Section 1230F — Corporations Act 2001: Requirements for redemptions by all CCIVs

Redemption must be in accordance with terms of issue (1) A CCIV must not redeem shares if the redemption is not on the terms on which the shares are on issue. Sub-fund must be solvent (2) A CCIV must not redeem shares if, immediately before the redemption: (a) the sub-fund to which the shares are referable is insolvent; or (b) there are reasonable grounds for suspecting that the sub-fund to which the shares are referable is insolvent, or would become insolvent immediately after the redemption. Note 1: For when a sub-fund of a CCIV is solvent, or insolvent, see section 1231A. Note 2: The directors of the corporate director have a duty to prevent insolvent trading by sub-funds: see section 588G (as modified by Division 6 of Part 8B.6). Consequences of contravention (3) If a CCIV redeems shares in contravention of subsection (1) or (2): (a) the contravention does not affect the validity of the redemption or of any contract or transaction connected with it; and (b) the CCIV does not commit an offence. Fault-based offence (4) A person commits an offence if the person is involved in a CCIV’s contravention of subsection (1) or (2) and the involvement is dishonest. Civil liability (5) A person who is involved in a CCIV’s contravention of subsection (1) or (2) contravenes this subsection. Note: This subsection is a civil penalty provision (see section 1317E).