Last Updated on 13/08/2025 by Damin Murdock
Family (discretionary) trusts are a popular structure for managing assets in Australia, and many business owners and investors ask whether a family trust can hold shares in a company. The short answer is yes, and doing so brings with it specific legal, control, and tax implications.
Can a Family Trust Hold Shares in a Company?
A family trust can hold shares in a company through its trustee. While the trustee is the legal owner of the shares who is registered on the company’s share register, the beneficial ownership belongs to the trust’s beneficiaries. This structure enables the trust to act in the interest of family members while participating in corporate ownership.
Multiple trustees may also jointly hold shares, provided this is permitted under the company’s constitution and trust deed.
How Does Shareholding by a Family Trust Affect Control?
Trustees of a family trust typically hold broad powers over company shares. These powers may include the ability to:
- Participate in restructures and amalgamations.
- Accept new securities or share offers.
- Vote at shareholder meetings.
- Appoint directors (in some cases).
The terms and conditions of the powers and control are normally set out in the company’s shareholders’ agreement, or alternatively, they are set out in the company’s constitution or the Corporations Act 2001 (Cth).
Control is generally determined by whether the trustee can exercise voting rights, receive dividends, or influence management decisions. A trust may be said to have a controlling interest if it controls more than 50% of the company’s voting power or capital.
That said, trustees who are also directors must carefully manage potential conflicts of interest. They must always act in the best interest of trust beneficiaries, which may at times diverge from the company’s broader objectives.
What Are the Tax Implications?
From a taxation perspective, shares held by a family trust are treated as being owned by a single notional entity under Australian law. This treatment continues even when the individual or corporate trustee changes, ensuring stability in ownership and taxation.
This structure allows for income distribution among family members in a tax-effective manner. However, compliance with trust rules and tax law is essential to avoid penalties or denial of benefits. You should consult with your accountant or a tax expert for more information regarding the tax implications.
Key Considerations
- Trust Deed Requirements: The trust deed must explicitly permit the holding of company shares.
- Control and Governance: Trustees must balance their duties to the trust with any company responsibilities.
- Succession Planning: Family trusts support intergenerational transfer of ownership without disrupting legal shareholding.
- Regulatory Restrictions: Some industries or company structures may place restrictions on who can hold shares.
- Professional Advice: Always seek legal and tax advice before structuring shareholdings through a family trust.
Conclusion
Holding shares in a company through a family trust offers control, tax flexibility, and asset protection, but also comes with responsibilities. It is essential to ensure the trust is properly established, managed, and compliant with all legal and taxation requirements.
Feel free to contact Damin Murdock at Leo Lawyers via our website, on (02) 8201 0051 or at office@leolawyers.com.au. Further, if you liked this article, please subscribe to newsletter via our Website, and subscribe to our YouTube , LinkedIn, Facebook and Instagram. If you liked this article or video, please also give us a favourable Google Review.
DISCLAIMER: This is not legal advice and is general information only. You should not rely upon the information contained in this article and if you require specific legal advice, please contact us.
Damin Murdock (J.D | LL.M | BACS - Finance) is a seasoned commercial lawyer with over 17 years of experience, recognised as a trusted legal advisor and courtroom advocate who has built a formidable reputation for delivering strategic legal solutions across corporate, commercial, construction, and technology law. He has held senior leadership positions, including director of a national Australian law firm, principal lawyer of MurdockCheng Legal Practice, and Chief Legal Officer of Lawpath, Australia's largest legal technology platform. Throughout his career, Damin has personally advised more than 2,000 startups and SMEs, earning over 300 five-star reviews from satisfied clients who value his clear communication, commercial pragmatism, and in-depth legal knowledge. As an established legal thought leader, he has hosted over 100 webinars and legal videos that have attracted tens of thousands of views, reinforcing his trusted authority in both legal and business communities."
