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Consequences of failing to comply with section 260A

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Written by
Kristina Kothrakis
Criminal Defence Lawyer

Contact Kristina Kothrakis 

03 9670 5111


Other (inc. Computer Offences) - VIC
The Law - Consequences of failing to comply with section 260A

What the Law states - Consequences of failing to comply with section 260A


CORPORATIONS ACT 2001 - SECT 260D

Consequences of failing to comply with section 260A

(1)  If a company provides financial assistance in contravention of section 260A:

(a)  the contravention does not affect the validity of the financial assistance or of any contract or transaction connected with it; and

(b)  the company is not guilty of an offence.

(2)  Any person who is involved in a company's contravention of section 260A contravenes this subsection.

Note 1: Subsection (2) is a civil penalty provision (see section 1317E).

Note 2: Section 79 defines involved .

(3)  A person commits an offence if they are involved in a company's contravention of section 260A and the involvement is dishonest.

Maximum Penalty in Victoria



 Pecuniary order of $200,000.00  or disqualification from managing a corporation

What the Prosecution must prove - Consequences of failing to comply with section 260A - Vic



 1. That a company provides financial assistance to a person to acquire shares in a company

2. That the acquisition materially prejudiced the interests of the company, or its ability to pay creditors; or

3. The assistance was not approved by the shareholders

Possible Defences - Consequences of failing to comply with section 260A



1. Lack of intent

2. Factual dispute

Which court will hear the charge of Consequences of failing to comply with section 260A



County Court

CORPORATIONS ACT 2001 - SECT 260A

Financial assistance by a company for acquiring shares in the company or a holding company

financially assist a person to acquire shares (or units of shares) in the company or a holding company of the company only if:

(a)  giving the assistance does not materially prejudice:

(i)  the interests of the company or its shareholders; or

(ii)  the company's ability to pay its creditors; or

(b)  the assistance is approved by shareholders under section 260B (that section also requires advance notice to ASIC); or

(c)  the assistance is exempted under section 260C.

(2)  Without limiting subsection (1), financial assistance may:

(a)  be given before or after the acquisition of shares (or units of shares); and

(b)  take the form of paying a dividend.

(3)  Subsection (1) extends to the acquisition of shares (or units of shares) by:

(a)  issue; or

(b)  transfer; or

(c)  any other means.

Article published on 01/09/2009. To check if any changes to the law please discuss with one of our lawyers.
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