Peter Johnson, director of Advisers’ Digest, said it is not possible to establish a new fund and transfer assets even if there is no change of beneficial assets, as it breaches a number of compliance regulations, including acquiring assets from a related party.
“However, there is an exemption in subsection 66 of the SIS Act where this occurs during a divorce,” Johnston said.
There are SIS consequences if there are charges registered against corporate trustees and risks that need to be considered.
Johnson gave the example of a charge from a trust registered with ASIC that related to previous CBA facilities held by a family trust established the following year, which had been paid out.
“The question is whether the charge should be removed. Regulation 13.14 of the SIS Act stated that you must make sure there are no charges over the assets of a fund.”
“The assets of the fund are all assets of the trustee, and they hold them for the benefit of the beneficiaries of the fund. It’s a trust, and now we have a charge, a fixed and floating charge over all the assets of the company. Does that mean that there is a charge over the assets of the fund?”
That the answer is ambiguous.
“The answer would be yes, there is, and no, there isn’t. You would get around it, it’s registered. If you have shares, then there’s a charge over those shares. If you own a property, there’s a charge over that property, and no doubt, if the Commonwealth Bank were going to call on that charge, it would do a search, find out any assets registered in the name of the company and call them in.”
“It would then be the trustees’ job to convince the court or the lawyers that they’re not the company’s assets, that the company holds those assets in trust for the super fund.”
He added it would probably result in a breach for having a charge over the assets of the company.
“Notwithstanding, you would probably be able to defeat the charge,” Johnson said.
“But there is the risk that if the trust doesn’t pay back the Commonwealth Bank, you’re going to have to fight.”
