Update on Court Case, page-61

http://download.asic.gov.au/media/1239851/rg76-published-11-may-2011.pdf

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Related party transactions

What this guide is about

RG 76.1 A ‘related party transaction’ is any transaction through which a public company or registered managed investment scheme provides a financial benefit to a related party (such as a director, their spouse and certain other relatives). Almost by definition, related party transactions involve conflicts of interest because related parties are often in a position to influence the decision of whether the benefit is provided to them, and the terms of its provision.
Overview of legal framework for related party transactions
RG 76.7 The objective of the related party provisions in Ch 2E and Pt 5C.7 is to protect the interests of members of public companies and registered schemes by requiring member approval for giving financial benefits that could endanger members’ interests: s207 and 601LB.

Member approval
RG 76.8 Under s208, for a public company or an entity it controls to give a financial benefit to a related party of the public company:
(a) the company’s members must approve the transaction in the way set out in s217–227; or
(b) giving the financial benefit must fall within an exception set out in s210–216.

Exceptions
RG 76.13 Member approval is generally not required for:
(a) transactions that are on arm’s length terms (s210);
(b) benefits that are reasonable remuneration or reimbursement of officers’ and employees’ expenses (s211); and

(c) certain other transactions (s212–215) or financial benefits given under a court order (s216). ​

Note: Sections 213 and 214 do not apply for registered schemes.
RG 76.14 The arm’s length exception in s210 provides that member approval is not needed to give a financial benefit on terms that would be reasonable in the circumstances if the public company and the related party were dealing at arm’s length, or on terms that are less favourable to the related party than these terms.
RG 76.15 If giving the financial benefit to the related party does not come within any of the exceptions, member approval must be obtained by using the procedure set out in s217–227.