A DBA company offers many advantages not found anywhere else. The DBA constitution is strategically drafted for all companies including where the company will trade in its own right, or where it acts as the trustee of an SMSF, discretionary trust or unit trust.
New companies are provided with our constitution at the outset and can enjoy all the discussed benefits at the outset. Existing companies can utilise our constitution upgrade service to adopt an up to date constitution with added features. Maintaining a strategically drafted constitution and related documents is prudent, and ensuring they are up to date with current law and best practices is worthwhile.
Ordering a DBA Lawyers constitution provides the following benefits:
Advantages of a DBA company
Companies are governed by their constitution, a key document which outlines the operation and management processes of the company. Constitutions were previously referred to as the memorandum and articles of association. Some of the key features of a DBA Lawyers’ constitution include:
- Streamlined meeting and resolution provisions.
- Successor director appointment nomination.
- A Division 7A loan facility agreement that covers shareholders and their associates.
- Greater control and flexibility through different share classes.
- An executor or attorney under an enduring power of attorney can stand in a shareholder’s shoes.
- A detailed company memo to explain the operation of a company, directors’ duties, compliance tasks and shareholder rights.
- SMSF specific benefits like the removal of the requirement to to change the constitution if the company seeks to commence or cease acting as a sole purpose SMSF trustee, with no extra cost incurred.
- Flexibility for electronic document execution, meetings and resolutions. However, we recommend deeds be executed in the traditional ‘wet-ink’ manner given legal risks. Refer to our article on Six simple rules to execute a deed that satisfies all Australian jurisdictions.
- Voting provisions that do not provide the chair with a casting vote that assists 50/50 structures.
- Compliant and backed by lawyers.
We now discuss some of these features in more detail.
Streamlined meeting and resolution provisions
Whether via meeting, circulating resolutions or other means permitted by law, the DBA constitution has streamlined provisions to assist with more efficient processes and ensure ease of compliance with the rules to make effective and valid resolutions.
Appointment of successor directors
Under a successor director strategy, a director is able to appoint one or more persons to ‘step into their director shoes’ in the event of the original director’s mental incapacity or death. Whilst very few constitutions allow for this level of succession planning, the DBA company constitution has been specifically drafted to cater for successor directors and also caters for multiple successor directors that may be appointed without distorting voting power. A successor director appointment form is also included.
Different share classes
DBA Lawyers’ constitution allows for flexibility to issue various classes of shares. This can allow planning for differentiated voting, dividend, capital and other rights including:
- ‘Guardian’ shares that allow for a guardian to exercise control in shareholder and director meetings.
- SMSF shares that can be issued where the company acts solely as a sole purpose SMSF trustee.
- Limited shares that exclude the right to participate in the distribution of surplus profits or assets.
- Capital shares that broadly exclude voting rights and entitlements.
| Right to vote | Right to dividends | Right to repayment of share price on winding-up | Right to distribution of surplus assets on winding-up | |
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| Ordinary | |
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| Limited | |
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| Guardian ² | |
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| Capital Share | |
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| Other | Attracting such rights, privileges and conditions as are determined from time to time by special resolution | |||
- Issuing SMSF shares reinforces the special requirements for qualifying as a special purpose SMSF company and assists in ensuring these are not inadvertently breached. However, SMSF shares are not strictly required for the company to qualify as a ‘special purpose company’ (the constitution itself contains appropriate provisions to ensure the company qualifies).
- Broadly, Guardian Shareholders must be present at meetings and must consent to any decision before it can be passed. Guardian Shareholders also have a deciding vote in the event of deadlock).
Div 7A loan facility agreement
A Division 7A loan facility agreement is included just in case a debit loan arises and to ensure a written loan agreement is in existence. This assists in minimising the extra tax and penalties that may otherwise arise. The template covers shareholders, shareholder’s associates, and arm’s shareholders with an agreement in writing that merely requires completion prior to the lodgement of the relevant company’s income tax return if there is a debit loan in existence that could give rise to a deemed dividend.
Memo
A detailed company memo on how a company operates, directors’ duties, compliance tasks and shareholder rights is included. This document is similar to a Product Disclosure Statement (PDS) to assist clients in understanding what they need to know when they have a company including information on the key provisions of DBA Lawyers’ constitution, as well as taxation, decision making and guidance on ongoing compliance.
SMSF trustee provisions
Most of the benefits discussed above have been included to cover both SMSF and non-SMSF situations. However, there are some SMSF-specific benefits including the following.
Where a company wishes to act or cease to act as a sole purpose SMSF trustee, DBA Lawyers’ constitution contains a switching provision that applies automatically when needed. Therefore, no extra cost is incurred to vary the constitution. Similarly, if the company is appointed as a trustee of a family trust.
The constitution has been drafted to enable the company to be eligible for a reduced ASIC annual fee (approximately an 80% discount from the normal fee) if the company acts solely as an SMSF trustee.
A handy ‘SMSF’ guide is included to assist in complying with the superannuation rules that are often overlooked.
Conclusion
DBA Lawyers’ documents include many value-add benefits and is supported by a team of expert lawyers. We recommend that companies be sourced from a qualified and quality supplier that can provide advice and ongoing service. To place an order for a DBA company please click here. For our constitution update service, please click here.
Related articles:
- Successor director provisions in the DBA Lawyers’ constitution
- What to do if a company’s constitution is lost
- Why is it important to have a good company constitution?
- Not all companies are created equal
- Company constitutions and SMSFs
- Reducing ASIC fees for SMSF corporate trustees
- Why seek SMSF, tax or other advice from a lawyer – are there any benefits?
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This article is for general information only and should not be relied upon without first seeking advice from an appropriately qualified professional. The above does not constitute financial product advice. Financial product advice should be obtained from a licenced financial adviser under the Corporations Act 2000 (Cth).
Note: DBA Lawyers presents monthly online SMSF training. For more details or to register, visit www.dbanetwork.com.au or call 03 9092 9400.
For more information regarding how DBA Lawyers can assist in your SMSF practice, visit www.dbalawyers.com.au.
By Daniel Butler, Director ([email protected]), Cassandra Hurley ([email protected]), Lawyer and Fraser Stead, Lawyer ([email protected]).
DBA LAWYERS
02 June 2025
