Infamous Amendment to Prime Trust Constitution

The Prime Trust Action Group has obtained a copy of the infamous amendment to the Prime Trust Constitution dated 22 August 2006 (see attached). As you will see, this amendment involved the Responsible Entity unilaterally changing the Constitution so that it could receive a listing fee. This listing fee was set at 2.5% of gross assets (more than 7% of unitholders’ funds at the time) and resulted in the Responsible Entity taking $33 million from the Trust without unitholder approval.

The Action Group finds it absolutely astonishing that the Responsible Entity stated that the introduction of the listing fee would not adversely affect unitholders’ rights. The Action Group believes that, by amending the Constitution, the Responsible Entity has blatantly ignored their legal and statutory responsibilities:

• Section 601GC of the Corporations Act (“Changing the Constitution”) requires that the Responsible Entity can only unilaterally change the Constitution if the Responsible Entity reasonably considers that the change will not adversely affect unitholders’ rights

• Section 601GC of the Corporations Act also requires that, where an amendment to the Constitution will materially and adversely affect unitholders’ rights, a special unitholder resolution is required, requiring a majority of at least 75%
 
• Section 601FC of the Corporations Act (“Duties of Responsible Entity”) requires that the Responsible Entity must act honestly and in the best interests of the unitholders, and if there is any conflict between the interests of the unitholders and the interests of the Responsible Entity, must give priority to the unitholders’ interests

• Section 601FD of the Corporations Act (“Duties of Officers of Responsible Entity”) requires that the officers of the Responsible Entity must act in the best interests of the unitholders, and if there is any conflict between the interests of the unitholders and the interests of the Responsible Entity, must give priority to the unitholders’ interests

• Section 601FD of the Corporations Act also requires that an officer of the Responsible Entity must not make improper use of their position to gain an advantage for themselves or for another person, or cause detriment to the members of the scheme

• Section 25.1(a)(i) of the Trust’s Constitution states that the Responsible Entity cannot unilaterally change the Constitution if the change is in favour of, or results in any benefit to, the Responsible Entity

• Section 25.1(a)(iii) of the Trust’s Constitution states that the Responsible Entity cannot unilaterally change the Constitution if that change affects the beneficial entitlements of unitholders

In view of the above, the Action Group believes that the Trust’s administrator, Lawler Draper Dillon, must take immediate action in relation to this matter. As a first step, the Action Group believes that Lawler Draper Dillon should immediately recover the $33 million listing fee which was taken from the Trust, together with interest at commercial rates thereon.

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