Asked by David Torrez on May 17, 2024
Verified
Discuss the current position of the Corporations Act in respect to reciprocal ownership interests.
Corporations Act
Legislation that governs the functioning of corporations, including their formation, operation, governance, and dissolution.
Reciprocal Ownership Interests
Situations where two companies hold ownership interests in each other, creating a mutually interdependent relationship.
- Acquire knowledge of the legal principles and guidelines governing cross-shareholdings and mutual ownership interests according to the Corporations Act.
Verified Answer
KG
Karen GreenMay 17, 2024
Final Answer :
Reciprocal ownership interests:
- Reciprocal ownership interests occur where members of a group own shares in each other including circular shareholdings and cross-shareholdings.
- The Corporations Act requires an entity holding shares in its controlling company to dispose of these shares within 12 months of a series of triggers.
- The aim of the prohibition is to ban companies from effectively having control of their own shares through a company it controls (its subsidiary)owning some of its shares.
- Reciprocal ownership interests occur where members of a group own shares in each other including circular shareholdings and cross-shareholdings.
- The Corporations Act requires an entity holding shares in its controlling company to dispose of these shares within 12 months of a series of triggers.
- The aim of the prohibition is to ban companies from effectively having control of their own shares through a company it controls (its subsidiary)owning some of its shares.
Learning Objectives
- Acquire knowledge of the legal principles and guidelines governing cross-shareholdings and mutual ownership interests according to the Corporations Act.