A project deed will typically require the private party to obtain prior consent from the government party for transactions affecting the control and ownership of the private party and any key subcontractors. In this context, it is important to understand the difference between control and ownership:
• Control generally refers to the ability to make or determine the outcome of decisions concerning an entity's financial and operating policies. The precise meaning of 'control' is usually defined in the project deed, typically by adopting the definition in the Corporations Act. Applying this definition to the circumstances of a particular project can be complex. Contract directors should seek legal advice where necessary.
• Ownership generally refers to having a direct or indirect legal or beneficial interest in the private party (or a key subcontractor). A change in ownership may not necessarily constitute a change in control, for example, a sale of 40 per cent of the shares in the private party may be a change in ownership, but may not be a change in control if the new shareholder is not able to make or determine the outcome of decisions concerning the private party's financial and operating policies.