205Financial accommodation to directors and associates

205 Financial accommodation to directors and associates (1) A co-operative must not provide financial accommodation to a director, or to a person the co-operative knows or should reasonably know is an associate of a director, unless: (a) the accommodation is: (i) approved under subsection (2); or

Co-operatives (National Uniform Legislation) Act 2015 132 (ii) given under a scheme approved under subsection (2); or (iii) provided on terms no more favourable to the director or associate than the terms on which it is reasonable to expect the co-operative would give if dealing with the director or associate at arm's length in the same (b) the directors have approved the accommodation, at a meeting of the board at which a quorum was present, by a majority of at least two-thirds of the directors present and voting on the matter. Maximum penalty: $50 000. (2) For the purposes of subsection (1)(a)(i) and (ii), financial accommodation or a scheme is approved if: (a) it is approved by a resolution passed at a general meeting; and (b) the full details of the accommodation or scheme were made available to members at least 21 days before the meeting. (3) A director or an associate of a director must not obtain financial accommodation given in contravention of subsection (1). (4) For the purposes of this section, a concessional rate of interest for a borrower from a co-operative is a normal term only if the borrower is entitled to the concession by being a member of a class of borrowers from the co-operative specified in its rules as being entitled to the concession. (5) If a director of a co-operative or an associate of a director accepts, in payment of a debt owed by a member of the co-operative to the director or associate, any proceeds of financial accommodation provided to the member by the co-operative, this section has effect as if the financial accommodation has been provided to the director or associate. (6) In this section, a reference to: (a) the provision of financial accommodation to a director or an associate of a director; or (b) the obtaining of financial accommodation by a director or an associate of a director; or

Co-operatives (National Uniform Legislation) Act 2015 133 (c) a debt owed to a director or an associate of a director; includes a reference to a provision of financial accommodation to, or an obtaining of financial accommodation by, the director or associate, or a debt owed to the director or associate, jointly with another person. (7) In this section: associate of a director means: (a) the director's spouse or de facto partner; or (b) a person when acting in the capacity of trustee of a trust under which: (i) the director or director's spouse or de facto partner has a beneficial interest; or (ii) a corporation referred to in paragraph (c) has a beneficial interest; or (c) a corporation if: (i) the director or director's spouse or de facto partner has a material interest in shares in the corporation; and (ii) the nominal value of the shares is not less than 10% of the nominal value of the issued share capital of the corporation. (8) For the purposes of this section, a person has a material interest in a share in a corporation if: (a) the person has power to withdraw the share capital subscribed for the share or to exercise control over the withdrawal of the share capital; or (b) the person has power to dispose of the share or to exercise control over the disposal of the share; or (c) the person has power to exercise or to control the exercise of any right to vote conferred on the holder of the share.