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Is a trustee company an ultimate holding company for the purposes of the Corporations Act?

8 JUL 2021 Governance

A company is an ultimate holding company if it has a subsidiary but is itself not a subsidiary i.e. it is the top company in a group of companies.

The Corporations Act provides that a company, let’s call this company “S”, will be a subsidiary of another company, let’s call this one “H”, if H:

  • controls the composition of the board of S
  • is able to cast, or control the casting of, the majority of votes able to be cast at a general meeting of S, or
  • holds more than one half of the issued share capital of S.

S would also be considered a subsidiary of H if S was a subsidiary of another company that was a subsidiary of H.

On its face, where a trustee company holds 100% of the shares in another company, and the trustee company itself is not a subsidiary of another company, a trustee company meets this test and is an ultimate holding company.

However, section 48 of the Corporations Act says that this is not the case. Section 48(2) provides that any shares held, or power exercisable, by a company in a fiduciary capacity (e.g. as a trustee or nominee) are not treated as being held or exercisable by it for the purposes of determining if a company is a subsidiary of it.

This question often arises in the context of determining whether a newly incorporated company with a sole shareholder that is a trustee company has an ultimate holding company. The answer is it does not.

Section 48 also has the effect that a trustee company is not a a holding company for the purpose of financial assistance approvals, saving a number of resolutions and ASIC notifications that might otherwise be required if it were.


This post is current at the date of publication. It is general in nature, does not constitute legal advice and should not be relied upon as legal advice. You should always obtain legal advice based on your specific circumstances before taking any action relating to matters covered by this post.

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