Registration is the gateway to running a lawful pooled investment fund in Papua New Guinea. The Capital Market Act 2015 splits the process into several pieces: a licence for the trustee, registration of the scheme, approval and registration of the trust deed, and a registered prospectus before any units are sold. This article puts them in order.
Step 1: a licensed trustee
Nothing can happen until there is a trustee that qualifies. Section 189(2) requires the trustee of a registered scheme to be a corporation holding a capital market licence issued under section 37 that authorises it to operate a unit trust or managed investment scheme. Section 184(1)(a) adds that the trustee must be “appointed by the members or unit holders”. For a brand-new scheme that has no members yet, the founding investors or the promoter appoint the trustee in the deed itself; the Act does not spell out how a first trustee is chosen, and the Commission’s guidelines under section 189(3) should be consulted. See who can be the trustee.
Step 2: draft a compliant trust deed
The deed is the scheme’s constitution. Section 210 requires it to make adequate provision for the price of units, the trustee’s investment powers, how members’ complaints are handled, winding up and the specific type of scheme, and to set out any fee, indemnity, borrowing and withdrawal rights. Section 185(3)(b) requires the directors of the proposed trustee to sign a statement that the deed complies with section 210, so the directors carry personal responsibility for getting it right. See what the deed must contain.
Step 3: lodge the application
“To register a unit trust or managed investment scheme, a person shall lodge an application with the Commission.” The application “shall state the name and the address of the registered office, of the proposed trustee”, and must be accompanied by “(a) a copy of the scheme’s trust deed; and (b) a statement signed by the directors of the proposed trustee that the trust deed complies with Section 210”.
The Act fixes no form or fee for the application, but the Commission may specify procedures under section 208(3) and set fees under section 38(2)(b) of the Securities Commission Act 2015. Any false or misleading statement to the Commission is an offence under section 120, punishable by a fine of up to K10 million or ten years’ imprisonment, or both.
Step 4: the Commission decides within 21 days
Section 186(1) obliges the Commission to register the scheme “within 21 days of lodgment of the application” unless it appears that the application does not comply with section 185, the proposed trustee does not meet the requirements of section 189, or the deed does not meet the requirements of section 210. Those are the only three grounds. Section 186(3) allows the Commission to test the proposed trustee and the draft deed against Division 4 as if the scheme were already registered. Once registered, section 186(2) requires the Commission to keep a record of the registration; that record names the trustee and, under section 198, the trustee cannot change until the record is altered.
Step 5: approval and registration of the deed
Alongside scheme registration, section 208(1) requires the trustee to submit the deed “for approval and registration and such deed shall not have effect unless so registered”. The Commission may approve the deed, register it with revisions or conditions, or refuse it. Within seven days after the deed is approved and registered, section 209 requires the trustee to lodge it with the Registrar of Companies, giving the public a second place to inspect it. In practice the scheme application and the deed application travel together. See how the deed is approved.
Step 6: approvals and a prospectus before offering units
Registration permits the scheme to exist; it does not permit units to be sold. Section 128(1) prohibits any issue, offer or invitation in respect of securities, including units, unless a prospectus has been registered by the Commission under section 129, and section 129(1)(e) tells the Commission to refuse a unit trust prospectus where a condition attached to the approval of the trustee has been broken. If the units are to be listed on PNGX, section 116(1)(b) requires the Commission’s prior approval under section 118 as well. Section 128(3) separately bans circulating application forms for a scheme “that has not been formed”. See when a prospectus is required and listing on PNGX.
Checklist
| Step | Section | Who acts |
|---|---|---|
| Trustee holds a capital market licence authorising scheme operation | ss 37, 189 | Trustee |
| Deed drafted to comply with s 210; directors sign compliance statement | ss 185(3), 210 | Trustee’s directors |
| Application lodged with name and registered office of trustee, deed and statement | s 185 | Trustee or promoter |
| Commission registers within 21 days unless a defect appears; record kept | s 186 | Commission |
| Deed approved and registered; no effect until then | s 208 | Commission |
| Deed lodged with Registrar of Companies within seven days | s 209 | Trustee |
| Listing approval if units will be quoted on PNGX | ss 116, 118 | Trustee |
| Prospectus registered before any offer; lodged with Registrar | ss 128–130 | Trustee as issuer |
A refusal to register, or silence past the 21 days, is a decision of the Commission. Under section 111 of the Securities Commission Act, as amended in 2023, the applicant may ask the Board to review it within 30 days of being notified, and may then appeal to the National Court on a question of law under section 114. See challenging a Commission decision.
Sources
- Capital Market Act 2015 — ss 37, 116, 118, 120, 128–130, 184–186, 189, 198, 208–210
- Securities Commission Act 2015 — ss 38, 111, 114 (as amended by the Securities Commission (Amendment) Act 2023)
Before relying on anything here, read the current text of the Capital Market Act 2015 and check for later amendments. If a decision matters to you, get advice — start with the Office of the Public Solicitor, or find a firm in the law firms directory.