Unreasonable Director Related Transactions


What are ‘Unreasonable Director Related Transactions’?

Transactions are unreasonable director related transactions if it involves a director or close associate (as defined) of the company and had no or little benefit to the company (i.e. it was unreasonable for the company to enter into the transaction).

The Corporations Act sometimes will require the other party to the transaction to return an asset or make a payment to the liquidator.

The main elements of unreasonable director related transactions are:

  1. The transaction – There must be a transaction involving the company. It may have been a payment, a transfer or disposition of property, the issue of securities, or incurring an obligation or commitment to make a payment, disposition or issue. The section is designed to cover money or assets actually leaving the company, or commitments like security interests being made over money or assets of the company.
  2. The payment, disposition or issue must involve one of a few parties related to the company, or more correctly, the director of the company. One of the parties to the transaction must be either a:

i.        a director of the company,

ii.       a close associate of a director of the company, or

iii.      a ‘nominee’ person acting on behalf of or for the benefit of a director or their close associate.


Related: See Uncommercial Transactions


Assistance with / Defending against Claims of Unreasonable Director Related Transactions: Who is this service for/aimed at?

C&N Turnaround Solutions can assist a director of a company that may have an Unreasonable Director Related Transaction claim brought against them by a Liquidator. We can assist and advise clients who are subject to these claims by potentially reducing or eliminating the amount required to be paid by the client.


How it works? What’s the process?

To make a claim the liquidator must prove that:

      1. A transaction was entered into;
      2. A director or close associate of the director was involved in the transaction; and
      3. Either there was no benefit to, or there was a detriment to, the company by entering into the transaction.


When will our services be required?

When a director of a company receives a demand for Unreasonable Director Related Transaction from a Liquidator.


What are the benefits/outcomes of engaging this service?

Reduction or elimination of the amount required to be repaid by the client to a Liquidator by assisting the client to provide their defences to such a claim, or to engage an appropriately qualified Lawyer to defend them.


Contact us

Call 02 9299 7000 or click here to submit your enquiry



 With C&N Turnaround Solutions we can help you untangle the mess, clear a way forward, and give you peace of mind…

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