Companies are an essential part of advising. Whether it is for use as a trading entity, a beneficiary of a trust or to act as trustee of a trust or superannuation fund they are still an important part of advising. Many advisors believe all company constitutions are the same. They are not.
The constitution should allow for multiple share classes and redeemable preference shares. This allows for a great deal of flexibility when structuring a client's affairs and when looking to withdraw funds from a company structure without the problems associated with Division 7A. The use of hybrid trusts should be considered for existing companies with retained earnings.
A constitution should also contain a drag along, tag along clause in case of a buyout.
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