Superannuation Industry (Supervision) Act 1993
If the governing rules of a registrable superannuation entity of which a trustee is a body corporate do not contain covenants to the effect of the covenants set out in subsection (2) , those governing rules are taken to contain covenants to that effect.
There are civil and criminal consequences for contravening a covenant: see sections 54B , 54C , 55 and 202 . Civil consequences may arise from an act or omission resulting in a contravention of a covenant regardless of whether or not the act or omission was intentional. Criminal consequences under section 202 require proof of dishonesty or intention in relation to a contravention of a covenant.
The covenants referred to in subsection (1) are the following covenants by each director of a corporate trustee of the entity: (a) to act honestly in all matters concerning the entity; (b) to exercise, in relation to all matters affecting the entity, the same degree of care, skill and diligence as a prudent superannuation entity director would exercise in relation to an entity where he or she is a director of the trustee of the entity and that trustee makes investments on behalf of the entity ' s beneficiaries; (c) (d) where there is a conflict between the duties of the director to the beneficiaries, or the interests of the beneficiaries, and the duties of the director to any other person or the interests of the director, the corporate trustee or an associate of the director or corporate trustee:
(i) to give priority to the duties to and interests of the beneficiaries over the duties to and interests of other persons; and
(ii) to ensure that the duties to the beneficiaries are met despite the conflict; and
(iii) to ensure that the interests of the beneficiaries are not adversely affected by the conflict; and
(e) not to enter into any contract, or do anything else, that would:
(iv) to comply with the prudential standards in relation to conflicts;
(i) prevent the director from, or hinder the director in, properly performing or exercising the director ' s functions and powers as director of the corporate trustee; or
(f) to exercise a reasonable degree of care and diligence for the purposes of ensuring that the corporate trustee carries out the covenants referred to in section 52 .
(ii) prevent the corporate trustee from, or hinder the corporate trustee in, properly performing or exercising the corporate trustee ' s functions and powers as trustee of the entity;
To avoid doubt, the obligations of the director under paragraph (2)(c) apply in respect of payments to a third party by, or on behalf of, the entity.
The obligations of the director under paragraph (2)(d) override any conflicting obligations the director has under: (a) Part 2D.1 of the Corporations Act 2001 ; or (b)
A covenant referred to in paragraph (2)(e) does not prevent the director from engaging or authorising persons to do acts or things on behalf of the trustee. Using reasonable care and diligence to ensure compliance by corporate trustee 52A(5)
The reference in paragraph (2)(f) to a reasonable degree of care and diligence is a reference to the degree of care and diligence that a superannuation entity director would exercise in the circumstances of the corporate trustee. Covenants operate as if director party to the governing rules 52A(6)
A covenant referred to in subsection (2) operates as if the director were a party to the governing rules. Superannuation entity director 52A(7)
A superannuation entity director is a person whose profession, business or employment is or includes acting as director of a corporate trustee of a superannuation entity and investing money on behalf of beneficiaries of the superannuation entity.