Commonwealth Consolidated Acts Commonwealth Consolidated ActsRedemption must be in accordance with terms of issue
(1) A CCIV must not redeem shares if the redemption is not on the terms on which the shares are on issue.
Sub - fund must be solvent
(2) A CCIV must not redeem shares if, immediately before the redemption:
(a) the sub - fund to which the shares are referable is insolvent; or
(b) there are reasonable grounds for suspecting that the sub - fund to which the shares are referable is insolvent, or would become insolvent immediately after the redemption.
Note 1: For when a sub - fund of a CCIV is solvent , or insolvent , see section 1231A.
Note 2: The directors of the corporate director have a duty to prevent insolvent trading by sub - funds: see section 588G (as modified by Division 6 of Part 8B.6).
Consequences of contravention
(3) If a CCIV redeems shares in contravention of subsection (1) or (2):
(a) the contravention does not affect the validity of the redemption or of any contract or transaction connected with it; and
(b) the CCIV does not commit an offence.
Fault - based offence
(4) A person commits an offence if the person is involved in a CCIV's contravention of subsection (1) or (2) and the involvement is dishonest.
Civil liability
(5) A person who is involved in a CCIV's contravention of subsection (1) or (2) contravenes this subsection.
Note: This subsection is a civil penalty provision (see section 1317E).