Commonwealth Numbered Acts

CORPORATIONS ACT 1989 No. 109 of 1989 - SECT 1069

1069. (1) Subject to subsection (3), a deed shall contain covenants to the
following effect:

   (a)  a covenant binding the management company that it will strive to carry
        on and conduct its business in a proper and efficient manner and to
        ensure that any relevant undertaking, scheme or enterprise is carried
        on and conducted in a proper and efficient manner;

   (b)  covenants binding the management company:

        (i)    to pay to the trustee or representative, within 30 days after
               receiving it, money that, under the deed, is payable by the
               management company to the trustee or representative;

        (ii)   not to sell or issue, or permit to be sold or issued, a
               relevant prescribed interest except at a price calculated in
               accordance with the provisions of the deed; and

        (iii)  not to publish, without the approval of the trustee or
               representative, a notice or other document containing a
               statement with respect to the sale price of relevant prescribed
               interests or the yield from those interests or containing any
               invitation to buy prescribed interests;

   (c)  a buy-back covenant;

   (d)  a covenant binding the management company to make, and to maintain at
        all times, adequate buy-back arrangements;

   (e)  covenants binding the trustee or representative:

        (i)    to exercise all due diligence and vigilance in carrying out
               his, her or its functions and duties and in protecting the
               rights and interests of the holders of the relevant prescribed
               interests;

        (ii)   to supervise the making and maintaining of adequate buy-back
               arrangements and to monitor the maintaining of such
               arrangements and the extent of compliance with the buy-back
               covenant;

        (iii)  to keep proper books of account in relation to those prescribed
               interests; and

        (iv)   to cause a registered company auditor to audit those accounts
               at the end of each financial year;

   (f)  a covenant binding the trustee or representative to send, within 2
        months after the end of each financial year, to each of the holders of
        those prescribed interests:

        (i)    a statement of the accounts for that financial year in relation
               to those prescribed interests;

        (ii)   a statement that describes the buy-back arrangements in effect
               when it is sent and states whether or not, in the opinion of
               the trustee or representative, those arrangements are adequate;
               and

        (iii)  a copy of the auditor's report on those accounts;

   (g)  a covenant binding the management company and the trustee or
        representative, respectively, that no money available for investment
        in respect of the relevant undertaking, scheme or enterprise will be
        invested in or lent to the management company, the trustee or
        representative, or any person (other than an Australian bank or an
        eligible money market dealer) who is an associate of the management
        company or of the trustee or representative;

   (h)  a covenant binding the management company that the management company
        will:

        (i)    make available to the trustee or representative, or to any
               registered company auditor appointed by the trustee or
               representative, for inspection all the books of the management
               company whether kept at the registered office or elsewhere; and

        (ii)   give to the trustee or representative or to any such auditor
               such oral or written information as the trustee or
               representative or the auditor requires with respect to all
               matters relating to the undertaking, scheme or enterprise of
               the management company or any property (whether acquired before
               or after the date of the deed) of the management company or
               otherwise relating to the affairs of the management company;

   (j)  a covenant binding the management company that the management company
        will make available, or ensure that there is made available, to the
        trustee or representative such details as the trustee or
        representative requires with respect to all matters relating to the
        relevant undertaking, scheme or enterprise;

   (k)  covenants binding the management company and the trustee or
        representative, respectively, that the management company or the
        trustee or representative, as the case may be, will not exercise the
        right to vote in respect of any shares relating to the relevant
        prescribed interests held by the management company or by the trustee
        or representative at any election for directors of a body corporate
        shares in which are so held, without the consent of the majority of
        the holders of those interests present in person and voting given at a
        meeting of those holders convened in the manner provided for in
        paragraph (m) for the purpose of authorising the exercise of the right
        at the next election;

   (m)  a covenant binding the management company that the management company
        will, within 21 days after an application is delivered to the
        management company at its registered office, being an application by
        not fewer than 50, or one-tenth in number, whichever is the less, of
        the holders of the relevant prescribed interests, by sending notice by
        post of the proposed meeting at least 7 days before the proposed
        meeting to each of the holders of those interests at the holder's last
        known address or, in the case of joint holders, to the joint holder
        whose name appears first in the management company's records, convene
        a meeting of the holders for the purpose of:

        (i)    laying before the meeting the accounts and balance-sheet that
               were laid before the last preceding annual general meeting of
               the management company or the last audited statement of
               accounts of the trustee or representative; and

        (ii)   giving to the trustee or representative such directions as the
               meeting thinks proper; and

   (n)  such other covenants as are prescribed by the regulations.

(2) Nothing in subsection (1) limits the generality of anything else in it.

(3) The Commission may, by writing, declare that, subject to such terms and
conditions as are specified in the declaration, a specified deed that makes
provision for the appointment of a specified person as trustee for or
representative of the holders of the prescribed interests to which the deed
relates is not required to contain covenants to the effect of such of the
matters referred to in subsection (1) as are specified in the declaration and
the Commission may, by writing, revoke the declaration or vary it in such
manner as it thinks fit.

(4) The Commission shall cause a copy of a declaration under subsection (3) to
be published in the Gazette.

(5) Where, as at the commencement of this Division, approval had been granted
to a deed under a law corresponding to this Division, the deed shall, if it
does not contain the covenants concerned, be deemed to contain covenants to
the effect of the covenants required to be contained in a deed under
subsection (1), except the covenants required under subparagraphs (1) (b) (i)
and (ii), paragraphs (1) (c) and (d) and subparagraphs (1) (e) (ii) and (f)
(ii), and subsections (11), (12), (13) and (14) apply in relation to the deed
accordingly.

(6) Where, as at the commencement of this Division:

   (a)  approval had been granted to a deed under a law corresponding to this
        Division; and

   (b)  the deed contains a covenant to the effect of the covenant required to
        be contained in a deed under paragraph (1) (c); the deed shall, if it
        does not contain the covenants concerned, be deemed to contain
        covenants to the effect of the covenants required to be contained in a
        deed under paragraph (1) (d) and subparagraphs (1) (e) (ii) and (f)
        (ii).

(7) If a deed (other than a deed to which subsection (5) or (6) applies) does
not expressly contain a covenant that is required by this section to be
contained in that deed, a covenant to the same effect shall, so far as is
practicable, be deemed to be contained in that deed.

(8) If:

   (a)  a prescribed interest has, whether before or after the commencement of
        this Division, been made available by a corporation;

   (b)  there was no deed in force in relation to that interest at the time
        when it was made available; and

   (c)  because there was no deed so in force the making available of the
        interest contravened section 1065 or a corresponding law; the
        covenants that would, had such a deed been in force at that time, have
        been required by this section or a corresponding law to have been
        contained in the deed shall, so far as is practicable, be deemed to be
        given by a deed in force in relation to that interest.

(9) If a regulation is made prescribing a covenant for the purposes of
paragraph (1) (n), that covenant shall except in so far as the regulations
provide otherwise:

   (a)  be deemed to be contained in every deed that is in force when the
        regulation comes into force; and

   (b)  in relation to a prescribed interest to which subsection (8)
        applies-be deemed to be given by a deed in force in relation to that
        interest.

(10) If:

   (a)  a covenant that is contained in a deed refers to a price calculated in
        accordance with the deed but no provision is made for the calculation
        of the price; or

   (b)  a covenant that is deemed to be contained in a deed or to be given
        refers to such a price; the price shall be calculated as prescribed or
        as the Commission determines.

(11) A meeting convened for the purposes of a covenant referred to in
paragraph (1) (k) or (m) shall be held at the time and place specified in the
notice, being a time not later than 2 months after the day on which the notice
was given, to be presided over by:

   (a)  a person appointed for that purpose by the holders of the relevant
        prescribed interests who are present at the meeting; or

   (b)  where no such appointment is made, a nominee of the trustee or
        representative approved by the Commission; and shall be conducted in
        accordance with the provisions of the deed or, in so far as the deed
        makes no provision or if there is no deed, as directed by the person
        presiding at the meeting.

(12) Notwithstanding anything to the contrary contained in an approved deed,
the undertaking, scheme, enterprise, contract or arrangement may be continued
in operation or existence if it appears to be in the interests of the holders
of the relevant prescribed interests during such period or periods as are
agreed upon by the trustee or representative and the management company.

(13) Where a direction is given to the trustee or representative at a meeting
convened pursuant to a covenant referred to in paragraph (1) (m), the trustee
or representative:

   (a)  shall comply with the direction unless it is inconsistent with the
        deed or this Act; and

   (b)  is not liable for anything done or omitted to be done pursuant to that
        direction.

(14) Where the trustee or representative is of the opinion that a direction so
given is inconsistent with the deed or this Act or is otherwise objectionable,
the trustee or representative may apply to the Court for an order confirming,
setting aside or varying the direction and the Court may make such order as it
thinks fit.