Superannuation Industry (Supervision) Act 1993

PART 6 - PROVISIONS RELATING TO GOVERNING RULES OF SUPERANNUATION ENTITIES

SECTION 56 INDEMNIFICATION OF TRUSTEE FROM ASSETS OF ENTITY

56(1)

Subject to subsections (2) and (2A) , a provision in the governing rules of a superannuation entity is void if:

(a)

it purports to preclude a trustee of the entity from being indemnified out of the assets of the entity in respect of any liability incurred while acting as trustee of the entity; or

(b)

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it limits the amount of such an indemnity.

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56(2)

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A provision in the governing rules of a superannuation entity is void in so far as it would have the effect of exempting a trustee of the entity from, or indemnifying a trustee of the entity against:

(a) liability for breach of trust if the trustee:

(i) fails to act honestly in a matter concerning the entity; or

(ii) intentionally or recklessly fails to exercise, in relation to a matter affecting the entity, the degree of care and diligence that the trustee was required to exercise; or

(b) liability for an amount of a criminal, civil or administrative penalty incurred by the trustee of the entity in relation to a contravention of a law of the Commonwealth (including this Act); or

(c) the payment of any amount payable under an infringement notice (however described) given under a law of the Commonwealth (including this Act); or

(d)

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liability for the costs of undertaking a course of education in compliance with an education direction (within the meaning of this Act).

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History

S 56(2) substituted by No 135 of 2020, s 3 and Sch 9 item 63, effective 1 January 2021 and applicable in relation to: (a) liabilities imposed on or after 1 January 2022; and (b) amounts that become payable under infringement notices (however described) given on or after 1 January 2022.

56(2)
A provision in the governing rules of a superannuation entity is void in so far as it would have the effect of exempting a trustee of the entity from, or indemnifying a trustee of the entity against:

(a) liability for breach of trust if the trustee:

(i) fails to act honestly in a matter concerning the entity; or

(ii) intentionally or recklessly fails to exercise, in relation to a matter affecting the entity, the degree of care and diligence that the trustee was required to exercise; or

(b) liability for a monetary penalty under a civil penalty order; or

(c) the payment of any amount payable under an infringement notice; or

(d) liability for the costs of undertaking a course of education in compliance with an education direction; or

(e) liability for an administrative penalty imposed by section 166 .
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History

S 56(2) amended by No 11 of 2014, s 3 and Sch 2 item 8, by inserting para (d) and (e), applicable to contraventions that occur on or after 1 July 2014.

S 56(2) amended by No 11 of 2014, s 3 and Sch 2 item 8, by inserting para (d) and (e), applicable to contraventions that occur on or after 1 July 2014.

S 56(2) amended by No 61 of 2013, s 3 and Sch 1 item 70, by inserting para (c), effective 1 July 2013.

S 56(2) amended by No 53 of 2004, s 3 and Sch 2 items 64 and 65, by substituting " exempting a trustee of the entity " for " exempting the trustee " and substituting " indemnifying a trustee of the entity " for " indemnifying the trustee " , effective 1 July 2004.

56(2A)

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A provision in the governing rules of a registrable superannuation entity is void in so far as it would have the effect of allowing a trustee of the entity:

(a) to indemnify itself out of the assets of the entity for any amount expended out of capital of the trustee managed and maintained by the trustee to cover the operational risk of the entity; or

(b) to indemnify itself out of any assets of the entity that do not form part of a reserve maintained for the purpose of covering the operational risk relating to the entity, any amount that relates to that risk, without first exhausting the reserve and any other financial resources managed and maintained by the trustee to cover the risk.

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56(3)

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Nothing in the governing rules of a superannuation entity prohibits a trustee of the entity from seeking advice from any person in respect of any matter relating to performance of the duties or the exercise of the powers of a trustee. A provision in the governing rules that purports to preclude a trustee of the entity from being indemnified out of assets of the entity in respect of the cost of obtaining such advice, or to limit the amount of such an indemnity, is void.

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