There are a number of issues to consider when contemplating how to run your self-managed superannuation fund (SMSF). Notably, when implementing a corporate trustee, it is useful to consider associated Australian Securities  and Investments Commission (ASIC) fees and how the constitution of the corporate trustee could address voting  issues for both shareholders and directors.

ASIC Fees

For SMSFs implementing a sole purpose corporate trustee, a concessional annual ASIC fee can apply; this annual fee for such special purpose companies is $45. Compare this with the usual annual ASIC fee of $243 for a proprietary company limited by shares that performs functions other than solely being a corporate trustee. The difference in annual fees between special purpose companies and proprietary limited companies is certainly worth considering.

However, advisers and company directors must be wary of special eligibility requirements. First, it must be that the sole purpose of the company is to act as the trustee of a regulated superannuation fund. Second, the constitution of the company must prohibit distribution of the company’s income or property to its members. Accordingly, it is not the case that “any old constitution” is suitable.

What about voting issues of the directors and shareholders

The directors of a SMSF may also be the shareholders.

In relation to directors, how directors vote could be addressed in the corporate trustee’s constitution. For example, as may often be the case with family super funds, if two parents have contributed the majority of the fund assets, and two children members have contributed comparatively little fund assets, it may seem more equitable for the parents to exercise greater, proportional control over the fund.

Proportional voting, according to the value of members’ contributions, may resolve this issue. That is, the corporate trustee’s constitution may set out that each member may vote in proportion to the amount of fund assets they have contributed. This does not mean that the parents, in this example, are entitled to run the fund their way without regard to their children’s interests. Contrarily, in their role of directors of the corporate trustee, the parents would be required to act in the best interests of the beneficiaries as a whole. Having proportional voting outlined in the corporate trustee’s constitution ensures that the children are not able to inequitably impose their views on the management of the fund, and that the trustees are complying with their duties to consider the interests of the beneficiaries as a whole.

Short Answer

The short answer is no, not any old constitution will do. There are a range of issues that a well-drafted corporate trustee constitution may address to benefit SMSF members and the administration of the fund.