Section 50AA — Corporations Act 2001 (Cth)

(1) For the purposes of this Act, an entity controls a second entity if the first entity has the capacity to determine the outcome of decisions about the second entity’s financial and operating policies.

(2) In determining whether the first entity has this capacity:

(a) the practical influence the first entity can exert (rather than the rights it can enforce) is the issue to be considered; and

(b) any practice or pattern of behaviour affecting the second entity’s financial or operating policies is to be taken into account (even if it involves a breach of an agreement or a breach of trust).

(3) The first entity does not control the second entity merely because the first entity and a third entity jointly have the capacity to determine the outcome of decisions about the second entity’s financial and operating policies.

(4) If the first entity:

(a) has the capacity to influence decisions about the second entity’s financial and operating policies; and

(b) is under a legal obligation to exercise that capacity for the benefit of someone other than the first entity’s members;

the first entity is taken not to control the second entity.

Related sections

• s 49 — References in this Division to a subsidiary
• s 50 — Meaning of related body corporate
• s 50AAA — Meaning of associated entity
• s 51F — Meaning of PPSA retention of title property
• s 51M — Meaning of mutual entity
• s 52A — Signing

Research how courts apply s 50AA

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