Section 224 of the Corporations Act 2001 (Cth) is ‘Voting by or on Behalf of Related Party Interested in Proposed Resolution’ and is extracted below.
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Section 224 of the Corporations Act 2001 (Cth) is Voting by or on Behalf of Related Party Interested in Proposed Resolution and reads as follows:
Voting by or on Behalf of Related Party Interested in Proposed Resolution
(1) At a general meeting, a vote on a proposed resolution under this Division must not be cast (in any capacity) by or on behalf of:
(a) a related party of the public company to whom the resolution would permit a financial benefit to be given; or
(b) an associate of such a related party.
(2) Subsection (1) does not prevent the casting of a vote if:
(a) it is cast by a person as a proxy appointed by writing that specifies how the proxy is to vote on the proposed resolution; and
(b) it is not cast on behalf of a related party or associate of a kind referred to in subsection (1).
(3) The regulations may prescribe cases where subsection (1) does not apply.
(4) ASIC may by writing declare that:
(a) subsection (1) does not apply to a specified proposed resolution; or
(b) subsection (1) does not prevent the casting of a vote, on a specified proposed resolution, by a specified entity, or on behalf of a specified entity;
but may only do so if satisfied that the declaration will not cause unfair prejudice to the interests of any member of the public company.
(5) A declaration in force under subsection (4) has effect accordingly.
(6) If a vote is cast in contravention of subsection (1), the related party or associate, as the case may be, contravenes this subsection, whether or not the proposed resolution is passed.
(7) For the purposes of this section, a vote is cast on behalf of an entity if, and only if, it is cast:
(a) as proxy for the entity; or
(b) otherwise on behalf of the entity; or
(c) in respect of a share in respect of which the entity has:
(i) power to vote; or
(ii) power to exercise, or control the exercise of, a right to vote.
(8) Subject to subsection 225(1), a contravention of this section does not affect the validity of a resolution.
(9) Subject to Part 1.1A, this section has effect despite:
(a) anything else in:
(i) this Act; or
(ii) any other law (including the general law) of a State or Territory; or
(b) anything in a body corporate’s constitution.
The maximum penalty for the offence of Voting by or on Behalf of Related Party Interested in Proposed Resolution is:
5 years imprisonment and/or 200 penalty units (a Commonwealth penalty unit is currently $210).
However, it should be kept in mind that maximum penalties are reserved for the most serious cases.
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