Reasonable remuneration and reimbursement of expenses

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Reasonable remuneration and reimbursement of expenses to the company officers of the company, an entity it controls, an entity that controls it or a sibling company {s 211 Corporations Act} (remuneration for this purpose is defined to include super and termination payments) Reasonable indemnities, exemptions, insurance premiums and payment for legal costs for officers {s 212 Corporations Act} Advances to director or their spouse or de facto spouse for up to $2000 (or a greater amount prescribed by Corps Act) {s 213 Corporations Act} Financial benefits to or by closely held subsidiaries where there is 100% common ownership of voting shares {s 214 Corporations Act} Non-discriminatory benefits to members in their capacity as members { s 215 Corporations Act} Benefits given under a court {s 216 Corporations Act} E. Member Approval Finally if the transaction is not exempt then member approval must be sought {s 208(1)(a)(i) Corporations Act}
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E.1 General Procedures {Division 3 of Chapter 2E Corporations Act} sets out the procedures for obtaining member approval The company must lodge notice of meeting, resolution and explanatory memorandum (and any other document) with ASIC { s 218 Corporations Act} o ASIC reviews the proposed resolution { s 220 Corporations Act} There must be full and detailed disclosure to shareholders under {ss 217-219, 221 and 222 Corporations Act} o Requirements for notice are under { s 221 Corporations Act} o Requirements for other material put to members under {s 222 Corporations Act} E.2 Voting Restrictions Under {s 224(1) Corporations Act} the related parties and their associates are prohibited from voting on the resolution However ASIC may declare that they are allow to vote {s 224(4) Corporations Act} However if there is no ASIC declaration and a vote is cast by a related party then the related party contravenes {s 224(6) Corporations Act} F. Consequences for Transaction Under {s 209(1)(a) Corporations Act} the validity of the transaction will NOT be affected However any person ‘involved’ in the breach will be liable for civil and criminal penalties {s 209(2) Corporations Act} . (see Consequences for Civil and Criminal Penalties) CONSEQUENCES OF BREACH A. Civil Penalty Provisions The following civil penalty provisions will apply to any person who has contravened: o Director Duty of Care Skill and Diligence {s 180(1) Corporations Act} o Director Duty of Good Faith {s 181(1) Corporations Act} o Director Duty to Act for Proper Purposes {s 181(1) Corporations Act} o Director Duty to not Profit {s 182/3 Corporations Act} o Director Duty to Prevent Insolvent Trading {s 588G(2) Corporations Act} o Related Party Transactions {s 344(1) Corporations Act} Note there is no civil penalty provision for conflicts of interest (only for no profit part) – however there may be criminal consequences Therefore if the Director breaches this duty, then under { Part 9.4B Corporations Act} he will face any of the following civil consequences for breaching the civil penalty A.1 Declaration of Contravention Under {s 1317E Corporations Act}
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