Turn your old company into a Special Purpose company -
to be the trustee of your Self-Managed Super Fund

Replace a Special Purpose Company Constitution so that your old Company can now be used as trustee of a Self-Managed Superannuation Fund.

You are about to replace a Company Constitution on our law firm's website. You are building everything you need including:

* the replacement Constitution so that the company can now only be used as a Special Purpose Company to be the trustee of your Self-Managed Super Fund (and therefore get the lower annual ASIC fees)
* Member Minutes
* law firm letter confirming the above for your accountant's and auditor's due diligence file

Let ASIC know

Build this document online to turn your company into a Special Purpose company. Your company then pays much lower yearly ASIC fees. But you need to let ASIC know. After you built and signed the documents lodge ASIC Form  484. Our covering letter tells you how to do this.

Every Member signs the Member Minutes

As we have drafted the update, each shareholder signs to give their consent.

Also, remember before you make the company the trustee of the Self-Managed Superannuation Fund (SMSF):

1. all the directors must be members of the SMSF

2. all the members of the SMSF must be directors of the company

Example 1: John, Jeff and Mary are the current directors of the company. But Jeff is not a member of the SMSF. Jeff must resign as a director of the company before the company can be the trustee of the SMSF.

Example 2: Paul and Fiona are the only directors of the company. But their daughter Ainsley, together with Paul and Fiona, is a member of the SMSF. Therefore, before the company can be made the trustee of the SMSF, Ainsely is made a director, as well.

The old company must have a balance sheet of zero

Your Special Purpose Company must not have any assets in it (other than the share capital for the shares). Its only job now is to be the trustee of the Self-Managed Superannuation Fund. It can't do anything else.

Why do I need a Company Constitution?

The Constitution is a contract between the company, directors and shareholders (members). It is not mandatory to create a constitution. Your internal procedures are, instead, governed by government Replaceable Rules. However, no accountants, lawyers or financial advisers would advise your company to rely on these Replaceable Rules. This is because Replaceable Rules are not tailored to your specific needs. Relying on Replaceable Rules is dangerous.

Also, a Special Purpose Company can't have Replaceable Rules. It must have a Constitution.

The 3 improvements to your current company constitution

The Constitution you are building also updates your company’s internal rules and procedures. It fully complies with changes to the Corporations Act. The 3 improvements are:

1. Technology convert company to a special purpose company

Technology has changed how a board can communicate with itself and shareholders. When you update your Company to a Special Purpose Company we also update the Constitution. Your Constitution is updated to reflect how changes in technology affect your business operations. Traditionally board decisions are mailed out in physical form to shareholders. However, email is a faster form of communication that is used by many businesses to correspond with shareholders. Your updated constitution takes into consideration how instantaneous communication affects your shareholders. Further, your constitution outlines how technology can be used in meetings.

2. Email voting

Shareholders can cast a vote regarding a meeting. Do it either online or through personalised voting forms. Members do not need to attend the meeting and can appoint a proxy. Your new Constitution improves meeting efficiency.

3. Single Directors

The Corporations Act now permits sole director companies. You now only have to have one director for your company. Before this time, you had to have a minimum of 2 directors.

Your new Constitution allows you to have a single director.

Three common faults in old Constitutions and Memo & Articles of Association

Australian companies created before 1 July 1998 had a 'Memo & Articles of Association'. Like old Constitutions, your Memo & Articles of Association still operates but not well. Like old Constitutions, faults with the Memo & Articles of Association include:

1. Mandatory AGM each year

Requiring an Annual General Meeting (AGM). However, the law no longer requires an AGM for Pty Ltd companies. No one has AGMs anymore. But if you don’t, under your old rules, then your company is non-compliant. This is for both taxation and SMSF laws. Your new Constitution ensures that you don’t have to have AGMs.

2. Only do as permitted

Stating a ‘list of objects’. This is the purpose of the company. E.g. ‘sell fishing tackle and retail’. This was never a good idea for any company. It is especially not appropriate for a special purpose company. Your company is acting ‘ultra vires’ if it does not follow its old fashion 'list of objects'. It is acting outside its powers. Again, your company is non-compliant. Legal Consolidated’s Constitution allows you to do comply with the SMSF rules – and more.

3. Perform out of date and illegal actions

Requiring illegal actions. Instead, we update the company constitution to allow these correct powers:

* exercise corporate powers
* issue and allot shares
* not avoid liability (a very strange requirement)
* transfer shares
* vote and proxies
* appoint directors and company secretary
* conduct general and director meetings
* sign bank documents, loans and mortgages (however this may be useful because banks often cannot enforce a loan made by a company that is still working under the old Constitution or M&A)
* allow alternative directors for 'central management and control' if the members live outside of Australia for an extended period

Build this document to transform your old company into a 'Special Purpose Company' so it can operate as trustee of your Self-Managed Superannuation Fund. You pay lower ASIC fees.

For more legal advice telephone us. We are a law firm. We can help you answer the questions to convert your old company into a Special Purpose Company.

Adjunct Professor, Dr Brett Davies, CTA, AIAMA, BJuris, LLB, LLM, MBA, SJD
Legal Consolidated Barristers and Solicitors
Australia wide law firm Replace a Special Purpose Company Constitution Replace a Special Purpose Company Constitution
39 Stirling Highway, Nedlands, WA 6009
Mobile: 0477 796 959 Replace a Special Purpose Company Constitution Replace a Special Purpose Company Constitution
National: 1800 141 612 Replace a Special Purpose Company Constitution Replace a Special Purpose Company Constitution
Email: brett@legalconsolidated.com