Section 56(1)(b) of the Constitution reserves the acquisition of freehold to citizens. A corporation is not a natural person, so the question is which corporate bodies are to be treated as citizens. Part III of the Land (Ownership of Freeholds) Act answers it exhaustively.
Section 15 — the list
The corporations to be regarded as citizens for the purposes of section 56(1)(b) are —
(a) the State;
(b) other governmental bodies within the meaning of section Sch.1.2(1) of the Constitution that are corporations;
(c) Local Government Councils and Local Government Authorities;
(d) incorporated land groups within the meaning of the Land Groups Incorporation Act;
(e) business groups within the meaning of the Business Groups Incorporation Act; and
(f) any other corporations declared by Act to be corporations regarded as citizens for the purposes of section 56(1)(b).
What is conspicuously absent
A company incorporated under the Companies Act 1997 does not appear in section 15 — and it does not become one because all its shareholders are citizens. Citizenship is not traced through shareholding under this Act.
The only route for an ordinary company is paragraph (f): a declaration by Act of Parliament.
This is the practical reason commercial land in Papua New Guinea is held under a State lease rather than freehold. A lease is a term of years, and therefore falls outside the section 3 definition of freehold ownership altogether.
Paragraphs (d) and (e) — the group vehicles
The two most significant inclusions for ordinary people are the group corporations:
- Incorporated land groups under the Land Groups Incorporation Act — the standard vehicle by which a customary landowning group acts as a legal entity. See what is an incorporated land group?
- Business groups under the Business Groups Incorporation Act.
Section 2 of the Land Act 1996 defines “citizen” for that Act to include a business group, a land group, a customary kinship group, a customary descent group, and a customary local group or community.
That is what makes lawful dealing in customary land under section 132 possible between such groups — and it is why an ILG, not an ordinary company, is the right vehicle for a landowner group.
Paragraphs (a) to (c) — the public bodies
The State, other corporate governmental bodies as defined in Schedule 1.2(1) of the Constitution, and Local Government Councils and Authorities are all treated as citizens.
This is necessary rather than remarkable. Under section 4 of the Land Act 1996, all land other than customary land is the property of the State in any event; and public authorities need to be able to hold land for public purposes without running into section 56(1)(b).
Paragraph (f) — declared corporations
The category is open-ended, but the gateway is narrow: the declaration must be by Act. Not by regulation, not by Ministerial notice, and not by the corporation’s own constitution.
Anyone told that a particular corporation “counts as a citizen” should ask for the Act that says so, and read it.
Section 4 closes the structuring route
Section 4 treats ownership of an indirect interest in freehold land as a form of freehold ownership. An “indirect interest” is one that, in law or in equity, confers or includes powers or rights equivalent to those of an owner of freehold land — and “interest” there includes any right, power or privilege in, over or in connection with land conferred by any instrument or transaction, whether or not it would otherwise be an interest in land.
So placing freehold in a nominee company, or holding it through options, trusts or control agreements, does not take the arrangement outside section 56(1)(b). The Act looks at the powers actually conferred.
Practical guidance
- If you are a company wanting land — the answer is a State lease, not freehold. Check the lease type that matches your use, and remember a transfer is a controlled dealing requiring Ministerial approval.
- If you are a customary landowner group — incorporate as an ILG. That gives you a corporation which is a citizen corporation under section 15(d), with members, a constitution and representatives.
- If you are buying from a corporation that holds freehold — check which paragraph of section 15 it falls under, and get the Act if paragraph (f) is claimed.
- If a structure is proposed that gives a non-qualifying party the powers of an owner — test it against section 4 before proceeding.
- If you hold freehold and want to deal with it commercially — consider conversion to a substitute State lease under Part IV, which is what that Part exists for.
Sources
- Land (Ownership of Freeholds) Act (Chapter 359) — ss 1–4, 15; Part III
- Constitution — s 56; Schedule 1.2(1)
- Land Groups Incorporation Act — PacLII 1986 Revised Edition
- Land Act 1996 — ss 2, 4, 132
- Companies Act 1997
The Business Groups Incorporation Act (Chapter 144) principal text is not carried in the PacLII databases, so no direct link is given here rather than an unverified one.
Before relying on anything here, read the current text of the Land Act 1996 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.