Can Unit Holders Put Their Own Resolutions to a Meeting in Papua New Guinea?

Calling a meeting is one thing; controlling what it decides is another. The Capital Market Act 2015 gives unit holders two tools short of convening their own meeting: the right to add a resolution to the agenda of a meeting the trustee is already holding, and the right to have their own statement sent to every member at the scheme’s expense. Both are in Subdivision 3 of Division 5 of Part V.

Who may propose a resolution

The thresholds mirror section 214, and the percentage is measured at midnight before the notice is given (section 223(7)). The notice must be in writing, set out the wording of the proposed resolution and be signed by the members giving it; identical copies may be signed separately (section 223(5)–(6)).

The limit in section 223(4) matters. Members cannot use the section to table an ordinary resolution on, say, which bank the scheme should use. The only resolutions they may force onto the agenda are special resolutions, such as one directing a winding up (section 265), and the removal and replacement of the trustee. Anything else needs the trustee’s agreement. See what a special resolution is.

When the resolution is considered, and who pays

Section 224(1) provides that the resolution “is to be considered at the next meeting of the members that occurs more than two months after the notice is given”. A notice delivered a week before a meeting therefore does not reach that meeting; it waits for the next one. If no meeting is in prospect, members should pair the notice with a request to call a meeting under section 214, which has its own two-month deadline; see requiring the trustee to call a meeting. The trustee must give all members notice of the resolution at the same time, and in the same way, as it gives notice of the meeting (section 224(2)).

Cost follows timing. If the trustee received the members’ notice in time to send it out with the notice of meeting, the trustee bears the cost (section 224(3)). If it did not, the requesting members are “jointly and individually liable” for the trustee’s reasonable expenses of a separate mail-out (section 224(4)), although the meeting itself may resolve that the trustee meet those expenses from the scheme’s assets (section 224(5)). The trustee need not give notice of a resolution that is more than 1,000 words long or defamatory, nor, where the members are to bear the cost, until they have paid the trustee a sum reasonably sufficient to cover it (section 224(6)).

Members’ statements: section 225

The same two groups may request the trustee to send all members a statement about a proposed resolution “or any other matter that may be properly considered at the meeting” (section 225(1)–(2)). The request must be in writing, signed and given to the trustee (section 225(5)), and the trustee must distribute the statement with the notice of meeting or as soon as practicable afterwards (section 225(8)). The cost rules repeat those for resolutions (section 225(9)–(11)), and the trustee may refuse a statement over 1,000 words or defamatory, or one whose cost the members have not prepaid (section 225(12)).

Worked example: replacing the trustee

Suppose 120 unit holders of a property fund, led by a landowner company and a church investment committee, have lost confidence in the trustee. The trustee has announced a meeting for 30 September to approve a supplementary deed. On 1 June the members give the trustee a signed notice under section 223 of this resolution: “That Example Trustee Ltd be removed as trustee of the Fund with effect from the close of this meeting, and that Replacement Trustee Ltd, the holder of capital market licence number 000, which has consented in writing to act, be appointed as trustee of the Fund.” With it they deliver a 900-word statement under section 225 setting out the audited fee figures. The meeting falls more than two months after 1 June, so the resolution must go on the agenda, and because the notice arrived before the trustee’s own notice went out, the trustee pays for circulating both documents. At the meeting the trustee and its associates cannot vote on the resolution unless the scheme is listed (section 241). If it passes, the outgoing trustee must lodge a notice with the Commission within two business days recording the new trustee; if it does not, the new trustee may (section 201(2)). See can unit holders remove the trustee and how voting is conducted.