What is a company?
This is a special purpose constitution for a company which is intended to be the trustee of a non-controlled or 50;50% unit trust (refer to ‘Unit Trust Products’ for an explanation of unit trusts).
A company is “private” in that the directors may refuse to register a transfer of the company’s shares. The ownership within a private company is therefore restricted.
As a company is its own legal entity, it earns and derives income in its own right and pays its own income taxes, capital gains tax and goods and services tax (provided it makes taxable supplies).
This is a special purpose constitution for a company which is intended to be the trustee of a non-controlled or 50;50% unit trust (refer to ‘Unit Trust Products’ for an explanation of unit trusts).
What is its purpose?
It is designed to prevent the company being an entity “controlled” by a self-managed superannuation fund under the terms as defined in s70E of the Superannuation Industry (Supervision) Act 1993.
How does it work?
This constitution – to accommodate this - has restrictions which prohibit any one director or shareholder from having a casting vote at any directors or members meetings to avoid a situation where any one SMSF may control more than 50% of the rights to income, capital or rights to vote (of the company and the trust). This constitution must be used with the 50;50 non controlled unit trust deed.
It is the 50% threshold which triggers the association between a self-managed superannuation fund and these companies/trusts. This product should only be purchased after consultation with an appropriate professional. If you are unable to consult a professional, call PGG Legal.
