submission example - very good

Dear Committee Members,
I am an investor in the Premium Income Fund ARSN 090 687 577 (PIF) The PIF is listed on the NSX (code PIN)
Wellington Capital Limited (ACN 114 248 458) announced a rights and placement issue in a release to the NSX 6 May 2011.
On 10 May 2011 Wellington Capital Limited announced it had amended the constitution of the PIF.
This enabled heavily discounted new units to enter the fund.
On 10 May 2011 ASIC registered the amendment to the Constitution of the PIF.
I made a series of complaints to ASIC about the amendment both on the 10 May 2011 and in the days and weeks following, and am aware that many others made similar complaints.
The amendment was later overturned in the Federal Court.
However the judge said it was not possible to reverse the placement of 75 million units. They had been entered into the fund's register before the court's decision (which was made possible by ASIC allowing the amendment in the first place )
The new units at the time of entering the fund had been promised equality in all respects to the existing units.
Despite the opinions that Wellington Capital has expressed, I am concerned that the fund is exposed to two scenarios as a consequence of ASIC allowing the amendment.
If section 601FC (1) (d) is upheld, all units will be treated equally and will share in potential litigation returns that come into the fund.
If a court were to rule that only the units who suffered the loss are to share in potential litigation returns, I am concerned that the fund could be exposed to legal action from the new units who were promised equality with existing units when they entered the fund.
On 6 May 2011, a rights and placement issue was released on the NSX. There was no reference in that announcement to the fund's constitution, which fixed the issue price of a unit in the fund.
The Rights and Placement issue sought
''...a Placement of units at 10 cents per unit to raise $11.3 million, and
"...a non-renounceable Rights Issue to eligible Unitholders on the basis of one new unit for every three units held, at an issue price of 10 cents per unit to raise up to $22.6 million...''
It was also represented that
"..The new units will rank equally in all respects with the Fund’s existing units...."
''.. Units issued pursuant to both the Placement and the Rights Issue will rank equally with other units on issue....''
''.. A number of current assets require capital to optimise their net realisable value. ...''
On 11 April 2011 $7.55 million had been returned to unitholders as a capital return of one cent per unit.
At the time of NSX release 6 May 2011, I placed my trust in the fund's constitution which fixed the issue price of a unit in the fund. I believed it would protect my units suffering any dilution.
In the NSX release 10 May 2011 - four days after the NSX release 6 May 2011 - the PIF fund constitution was amended and filed with ASIC making it possible for these new units to enter the fund. The issue was at a 70% discount to the then current NTA value per unit of 34cents, and at a 90% discount to what I had paid for my units.
(At the time, units were trading on the NSX at a considerably lesser price to the NTA but trading was slow.)
Some 75 million new units were registered in the PIF register on 17 May 2011.
Two weeks after the new units had been registered (and promised equality in all respects), and two years after unitholders had joined in the class action outside of the fund, a 2 June 2011 NSX release informed me that Wellington Capital
"...has entered into a funding agreement with IMF (Australia) Limited (ASX:IMF) in relation to Federal Court Proceedings NSD 324/009. The consequence is that Wellington Capital will become an applicant in the claim in its capacity as responsible entity of the Premium Income Fund....''
and from the same document
"...Wellington Capital ............ will as responsible entity convene a Unitholders meeting of the Premium Income Fund within 30 days of receipt of proceeds in finalisation or settlement of the claim. The purpose ....... will be to enable the Unitholders ..... consider an amendment to the Constitution of the Premium Income Fund, so that those Unitholders who were members of the Premium Income Fund on 15 October 2008, and remain members at the time of the finalisation or settlement of the claim, are pro-rata the beneficiaries of the proceeds.....''
There were lots of complaints sent to ASIC as the entity responsible for regulating managed investment schemes who's role is to protect our constitutional rights under the Corporations Act.
Between 10 May 2011 and 2 June 2011, there was an outpouring of dismay from unitholders evidenced on an online forum.
I sent a complaint to ASIC on 10 May 2011 and have copies of several other complaints sent by other PIF members to ASIC on 10 May 2011.
A NSX release dated 10 May 2011 being http://www.nsxa.com.au/
ftp/news/021723990.PDF discloses an email dated 9 May 2011 sent by DLA Piper to ASIC which raised a comprehensive list of issues and concerns regarding unitholders rights under the Corporations Act.
(This release appeared for some hours on the NSX on 10 May 2011 and was then removed. I have saved a copy, although the link still works on the web today).
I received a reply from ASIC to my complaint dated 10 May 2011 on 20 May, 2011.
I am aware that other members in the fund received similar answers from ASIC to their complaints. ASIC referred to Section 601GC (1) (b), stating that
"..At Law, the question is not a general question whether members would be "worse off" if the change is made (for example, it is not a general question of prejudice or financial disadvantage). It is a specific question that goes to the narrow matter of the effect of the amendments on member's rights as set out in the constitution, for example, a member's right to vote or a member's right to withdraw from the Fund. Of course, in making the amendment the responsible entity must act honestly and in the best interests of members in accordance with section 601FC of the Act.
Wellington Capital confirmed to ASIC that it considers the amendments to be within its power and in the best interests of the members of the PIF.
In these circumstances ASIC is not proposing to take further action in relation to the Placement and Non-renounceable Rights Issues."
It wasn't until 22 November that I received further correspondence from ASIC in answer to my pleas for a review of their decision.
However, the placement (and the consequences thereof) of 75 million units remain in the PIF.
In NSX release 21 June 2011 the Federal Court had overturned the amendments to the PIF Constitution, but said that the placement could not be reversed.
Unitholders were left to contemplate these words from Judge Gordon
"...That conclusion is fortified by the fact that the Plaintiffs were aware of Wellington’s intention to make the placement as early as 6 May 2011 (before any issue or allotment of the units) but did not institute proceedings in this court until 6 June 2011.
If, as here, the plaintiff sought relief other than damages, they should have moved earlier.''
In May 2011 many of us, myself included, had written to ASIC asking ASIC to protect our interests, which according to ASIC's own website are regulated by the Corporations Act.
ASIC website represents that
''...We regulate corporations, managed investment schemes, participants in the financial services industry and people engaged in credit activities under a number of Commonwealth laws. These laws include the Corporations Act 2001 (Corporations Act).....'
"....The ASIC Act directs ASIC to ‘take whatever action it can take, and is necessary, in order to enforce and give effect to the laws of the Commonwealth that confer functions and powers on it’....''
In NSX release 3 May 2013 Wellington Capital stated that
4.4 "..At Law, the proceeds of any litigation commenced on behalf of the Fund will, unless a court orders otherwise, be assets of the Fund. This means that the Unitholders who are Unitholders at the time when an asset comes into the Fund have an entitlement to it..."
If the 75 million new units which were placed into the PIF on 17 May 2011 ( the placement of which the judge said could not be reversed) were to share potential litigation proceeds as per section 601FC(1) (d) of the Corporations Act, it will be a travesty of justice to the much devastated members of this fund who have suffered such huge losses.
If Wellington Capital is permitted to treat units of the same class differently, and with reference to the NSX release 6 May 2011 where new units were promised not only equality, but equality is all respects, I remain concerned that it is possible that the fund face litigation. This would also be a travesty of justice to the much devastated members of this fund who have suffered such huge losses.
I submit to this inquiry that there be a more transparent process between ASIC and the court system as I feel unitholders in the PIF have been let down in this long saga by both.
I submit to this inquiry that ASIC should not allow responsible entities to make representations with inferences that are contrary to the Corporations Act.
I submit to this inquiry that members of damaged managed investment schemes must be able to rely on ASIC to protect their constitutional rights, which includes preserving their unit price, and thus their voting strength.
In NSX release 21 June 2011 the Federal Court had overturned the amendments to the PIF Constitution, but said that the placement could not be reversed.
Unitholders were left to contemplate these words from Judge Gordon
"...That conclusion is fortified by the fact that the Plaintiffs were aware of Wellington’s intention to make the placement as early as 6 May 2011 (before any issue or allotment of the units) but did not institute proceedings in this court until 6 June 2011.
If, as here, the plaintiff sought relief other than damages, they should have moved earlier.''
In May 2011 many of us, myself included, had written to ASIC asking ASIC to protect our interests, which according to ASIC's own website are regulated by the Corporations Act.
ASIC website represents that
''...We regulate corporations, managed investment schemes, participants in the financial services industry and people engaged in credit activities under a number of Commonwealth laws. These laws include the Corporations Act 2001 (Corporations Act).....'
"....The ASIC Act directs ASIC to ‘take whatever action it can take, and is necessary, in order to enforce and give effect to the laws of the Commonwealth that confer functions and powers on it’....''
In NSX release 3 May 2013 Wellington Capital stated that
4.4 "..At Law, the proceeds of any litigation commenced on behalf of the Fund will, unless a court orders otherwise, be assets of the Fund. This means that the Unitholders who are Unitholders at the time when an asset comes into the Fund have an entitlement to it..."
If the 75 million new units which were placed into the PIF on 17 May 2011 ( the placement of which the judge said could not be reversed) were to share potential litigation proceeds as per section 601FC(1) (d) of the Corporations Act, it will be a travesty of justice to the much devastated members of this fund who have suffered such huge losses.
If Wellington Capital is permitted to treat units of the same class differently, and with reference to the NSX release 6 May 2011 where new units were promised not only equality, but equality is all respects, I remain concerned that it is possible that the fund face litigation. This would also be a travesty of justice to the much devastated members of this fund who have suffered such huge losses.
I submit to this inquiry that there be a more transparent process between ASIC and the court system as I feel unitholders in the PIF have been let down in this long saga by both.
I submit to this inquiry that ASIC should not allow responsible entities to make representations with inferences that are contrary to the Corporations Act.
I submit to this inquiry that members of damaged managed investment schemes must be able to rely on ASIC to protect their constitutional rights, which includes preserving their unit price, and thus their voting strength.