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Kristina Kothrakis
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Welcome to the VIC Consequences of failing to comply with section 260A article page. Everything you need to know about Consequences of failing to comply with section 260A according to VIC law - Dated: 09/01/2009

What the Law States according to VIC Law for Consequences of failing to comply with section 260A

According to VIC Law for the charge of 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.

The Maximum Penalty - Consequences of failing to comply with section 260A

According to VIC Law for the charge of Consequences of failing to comply with section 260A ,
 Pecuniary order of $200,000.00  or disqualification from managing a corporation

What the Police must prove according to VIC Law for Consequences of failing to comply with section 260A


 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 under VIC Law - Consequences of failing to comply with section 260A


1. Lack of intent

2. Factual dispute

In VIC which court will hear the matter - 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.

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