Section 88 of the Constitution of Urabba Parks
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|Constitution of Urabba Parks|
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|Text of the Constitution|
|Commonwealth of Australia Constitution Act|
Section 88 of the Constitution of Urabba Parks sets out the terms of service membership.
Compiled text (Section 88 - Service membership)
Rights of existing members
(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.
Return of capital
(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, 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;
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.
Law not made
|Statute or Instrument||Number and year||Assent||Commencement||Application, saving and transitional provisions|
|Urabba Parks Proprietary Limited Constitution Statute 2021||No. 1, 2021||5 Mar 2021||5 Mar 2021 (gaz 2021,p. 1)|
|Provision affected||How affected|
Relevant notes from the explanatory memorandum
224. Subsection (1) places the repayment of the deposits made of service membership and any outstanding interest and charity distribution entitlements of service members above all other distributions to charities chosen by members on winding-up, provided service members are not entitled to any further charity distribution. 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.
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