Section 88 of the Constitution of Urabba Parks

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Section 88 of the Constitution of Urabba Parks

Compiled text (Section 88 - Service membership)

(1)    Unless otherwise provided under the law of Urabba Parks, no original grant of service membership, or any conversion from one class of service membership to another class of service membership, shall affect the rights of any existing member, service member or otherwise.

(2)    Upon the winding-up of Urabba Parks and after the payments of all debts and obligations except those of membership:

(a)    service members are repaid their deposits, and then any accumulated interest and charity distributions;
(b)    if there are not enough assets to meet obligations under paragraph (a), then all service members ranking equally shall share the loss in equal proportion; and
(c)    once the liabilities and obligations in paragraph (a) have been settled no service member shall be entitled to participate in any further charity distribution of assets.

(3)    No charity distributions may be made:

(a)    unless the amounts paid up by service members and any outstanding interest can be paid back in full; and
(b)    other than in the case of accumulated charity distribution entitlements of service members, unless those charity distributions have been made under subsection (2);

provided that once the interest and cumulative charity distribution entitlements have been settled no service member shall be entitled to participate in any further charity distribution of profits.

Enactment information

Status

Proposed

Commencement

Law not made

Entrenchments

Endnotes

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Legislation history
Statute or Instrument Number and year Assent Commencement Application, saving and transitional provisions
Constitution Adoption 2021 No. 1, 2021 11 Jan 2021 1 Feb 2021 (gaz 2021,p. 1)
Amendment history
Provision affected How affected

Relevant notes from the explanatory memorandum

224. Subsection (1) provides that the grant of service membership shall not in itself affect the rights of other members.  Because service membership is regarded as preference shares (as it is redeemable), and an issue of preference shares is taken to be a variation of class rights of existing preference shareholders under subsection 246C(6) of the Corporations Act 2001, this provision is necessary to ensure that new service membership can be granted without the risk of being called into question over a variation of class rights.

225. Subsection (2) places the repayment of the deposits made of service membership, and any outstanding interest and charity distribution entitlements of service members, immediately after the payment of obligations other than membership, and is not entitled to any further charity distribution upon winding-up.  This provision, along with the section 89, effectively makes service membership classified as a liability instead of equity for accounting purposes; the repayment of the deposit upon winding up is effectively a repayment of money lent and not a distribution of the surplus assets of Urabba Parks.

226. Subsection (3) limits charity distribution for members unless the outstanding interest and charity distribution entitlements of service members has been paid.  Subsection 4(1) defines service membership with entitlements to interest as ‘interest-bearing membership’.  Otherwise, service membership usually is granted with cumulate charity distribution entitlements, meaning a rate on the amount deposited is made as a charity distribution.  This provision ensures the ranking of service membership in relation to charity distributions is consistent with that of a debt instrument.

See also

Notes

Judgments

Further reading

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