When a corporate trustee is de-registered, the corporate entity ceases to exist, but this does not mean that the trust is also “de-registered”.
The trust continues and any assets held by the de-registered company as trust assets are automatically vested in the Commonwealth with ASIC acting as the agent of the Commonwealth in dealing with the assets. This vesting occurs by force of the Corporations Act.
The same principles apply where the de-registered company was acting as the trustee of an SMSF. The SMSF continues despite the absence of a trustee with the assets vested in the Commonwealth.
If a successor trustee cannot be appointed (for example, the trust deed of the SMSF has been lost and therefore the procedure for appointing a replacement trustee is not known or trust deed only confers power to appoint a replacement trustee on the current trustee – which is now de-registered) and the Commonwealth (while having a statutory power to appoint a replacement trustee) declines to exercise the power it seemed there was only one solution – to have the de-registered company reinstated by Court Order.
Now a recent case has shown another solution. In Re Inavas Pty Limited – [2017] NSWSC 1312 – company was trustee of an SMSF. The company was de-registered in 1996. One asset of the superannuation fund was life insurance policy – this policy matured in 2015 and the proceeds of the policy were paid to ASIC (as agent of the Commonwealth).
A member of the fund (the life insured under the policy) sought to have the policy proceeds paid to him. The Court declined to make such an order.
However, the Court was prepared to and did make a vesting order whereby the policy proceeds were vested in the trustee of a master superannuation fund which the member had recently joined.
The vesting order bypassed the need for a reinstatement of the Company (which would have involved paying ASIC for unpaid review fees from 1996 until 2017).
The Court was prepared to assume (given the non-adversarial nature of the proceedings) that the trust deed of the SMSF would have contained a provision permitting the rollover of a member’s super benefit to another regulated superannuation fund and that the policy proceeds constituted the member’s benefit (or part of the benefit) given the member was the life insured.
The Court made the point that as the policy was an asset of the SMSF, the policy proceeds could not simply be paid to the member (even if the member were the life insured).
The policy proceeds had to be paid to a superannuation fund and could only be paid to the member on satisfaction of a condition of release –e.g., being retired or being aged 65 or more.
Michael Hallinan
Special Counsel Superannuation
SUPERCentral
t: (02) 8296 6222
Twitter: @SUPERCentralAU
michael@townsendslaw.com.au
www.townsendslaw.com.au