Superannuation Industry (Supervision) In-house Asset Determination — Intermediary Limited Recourse Borrowing Arrangement Determination 2020
5. Definitions5. Definitions
Start here
Get a plain-English read of 5. Definitions
Turn the raw legal text into a practical explanation grounded in Superannuation Industry (Supervision) In-house Asset Determination — Intermediary Limited Recourse Borrowing Arrangement Determination 2020.
5. Definitions
(a) Expressions used in this determination have the same meaning as in the Superannuation Industry (Supervision) Act 1993 unless otherwise stated.
(b) The Intermediary LRBA is an arrangement entered into by the parties which meets the following requirements:
(1) a holding trust is established with members of a fund being the only trustees or shareholders and directors of the corporate trustee (Holding Trustee);
(2) the trustee of the fund is a beneficiary of the holding trust;
(3) the Holding Trustee holds an acquirable asset (Asset) on trust for the trustee of the fund, who is beneficially entitled to the Asset;
(4) the Asset is a single acquirable asset (as referred to in subsection 67A(1)) that the trustee of the fund is allowed to acquire under the Superannuation Industry (Supervision) Act 1993;
(5) the Holding Trustee enters into a borrowing as principal with a lender with the borrowing secured by a mortgage over the Asset;
(6) the contract or deed of borrowing, referred to in paragraph (5), between the Holding Trustee and the lender may not limit the lenders right of recourse, under the contract or deed, to only the Asset in the event of default;
(7) the lender may require that personal guarantees are given as part of the Intermediary LRBA;
(8) the arrangement is established by a legally binding deed(s) under which the trustee of the fund and the Holding trustee agree, for:
(i) the trustee of the fund to maintain all borrowing obligations entered into by the Holding Trustee in respect of the borrowing referred to in paragraph (5);
(ii) the trustee of the fund is absolutely entitled to any income derived from the Asset, less fees, costs, charges and expenses incidental to the acquisition, holding or management of the Asset;
(iii) the trustee of the fund has the right to acquire the legal title of the Asset on completion of the borrowing referred to in paragraph (5);
(iv) the rights of the Holding Trustee or any Guarantors against the trustee of the fund in connection with default on the borrowing referred to in paragraph (5) is limited to the Asset.
(9) the documentation referred to in paragraph (8) in connection to the borrowing referred to in paragraph (5), is disclosed to the lender at the time of the borrowing.