When incorporating a company or establishing a trust structure, a governing State or Territory jurisdiction must be selected. Essentially, each state and territory has different governing laws that would confer different rights and obligations to companies and trusts.
In choosing an appropriate jurisdiction, it is recommended that you seek legal guidance. By using Quick Quotes, connect with a lawyer best suited to your needs.
Selecting Governing Jurisdiction for Companies
The governance of companies is delegated by the Corporations Act 2001 to states and territories. Hence, when you register a company you are required to nominate a state or territory jurisdiction under which you wish your company to operate. This state or territory jurisdiction is listed on the company’s certificate of registration as stipulated under the Act.
Selecting Governing Jurisdiction for Trust Deeds?
A trust deed needs to elect a state jurisdiction through which its operations are governed. The trustee has autonomy over the selection of the jurisdiction, though despite this, the governing jurisdiction is not conclusive. Depending on the geographical nature of the trust execution amongst other factors, this jurisdiction is subject to change. To illustrate, say you nominate NSW to be the trust’s governing jurisdiction. If you then acquire property from Queensland, then Courts may find the appropriate jurisdiction to be that of the Queensland state.
Courts have the final say as to the applicable jurisdiction and they determine this on the assessment of which state law has the closest and most substantial connection with the trust. They take into account the following considerations:
- Location of trust assets;
- Location of trustee’s business and management;
- Residence of trustee; and
- Purpose of the trust.
You should weigh these considerations equally as they could affect the ultimate governing jurisdiction.
Finally, you should also note that if a court finds that your choice of jurisdiction is founded on an ulterior motive, for example, to avoid a piece of law that would otherwise be applied, then that would also factor into consideration.
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