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Investment mandate
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MIG’s principal investment policy is investment in infrastructure assets in OECD and OECD equivalent countries; and non-infrastructure assets where ancillary to a major infrastructure investment or acquisition. However MIG has a stated focus on tollroad investments, both greenfield and mature.
The investment policy may be varied from time to time on reasonable notice to securityholders.
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Trust constitutions clause 11
Advisory Deed clause 3
MIG 2001 Prospectus pg 23
MIG Annual Report 2008 pg 3
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Services
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Company Adviser
The adviser under the terms of the Advisory Deed is responsible to the company for:
- Investment and divestment evaluation and recommendations
- Implementation of investment / divestment instructions given by the board
- Asset management
- Asset valuations
- Capital and financial management recommendations
- Financial reporting
- Board reporting
- Investor communications and meetings
- General fund administration including company secretarial services (subject to outsourcing of registry and trust custodial services to Computershare Investor Services Pty Limited ABN 48 078 279 277 and Trust Company Limited ABN 59 004 027 749 respectively, and company secretarial services in Bermuda to Butterfield Fund Services (Bermuda) Limited)
- Monitoring of fund operational risk and compliance
- Litigation management
- Provision of suitably qualified personnel to perform the CEO and CFO roles.
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Advisory Deed clause 3
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Responsible Entity
The responsible entity has all the powers of a natural person including contracting, borrowing and investment and carries out all management functions for the trusts subject to outsourcing registry and custodial services as described above.
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Trust constitutions clause 11
Corporations Act s601FB, s601FC
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| Term |
No fixed term for both trusts and the company or until the responsible entity / adviser is removed or retires or securityholders vote to wind up the stapled entities as provided for in the trust constitutions or by law. |
Trust constitutions clauses 12 and 20
Advisory Deed clause 10
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Extension or removal
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There are no extension or renewal provisions in the Advisory Deed.
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| Termination |
The trusts and company may terminate the appointment of the responsible entity / adviser, without cause, by securityholder vote. The company adviser can only be removed on a vote if the responsible entity of the trusts is also removed.
For both trust and company the resolution must be passed by at least 50% of votes cast at meeting by securityholders entitled to vote. Managers and associates may vote their securities on the resolution.
The company adviser can also be removed for cause being where the adviser is in liquidation, ceases to carry on business or lacks the appropriate licence or authorisation.
In the case of the trusts, ASIC or a court may replace the responsible entity where there are solvency issues or members are likely to suffer a loss because the responsible entity has breached the Corporations Act.
Pursuant to the Corporations Act the responsible entity of the trusts can retire if it first convenes a unitholders meeting to explain its reason for retirement and to enable unitholders to vote on a resolution to choose a new responsible entity.
The company adviser may resign by giving written notice.
Where removal events have occurred in the case of the company, its directors retain discretion as to whether to terminate the adviser. As the directors must act in the interest of securityholders, it is considered unlikely that they would not terminate the deed in the situation where securityholders have voted to remove both the responsible entity and the adviser.
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Trust constitutions clause 12
Corporations Act s601FL, s601FM, s601FN, s601FP, s253E, s915B
Advisory Deed clauses 2.2, 7 and 10
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If the responsible entity / adviser are terminated any future second and third performance fee instalments will be crystallised and paid on termination together with base fees accrued to the date of termination. There are no other termination fees payable. |
Trust constitutions clause 19
Advisory Deed 7
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| Fees |
Base fee
Payable Quarterly.
The base fee =
- 1.25% per annum of market value of the funds up to $3 billion.
- 1% per annum of market value of the funds in excess of $3 billion.
Market value of the funds is the volume weighted average market capitalisation over last 10 ASX trading days of each quarter plus fund level borrowings and firm commitments for future investments less cash or cash equivalents.
The trust constitutions clause 19 provide for a base fee of 1.25% per annum. However, clause 19 allows the responsible entity to accept a lower fee. On 7 September 2001, MIG announced it would accept a lower base fee for market value in excess of $3 billion. The Advisory Deed clause 7 reflects the updated base fee arrangements.
Base fees payable may be reinvested in MIG securities if MIG’s non-executive directors approve and at a price being the volume weighted average trading price over the last 10 ASX trading days before the fee becomes payable.
Performance Fee
Performance fee payable at 30 June if earned.
The performance fee is payable in event that MIG accumulation index outperforms the S&P/ASX 300 Industrials Accumulation Index in any financial year having made up for underperformance in previous years.
Performance fee = 15% of the dollar amount of out performance and is in three equal instalments. The second and third year instalments are only paid if MIG continues to outperform the index on a cumulative period over the two and three year period.
Any underperformance deficit from prior periods must be made up before future performance fees can be earned.
If the responsible entity / adviser is terminated, any future second and third performance fee instalments will be crystallised and paid on termination.
Performance fees payable may be reinvested in MIG securities if MIG’s non-executive directors approve and at a price being the volume weighted average trading price over the last 10 ASX trading days before the fee becomes payable.
Other services provided by Macquarie Group companies
Additional market based fees are payable for other services such as financial advisory, underwriting, broking and hedging provided on a transactional basis by Macquarie Group companies, and approved under MIG’s related party policy.
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Trust constitutions clauses 19 and 28
Advisory Deed clauses 1, 2.2 and 7
ASX release 7 Sept 2001
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| Expenses |
The responsible entity and adviser are entitled to be reimbursed for expenses incurred in relation to the proper performance of their duties.
Expense reimbursement does not include adviser administration costs such as premises, staff and facilities.
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Trust constitutions clause 19
Corporations Act s601GA(2)
Advisory Deed clause 8
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| Exclusivity |
The adviser is engaged by the company on a non-exclusive basis although the adviser itself may act for other parties.
The responsible entity of the trusts may act for other parties and may outsource its general management responsibilities to other Macquarie or non-Macquarie managers (but remains liable for their actions).
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Trust constitutions clause 11
Advisory Deed clauses 2, 4 and 15
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Macquarie (including the responsible entity and the adviser) has no obligation to accept investment opportunities and MIG has no obligation to accept any investment opportunities.
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MIG 1996 Listing Prospectus pg 68 |
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If investment opportunities are provided to the Macquarie Capital specialist funds business then MIG has priority over toll road investments meeting its investment criteria.
If it does not wish to proceed with an investment opportunity so offered then it may be offered to other funds or clients.
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Investor Presentation May 2005 |
| Discretions |
The board of the responsible entity of the trusts makes all significant investment/divestment and operational decisions in relation to the trusts.
The adviser mandate for the company is non-discretionary. All significant investment/divestment and operational decisions are made by the board of the company based on adviser recommendations.
The performance of management generally is oversighted by the independent directors on the responsible entity and company boards.
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MIIML Constitution clause 22
Trust constitutions clause 11
Advisory Deed clause 3
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| Related Party Protocols |
The trusts and companies have adopted a detailed related party protocol covering transactions with and services provided by Macquarie Group companies and managed vehicles.
All related party transactions or services must be on arms length terms and approved by the MIG independent directors only.
Asset acquisition or sale transactions with related parties for 5% or greater of fund value are supported by an independent valuation.
Mandates for the provision of services to MIG stapled entities or their controlled businesses are subject to third party independent review unless the independent directors determine otherwise on the basis of appropriate market information or practice.
Third party independent review is mostly carried out by the corporate advisory divisions of large accounting firms. In the case of the provision of services, the reviewers have regard to market evidence gathered from their own enquires, including information requested from Macquarie. For asset sales or acquisitions, the reviewer carries out its own valuation if required.
MIG independent directors have put in place a panel of reviewers (which does not include the MIG auditor) and the reviewer for a particular service or transaction is usually chosen by them on a rotational basis.
Swap and foreign exchange transactions with Macquarie companies solely for hedging purposes are given standing approval if certain conditions are met.
Significant volume securities transactions with a Macquarie broker require independent director approval.
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MIG Related Party Policy
Part 5C.7 and 2E of the Corporations Act which governs related party transactions by trusts
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| Change of Control |
MIG co-invests from time to time with other Macquarie companies or managed vehicles. Co-investment arrangements may include pre-emption and tag-along or drag-along rights in favour of each other including rights which are triggered on removal of the Macquarie manager typical of those agreed with third party co-investors. Refer the asset description in relation to APRR on page 22 of the 2008 Annual Report for more details.
In addition, loan facilities for MIG stapled entities (which are currently undrawn) or MIG businesses may provide for acceleration of loan payments if MIG is no longer managed by a Macquarie company.
Removal of manager trigger events are typically put in place because counterparties (both equity and debt providers) require ongoing Macquarie involvement in the management of the fund or particular businesses.
The MIG independent directors obtain separate legal advice as necessary and the arrangements are approved by the independent directors and disclosed to security holders.
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MIG Related Party Policy
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| Variation to Management Arrangements |
Any variations adverse to securityholders rights or in respect of changes to fee structures to increase fees would involve trust constitution amendments and therefore effectively require approval by 75% by value of votes cast at meeting by securityholders entitled to vote.
There are however no specific requirements in the Advisory Deed for variations to the deed to be approved by securityholders but given the stapled structure it is unlikely that any changes would result in material inconsistency with the trusts provisions particularly as regards investment policy, manager termination or fees.
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Trust constitutions clause 22
Corporations Act s601GC
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| Director Appointment Rights |
The adviser has director appointment rights for 50% of the board of the company. MIIML as responsible entity for one of the trusts has director appointment rights for 25% of the board of the company.
Macquarie currently appoints the board of MIIML as it is a Macquarie subsidiary.
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MIIML constitution clause 18
MIGIL Bye-Laws 6, 7
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Macquarie (including MIIML) will undertake from December 2008 to exercise its director appointment rights for the next 3 years in accordance with a vote by securityholders. As a result securityholders will have the right to nominate and vote on the appointment of all directors across the boards of MIG. |
ASX announcement dated 22 October 2008 |
