SMSFs with a corporate trustee have been advised to ensure there are no conflict between statement in the trust deed and company constitution documents that may create complications during the appointment or removal of directors.
SuperConcepts SMSF technical and strategic solutions executive manager Philip La Greca said the simplest way to prevent a conflict in statements within key documents is to use a single document provider during the establishment phase of SMSFs.
“One of the things that we always suggest is that if you are going to set up your fund, make sure that the company’s constitution is set up from the same supplier. That way hopefully those things have been integrated,” La Greca said.
“Having a company set up by one lawyer and the deed from another set of lawyers may not necessarily mean that they will always interact in the most seamless manner, and that’s what you want.
“You do not want to have a situation where the company says ‘the shareholders get to appoint the trustees’, but then also need to deal with that appointment at the fund level.”
He further noted if the trust deed and company constitution have statements that contradict the other, the potential exists to significantly impact how super funds appoint and remove directors.
“When we’re dealing with a company we look at shareholders rather than the members of the fund and so when it comes to appointing new directors, who appoints them?” he said.
“As a general rule, most companies have the so-called casual vacancy rule, [which] allows existing directors to appoint new directors, but how does that interact with what the trust deed says?
“You do need to make sure that if you have a company trustee, that you do not have a conflict between what the deed says and what the company constitution says.”
