7ADefinition of prohibited agreement or arrangement

7A Definition of prohibited agreement or arrangement

(1) For the purposes of these Regulations, a prohibited agreement or arrangement means an agreement or arrangement—

(a) made between 2 or more of the following parties—

(i) the governing body of a school;

(ii) the proprietor of the school;

(iii) another person or entity; and

(b) where the purpose of the agreement or arrangement—

(i) is to pay or divert any profit or gain made in the conduct of the school to the proprietor or any other person or entity; or

(ii) that involves a payment by the governing body of the school or the proprietor of the school (as the case requires) to another person or entity which—

(A) is excessive compared to the reasonable market value of the charges, fees, rates or costs currently prevailing in the community for payment for that purpose (other than a payment made in good faith for that purpose); or

(B) involves a gift, loan or similar payment for a purpose unconnected to the conduct of the school (other than payments made to a bank in connection with the conduct of the school); or

(iii) is otherwise not a payment made in good faith for the benefit of the school, or reasonably required for the conduct of the school.

1 Payments under paragraph (b)(i) may include excessive fees or remuneration or other expenses paid to members of the school's governing body, or excessive rents, fees, or other charges paid to any other person or entity.

2 Payments under paragraph (b)(ii) may include loans, guarantees, or indemnities payable for the recipient's own use or benefit; for example, a payment to benefit an enterprise conducted by the payment recipient where that enterprise is unconnected to the conduct of the school.

3 Payments under paragraph (b)(iii) may include "sham" arrangements that have the effect of transferring payments from the school to the recipient for the recipient's own purpose or benefit, and which deliver no benefit or service to the school.

(2) Despite subregulation (1), a prohibited agreement or arrangement does not include an agreement or arrangement under which the proprietor of a school provides money (other than government funding) or property of the school to—

(a) a person or entity to conduct an early learning centre that is a feeder for enrolments to the school; or

(b) a person to provide school boarding services at a school boarding premises to students who are enrolled or attending that school, and where those services are not provided for the purposes of profit or gain.