109Investments of superannuation entity to be made and maintained on arm’s length basis

#### 109 Investments of superannuation entity to be made and maintained on arm’s length basis (1) A trustee or investment manager of a superannuation entity must not invest in that capacity unless: (a) the trustee or investment manager, as the case may be, and the other party to the relevant transaction are dealing with each other at arm’s length in respect of the transaction; or (b) both: (i) the trustee or investment manager, as the case may be, and the other party to the relevant transaction are not dealing with each other at arm’s length in respect of the transaction; and (ii) the terms and conditions of the transaction are no more favourable to the other party than those which it is reasonable to expect would apply if the trustee or investment manager, as the case may be, were dealing with the other party at arm’s length in the same circumstances. (1A) If: (a) a trustee or investment manager of a superannuation entity invests in that capacity; and (b) at any time during the term of the investment the trustee or investment manager is required to deal in respect of the investment with another party that is not at arm’s length with the trustee or investment manager; the trustee or investment manager must deal with the other party in the same manner as if the other party were at arm’s length with the trustee or investment manager. (2) Subsections (1) and (1A) are civil penalty provisions as defined by section 193, and Part 21 therefore provides for civil and criminal consequences of contravening, or of being involved in a contravention of, those subsections. (3) A contravention of subsection (1) or (1A) does not affect the validity of a transaction.