has committed an offence under subsection (2), a defendant bears an evidential burden in relation to the matters in subsection (3), see subsection 13.3(3) of the Criminal Code.

(4)

Subsections (1) and (2) do not apply if the company has executed a deed of company arrangement and the deed has not yet terminated.

Note 1:

Section 444G deals with the effect of a deed of company arrangement on various persons.

Note 2:

In proceedings to determine whether a person has committed an offence under subsection (2), a defendant bears an evidential burden in relation to the matters in subsection (4), see subsection 13.3(3) of the Criminal Code.

(4A)

Subsections (1) and (2) do not apply in relation to:

(a)

a company under restructuring; or

(b)

a company that has made a restructuring plan that has not yet terminated.

Functions and powers of liquidator or provisional liquidator prevail in case of conflict

(5)

If subsection (3) applies and there is a conflict between a function or power of the external administrator of the company and a function or power of the officer in relation to the company, the external administrator’s function or power prevails.

Effect of section

(6)

This section does not remove an officer of a company from office.

(7)

For the purposes of this section, a person is not an officer of a company merely because he or she is a managing controller, appointed under a power contained in an instrument, of property of the company.

(8)

Nothing in this section affects a secured creditor’s right to realise or otherwise deal with the security interest.

Definitions

(9)

In this section:

external administration of a company has the same meaning as in Schedule 2.

This Act’s bill:Explanatory memorandum Second reading speech

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