51ABSBAcquisitions that do not result in control—meaning of associate

51ABSB Acquisitions that do not result in control—meaning of associate

Meaning of associate—main rule

(1) For the purposes of paragraph 51ABSA(2)(b), a person (the second person) is an associate of a person (the primary person) in relation to a body corporate (the designated body) if, and only if, one or more of the following paragraphs applies:

(a) the primary person is a body corporate and the second person is:

(i) a body corporate the primary person controls; or

(ii) a body corporate that controls the primary person; or

(iii) a body corporate that is controlled by an entity that controls the primary person;

(b) the second person is a person with whom the primary person has, or proposes to enter into, a relevant agreement for the purpose of controlling or influencing the outcome of decisions about the designated body’s financial and operating policies;

(c) the second person is a person with whom the primary person is acting, or proposing to act, in concert in relation to controlling or influencing the outcome of decisions about the designated body’s financial and operating policies.

Exception—is not an associate merely because of certain rights

(2) Despite paragraph (1)(b) or (c), the second person is not an associate of the primary person in relation to the designated body merely because:

(a) they have entered or propose to enter into a relevant agreement; and

(b) under the relevant agreement, one of them has or will have one or more rights:

(i) of a class set out in subsection (3); and

(ii) whether enforceable presently or in the future, and whether or not on the fulfilment of a condition.

(3) The classes of rights are as follows:

(a) a right to dispose of securities in the designated body;

(b) a right to control the exercise of a power to dispose of securities in the designated body;

(c) a right that is both:

(i) consistent with a right normally accorded to minority shareholders in order to protect their financial interests as investors; and

(ii) reasonably appropriate and adapted to achieving the purpose of protecting a minority shareholder’s financial interests, in their capacity as an investor, and not for some other purpose;

(d) a right to the distribution of the profits of the designated body in accordance with a policy for allocating such rights for classes of securities in the designated body;

(e) a right under the relevant agreement if the agreement:

(i) would be reasonable in the circumstances if the parties were dealing at arm’s length; and