A meeting of unit holders binds everyone, including the members who stayed away, so the law insists that everyone had a fair chance to come. Subdivision 2 of Division 5 of Part V of the Capital Market Act 2015 sets the minimum notice, the recipients, the method of delivery and the contents. The trust deed may lengthen the notice period or alter the method, but may not shorten the 21 days.
How much notice: 21 days
“At least 21 days notice shall be given of a meeting, however, the trust deed may specify a longer minimum period of notice.”
The 21 days run from the day notice is taken to be given. Under the deemed-service rules below, a notice posted on 1 March is given on 4 March and the earliest lawful meeting date is 26 March. The period fits inside the other deadlines in Division 5: a trustee must call a requested meeting within 21 days and hold it within two months (section 214(8)). A deed may require 28 or 30 days; it cannot allow 14.
Who must receive notice
Section 219(1) requires written notice to be given to each member entitled to vote at the meeting, each director of the trustee, and the auditor of the scheme. Where units are held jointly, notice to one joint holder is enough, and unless the deed says otherwise it goes to the holder named first in the register (section 219(1)(d) and (2)), so joint holders should keep the first-named holder’s address current. The auditor is entitled to attend any meeting and to be heard on business that concerns the audit (section 230), and section 220 requires the trustee to give the auditor “any other communications relating to the meeting that a member of the scheme is entitled to receive”, such as members’ statements and proxy forms. Failure is an offence punishable by a fine of up to K5 million, with every director and the chief executive officer liable to a fine of up to K1 million or five years’ imprisonment, or both (section 220(2)).
How notice may be given
Unless the deed provides otherwise, section 219(3) allows notice to be given personally, by post to the address in the register or an alternative address the member has nominated, or to a fax number or electronic address the member has nominated. A trustee cannot email a notice to an address it found for itself; the member must have nominated it, which is why trustees should invite an email nomination when a member first invests. Section 219(4) fixes when notice is taken to be given:
| Method | Deemed given |
|---|---|
| Personal delivery | On delivery |
| Post to registered or nominated address | Three days after posting |
| Fax or other electronic means | The business day after it is sent |
Members’ resolutions, statements and proxy forms must travel “in the same way” as the notice (sections 214(10), 224(2), 225(8) and 234).
What the notice must contain
Section 221 lists four compulsory contents. The notice must set out the place, date and time of the meeting and, if it is to be held in two or more places, the technology that will be used to link them. It must state the general nature of the meeting’s business. If a special resolution is to be proposed, it must set out the intention to propose it and state the resolution itself, word for word; a vague reference to “the future of the trustee” is not enough. And it must contain a statement that the member has a right to appoint a proxy, that the proxy need not be a member of the scheme, and that a member who appoints two proxies may specify the proportion or number of votes each is to exercise. See how proxies work and what a special resolution is.
The Act does not spell out an explanatory memorandum, but a notice that gives the bare resolution and nothing else invites challenge. In Pacific Equities and Investment Ltd v Melanesian Trustee Services Ltd [2007] PGNC 24; N3122, the Pacific Balance Fund deed required a notice to give unit holders enough information “to form a reasoned judgment”; the trustee’s notice of the 14 July 2006 meeting set out the allegations against the manager together with the manager’s brief response to each, and the Court found no serious question about its adequacy. A balanced summary of both sides is the safe model.
Adjourned meetings
Section 222 provides that when a meeting is adjourned, “new notice of the adjourned meeting shall be given if the meeting is adjourned for one month or more”. Shorter adjournments, including the automatic one-week adjournment for want of a quorum under section 228(3), need no fresh notice. At a resumed meeting only unfinished business may be transacted, and a resolution passed there is passed on the day of the resumed meeting (section 231). Proxy appointments received 48 hours before the resumption are effective for the resumed part (section 236(3)). See how voting is conducted.
What if notice was defective?
The Act does not say that a defect in notice automatically invalidates a meeting. A member who was never notified may apply to the National Court under section 256 for any order appropriate to protect members’ interests, but the courts weigh prejudice: in the Pacific Balance Fund litigation the manager’s complaint failed because it had actual notice five weeks ahead and had used it. A trustee that discovers an error should issue a corrected notice and, if necessary, move the date.
Sources
- Capital Market Act 2015 — ss 214(8), (10), 218–222, 224(2), 225(8), 228(3), 230, 231, 234, 236, 256
- Pacific Equities and Investment Ltd v Melanesian Trustee Services Ltd [2007] PGNC 24; N3122
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.