12Meaning of significant related entity

12 Meaning of significant related entity

Significant related entities of accountable entities other than RSE licensees (1) Subject to subsection (2), a body corporate is a significant related entity of an accountable entity that is not an RSE licensee if all of the following apply to the body corporate: (a) it is a subsidiary of the accountable entity; (b) it, or its business or activities, has (or is likely to have) an effect on the accountable entity, or the business or activities of the accountable entity, that is material and substantial; (c) it is a constitutionally covered body; (d) it is not an accountable entity itself.

Note 1: For the definition of subsidiary, see section 8.

Note 2: For when a body corporate is a constitutionally covered body, see section 13.

(2) A body corporate is not a significant related entity of an accountable entity (the first accountable entity) if: (a) the body corporate is also a subsidiary of another accountable entity; and (b) that other accountable entity is a subsidiary of the first accountable entity.

Note: Example: Company A is a subsidiary of the authorised NOHC of an ADI, and also a subsidiary of the ADI. Both the ADI and the authorised NOHC are accountable entities. Under this subsection:

(a) if the business of Company A has a material and substantial effect on both the ADI and the authorised NOHC—Company A would be a significant related entity only in relation to the ADI; but
(b) if the business of Company A did not have a material and substantial effect on the ADI—Company A would not be a significant related entity in relation to either the ADI or the authorised NOHC.

Significant related entities of accountable entities that are RSE licensees (3) A body corporate is a significant related entity of an accountable entity that is an RSE licensee if all of the following apply to the body corporate: (a) it is a connected entity of the accountable entity; (b) it, or its business or activities, has (or is likely to have) an effect on the accountable entity, or the business or activities of the accountable entity, that is material and substantial; (c) it is a constitutionally covered body; (d) it is not an accountable entity itself.

Note: For the definition of connected entity, see section 8.

Material and substantial effect (4) For the purposes of paragraphs (1)(b) and (3)(b), in determining whether a body corporate has (or is likely to have) an effect on an accountable entity, or the business or activities of an accountable entity, that is material and substantial, the following matters may be taken into account: (a) the nature of the body corporate’s business or activities; (b) the scale of the body corporate’s business or activities; (c) the nature and extent of any interdependency between the body corporate and the accountable entity; (d) any organisational, financial or administrative arrangements between the body corporate and the accountable entity; (e) any other relevant matter.