Convert your company to a Special Purpose Company

Do you have a lazy company lying around doing nothing?

We update the company’s Constitution for its new job as trustee of your SMSF.

Or do you currently have a ‘normal’ company as trustee of your SMSF? That is perfectly legal. However, we will update its Constitution to help your company work better as trustee of your SMSF, and you can then apply for the reduced yearly company ASIC fee.

Why does my SMSF need a trustee?

Your SMSF needs a trustee to hold its bank accounts, shares and property. If a company is your trustee, its directors make the decisions. Its Constitution sets out how those directors and shareholders exercise their powers.

We replace your company’s Constitution. If your company already holds your SMSF’s assets as trustee, it continues to do so. You do not need to transfer any assets. Your company keeps its name and Australian Company Number (ACN).

Once we update your company’s Constitution:

1. Build a new SMSF if you do not yet have an SMSF; or
2. If you already have an SMSF, just update the trustee.

Legal Consolidated’s Constitution update allows you to get a lower yearly ASIC fee

Your ordinary company pays ASIC’s standard annual review fee. Our Legal Consolidated SMSF Constitution update prepares your Constitution for special purpose status, so you can apply for the reduced annual fee. Legal Consolidated Special Purpose Companies qualify for a substantially lower fee while they retain their special purpose status.

We prepare your Constitution to meet the constitutional requirements for an SMSF Special Purpose Company. The company’s sole purpose must also be acting as trustee of a regulated superannuation fund.

Regulation 3 of the Corporations (Review Fees) Regulations 2003 (Cth) sets these requirements.

We carefully set out the steps necessary to obtain the reduced annual company fee in our cover letter, including how to notify ASIC of the company’s special purpose status.

Your Constitution does more than support the ASIC fee savings

Once your company acts as trustee, it holds your retirement savings. Who appoints its directors? How do they make decisions? What happens if they disagree, or one dies?

Your Constitution sets the company’s rules for those events. Under s 140 of the Corporations Act 2001 (Cth), the Constitution and applicable Replaceable Rules have contractual effect between the company and specified participants.

Legal Consolidated prepares those rules for a company whose job is to act as your SMSF trustee. The fee saving is one benefit. The rules governing control and decisions matter throughout the company’s life.

You and your spouse are directors. What happens when one of you dies?

Your company continues to hold the SMSF’s assets. But someone must still make its decisions. Your Constitution sets out who has authority to appoint another director.

The shareholders also matter. Superannuation law does not require the SMSF members to own the trustee company’s shares. The members often own them, but someone else might. Choose shareholders you trust: their voting rights affect who controls the company holding your super.

Your Will does not automatically appoint a replacement director. Nor should you assume that being an executor gives someone control of the company.

Section 201F of the Corporations Act 2001 (Cth) provides a particular appointment process following death or incapacity where the person was both the company’s only director and only shareholder. It does not cover every company or ownership arrangement.

Her executors went to court. Her husband received the super.

Francesca Conti died. Her executors argued that one of them should replace her as a trustee of the SMSF. Her surviving husband decided to pay her super benefits to himself.

In Ioppolo v Conti [2015] WASCA 45, the Court rejected the argument that the superannuation legislation required an executor’s appointment.

Your executor deals with your estate. That does not automatically put them in charge of your SMSF. Your company Constitution, SMSF Deed, Will and death benefit instructions need to support the people you want making decisions.

Built from the experience of more than 4,600 professionals

More than 4,600 accountants, financial planners and lawyers build legal documents on our website. They report what happens inside ATO audits — the arguments, tactics and pressure points. They also see the problems families face when someone dies, loses capacity or disputes control.

Our lawyers track tax and superannuation developments, bankruptcy cases, trust disputes, family law judgments and estate litigation. We turn that experience into practical drafting.

That experience informs the rules we prepare for your SMSF trustee company. Your company’s appointment, ownership and decision rules need to work together.

Some websites sell documents. Some pretend to be law firms.

When you replace the rules governing your SMSF trustee company, you need to know who takes responsibility for preparing them.

Legal Consolidated is a national tax and superannuation law firm. We prepare your finished legal documents and provide our law firm’s cover letter identifying what we have prepared. You deal with the lawyers preparing the documents, including when you need legal help answering the building questions.

We do not resell another law firm’s template. Read why the distinction matters when choosing a law firm or non-law firm website.

Your old rules do not disappear when the law changes

Your company’s old Constitution might still require an annual general meeting or restrict how directors make decisions. Changing the law does not automatically remove those requirements from your document.

Your directors agree on a decision. Legal Consolidated’s Constitution allows the directors to sign a written resolution without holding a directors’ meeting.

Your shareholders no longer need to attend a meeting to vote. We provide for direct voting, including electronically. We allow the company to recognise someone entitled to shares following death, bankruptcy or incapacity.

We also prepare the shareholder minutes for adopting your replacement Constitution. Section 136 of the Corporations Act 2001 (Cth) governs changes to a Constitution by special resolution.

Does your company rely on Replaceable Rules?

Replaceable Rules are the government’s default rules for company management. They do not supply the specific constitutional restriction required for your SMSF company’s special purpose status.

Legal Consolidated prepares your company’s own Constitution for its SMSF trustee role. Read our explanation of Company Constitutions versus Replaceable Rules.

Your unused company once traded. Should you reuse it?

Your company might now sit idle. If it once traded, its history has not disappeared.

Does it owe money? Does someone owe it money? Does it have unpaid tax, Division 7A loans, unpaid present entitlements or obligations to former suppliers? Could a claim arise from its earlier business?

Replacing the Constitution does not erase those matters. Before using the company solely as your SMSF trustee, ask your accountant to check its assets, debts, tax position and history.

If the company has an uncertain past, consider incorporating a new Legal Consolidated Special Purpose Company. Start your SMSF trustee company with a clean history.

Who controls the company — and who receives your super?

These are separate questions. Your Constitution governs the company. Your SMSF Deed and death benefit arrangements address payment of your super.

In Wooster v Morris [2013] VSC 594, two daughters pursued their father’s super despite his binding death benefit nomination. His widow controlled the trustee company. The proceedings resulted in judgment against the company as trustee and the widow personally.

Plan who controls your trustee company alongside who receives your super. Check your binding death benefit arrangements when reviewing your company rules.

What does Legal Consolidated’s conversion to a Special Purpose Company give you?

We prepare three documents tailored to your answers:

1. Legal Consolidated’s cover letter and instructions — identifies the documents our law firm prepared and carefully explains the steps to complete.
2. Shareholder minutes — records shareholder approval of your replacement Constitution.
3. Special Purpose Company Constitution — replaces your old Constitution or Memorandum and Articles of Association with rules for your SMSF trustee company.

Keep the signed documents with your company records.

How do you put your company’s new Constitution to work?

1. Build your replacement Constitution online. Answer the questions. Our hints and legal help guide you through the building process.
2. Sign the documents using our instructions. We prepare the Constitution, shareholder minutes and cover letter.
3. Appoint the company as trustee if it is not already your trustee. Build a new SMSF if you do not yet have one. If you already have an ongoing SMSF, update the trustee.
4. Apply for the reduced yearly ASIC fee. Our cover letter carefully explains the special purpose status notification. The company must act solely as trustee of a regulated superannuation fund.

If your company already holds your SMSF’s assets as trustee, it continues to do so. You do not transfer the assets merely because we replace its Constitution.

If you are appointing the company to replace human trustees, you and your accountant arrange the transfer of the SMSF’s assets into the company’s name as trustee. Replacing the company’s Constitution and appointing it as trustee are separate steps.

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Other Legal Consolidated documents for your SMSF

• SMSF Update and Confirmation Deed — update your fund’s rules and record trustee and member changes.
• New SMSF Deed — establish your fund after incorporating its trustee company.
• Binding Death Benefit Nomination — prepare binding instructions for payment of your super.
• Reversionary Pension Kit — prepare a pension that continues to your nominated eligible beneficiary when you die.
• SMSF Corporate Trustee Power of Attorney — prepare company authority for an attorney.
• SMSF Investment Strategy — record your fund’s investment strategy.