Legislation Regarding Corporate Trustees

On 6 May 2010, the Commonwealth assumed responsibility for the regulation of the activities of private trustee companies, under the Corporations Legislation Amendment (Financial Services Modernisation) Act 2009. Previous to this, Trustee corporations were authorised under State or Territory laws.

 Under the new legislation, which was enacted in late 2009, the provision of ‘traditional’ services by Trustee companies is regulated as a financial service under the Corporations Act. All Trustee companies providing traditional Trustee services in Australia are required to hold an Australian Financial Services Licence.

Under the legislation, which is administered by the Australian Securities and Investments Commission, Trustee corporations must adhere to certain requirements, including;

• Having a risk management system in place that addresses risk to financial resources;
• Maintaining adequate levels of capital;
• Maintaining adequate levels of insurance;
• Having directors and senior managers who are ‘fit and proper’ with relevant experience and expertise;
• Maintaining accurate records; and
• Submitting regular financial reports.

 Trustee corporations are also subject to:

•  The relevant regional Trustee Act;
• The Superannuation Industry (Supervision) Act 1993; and
• The Corporations Act 2001