@donegaldemon
You are correct in that the Trustee must adhere to the investment strategy of the super fund and that the documents for an SMSF are written such that you can define your strategy to include almost anything. My own SMSF established through eSuperfund allows me to invest up to 90% into a single stock without any justification, and up to 100% if the trustee can provide adequate justification in the view of the auditor. So far it has been audited twice and deemed compliant with 100% invested in AVZ shares. As the trustee my justification was an account of the global electrification transition, the clearly projected supply and demand imbalance, and AVZ's project fundamentals. It would appear the auditor agreed the risk is acceptable.
However
@BabyJack nailed it.
The ATO states
here that:
"In-house assets can't be more than 5% of your fund’s total assets. If, at the end of a financial year, the level of in-house assets of a self-managed super fund (SMSF) exceeds 5% of a fund’s total assets, the trustees must prepare a written plan to reduce the market ratio of in-house assets to 5% or below."
On the same page the ATO defines an "in-house asset" to include:
"a loan to, or an investment in, a related party of your fund."
The ATO states
here that a "related party" includes:
"any company the member or their associates control or influence."
Therefore under Australian tax rules
none of our board of directors with an Australian SMSF may have more than 5% of their SMSF invested in AVZ shares. Due to our stellar run up this past year we should expect to see more of our directors having to reduce their SMSF holdings in AVZ,
not because they want to but because they have to by law. Those of our board with an SMSF outside Australia may be subject to different rules.
The fact that Graeme was the first to do this indicates he was the one with the greatest percentage of his SMSF invested in AVZ. At first glance it may appear to some that his confidence waned, but in truth the greater percentage of his SMSF invested in AVZ may be interpreted as greater confidence in our future.
