Chapter 2 - Overview of the 2005 Bill
This chapter summarises the background to the 2005 Bill, followed by a
brief outline of the 2005 Bill.
Background to the 2005 Bill
As outlined in Chapter 1, the 2005 Bill would replace the ACA Act. The Bill's
purpose is to improve governance and capacity in the Indigenous corporate
sector. The Bill seeks to align with modern corporate governance standards and
corporations law, while maintaining a special statute of incorporation for
Aboriginal and Torres Strait Islander peoples to take account of the special
risks and requirements of the Indigenous corporate sector.
As the Explanatory Memorandum explains, the ACA Act was originally
envisaged as an incorporation statute to provide a simple and flexible means
for incorporating associations of Indigenous people.
According to the Office of the Registrar of Aboriginal Corporations (ORAC),
there are approximately 2600 Aboriginal and Torres Strait Islander corporations
currently registered under the ACA Act.
There have been a number of significant external developments since the
ACA Act was last amended in 1992. Some of the key external developments have
included the introduction of the Corporations Act 2001 (Corporations
Act) and the enactment of the Native Title Act 1993 (Native Title Act).
The 2005 Bill is the culmination of a number of reviews of the ACA Act.
The final report of the most recent review, commissioned by the Registrar of
Aboriginal Corporations (the Registrar), was released in December 2002 (the 2002
According to the Explanatory Memorandum, the 2002 review concluded that
the ACA Act was out-of-date and suffered from a large number of technical
shortcomings to the point that the ACA Act itself had become a source of
disadvantage for Indigenous people. The major finding of the 2002 review was
that the special incorporation needs of Indigenous people should be met through
a statute of incorporation tailored to the specific incorporation needs of
Indigenous people. The 2002 review recommended a thorough reform of the ACA Act
by enactment of a new Act. The 2002 review also recommended that the new Act
provide Indigenous people with key facilities of a modern incorporation statute,
such as the Corporations Act. The 2002 review further recommended that the new
Act provide special forms of regulatory assistance to support contemporary
standards of good corporate governance.
The 2005 Bill implements the 2002 review by retaining a special
incorporation statute to meet the needs of Indigenous people. According to the
Explanatory Memorandum, the Bill introduces:
...a strong but flexible legislative framework that maximises
alignment with the Corporations Act where practicable, but provides sufficient
flexibility for corporations to accommodate specific cultural practices and
tailoring to reflect the particular needs and circumstances of individual
groups. In acknowledgement of the fact that most corporations are located in
remote or very remote areas, and may provide essential services or hold land,
the Bill also offers safeguards through the Registrar's unique regulatory
Key differences between the 2002
review and the 2005 Bill
Some aspects of the 2002 review have not been implemented in the 2005 Bill.
The Explanatory Memorandum outlines some of the key differences and the reasons
for not implementing those recommendations. In particular, the 2002 review
membership of corporations be restricted to Indigenous people.
This has partly been implemented by providing that a majority of members (and directors)
must be Indigenous. According to the Explanatory Memorandum, this will improve
flexibility for corporations to permit non-Indigenous membership, and as some corporations
are the only providers of essential services in some communities it also ensures
that non-Indigenous members of such communities are not disadvantaged;
corporate members should not be permitted. The Bill does permit
corporate membership 'which improves the flexibility of corporate design to
allow for resource agencies and peak bodies';
particular regulatory powers under the current ACA Act should not
be retained. For example, the 2002 review suggested that instead of the
Registrar being able to appoint an administrator, the Registrar should apply to
a court for appointment of a receiver under the court's equitable jurisdiction.
This recommendation has not been implemented but the appointment of an administrator
by the Registrar (called a 'special administrator') has been improved to address
a number of the reasons why the 2002 review considered that Registrar-appointed
administrators were problematic. A key improvement is that a decision to
appoint a special administrator is a reviewable decision.
The 2005 Bill has a commencement date of 1 July 2006. The committee has been advised that this date will be altered to 1 July 2007 by the draft Parliamentary Amendments to the 2005 Bill.
Other background issues
Interaction with native title
One of the aims of the 2005 Bill is to ensure that there is appropriate
interaction between this Bill and native title legislation. The Explanatory
The Bill removes the current uncertainty of how the Native Title
Act and regulations are to interact with the ACA Act through tailored
provisions for registered native title bodies corporate (RNTBCs) or in relation
to an application made for the purposes of becoming an RNTBC where necessary.
Other legislative matters
A number of other legislative matters are noted in the Explanatory
For example, there are a number of strict liability offences contained in the Bill.
The Explanatory Memorandum states that:
Many of these offences are based on equivalent offences in the
Corporations Act which are also strict liability. Consistent with the objective
of the reforms to align the Bill to modern corporations law, strict liability
has been retained for these provisions to ensure that these offences in the Bill
remain closely aligned with their counterpart offences in the Corporations Act. 
The Explanatory Memorandum also notes that:
...a relatively small number of strict liability offences are
unique to the Bill. In determining that these provisions should be strict
liability, regard has been given to similar provisions contained in the
Corporations Act, as well as to provide consistency with similar provisions in
Strict liability offences occur in the event of a corporation
contravening the following requirements:
A direction by the Registrar to change its document access
Removal of a member's name from the register of members within 14
days of receiving a notice of resignation;
Before cancelling the membership of a member the directors must
give the member 14 days written notice to object to the cancellation;
Directors must send a member a copy of a resolution as soon as
practicable after the resolution has been passed where the member's membership
has been cancelled on the basis that the person is not contactable or not an
Aboriginal and Torres Strait Islander or has misbehaved;
A corporation must make the register available for inspection by
members at the AGM and ask each member attending to check the entry for that
member and inform the corporation of any corrections that might need to be made
to that entry; and
The Registrar may at any time request the corporation to give him
or her a copy of the register of members, and the corporation must comply
within 14 days or such other period as the Registrar specifies.
The sections that follow summarise the provisions in the 2005 Bill.
Outline of the 2005 Bill
Chapter 1 — Introduction
Chapter 1 of the Bill provides for the preliminaries of the proposed Act
including the preamble, the objects of the Act and an overview. The objects
provide for the Registrar as well as the functions and powers of the Registrar.
They clarify that the Bill provides for:
the incorporation, operation and regulation of bodies registered
under the Bill and
for duties of officers of Indigenous corporations and their
regulation in the performance of those duties.
The Bill's objects also expressly provide for the incorporation of
bodies incorporated for the purpose of becoming a RNTBC.
According to the Explanatory Memorandum, these objects are designed to
recognise that Aboriginal and Torres Strait Islander peoples in some
circumstances have special needs for incorporation, assistance, monitoring and
regulation which the Corporations Act is unable to adequately meet as that Act exists
primarily to provide uniform incorporation and regulation of trading
Chapter 2 — Aboriginal and Torres
Strait Islander corporations
Chapter 2 of the Bill provides for the registration of Aboriginal and
Torres Strait Islander corporations, clarifies what is required to make an
application, and provides the legislative basis for the Registrar to decide an
application for registration.
Corporations can be registered as small, medium or large corporations
(see Part 2-4). The classification determines, among other matters, the
reporting requirements of the corporation – see Chapter 7 of the Bill.
Chapter 3 — Basic features of an
Aboriginal and Torres Strait Islander corporation
This chapter provides for the basic features and powers of a corporation.
Consistent with the Corporations Act, it provides for a system of 'replaceable
rules'. Proposed section 60‑25 sets out a table of the replaceable rules,
which are also identified throughout the Bill. The Explanatory Memorandum
explains that the replaceable rules:
...provide a framework of internal governance rules to apply to a
corporation. A corporation can adopt all the replaceable rules, or replace the
replaceable rules with their own provisions, [or] adopt some of the replaceable
and replace some. The replaceable rules will apply to a corporation whose
constitution does not cover the matters provided for in the replaceable rules.
The replaceable rules are intended to establish a minimum standard for
Chapter 3 also provides for the matters that a corporation is required
to cover in its constitution and other documents relevant to internal
governance. Among other matters, this chapter establishes:
requirements for changing a constitution;
the requirement for a corporation to have a registered office or
a document access address; and
the assumptions third parties are entitled to make when dealing
with the corporation.
Chapter 4 — Members and observers
This chapter sets out some rules for membership of an Aboriginal and
Torres Strait Islander corporation and some rules about cancelling membership.
This chapter deals with the register of members that the corporation is
required to keep, and the protection of the rights and interests of members of
Chapter 5 — Meetings
This chapter deals with the kinds of meetings that Aboriginal and Torres
Strait Islander corporations may have and sets out requirements for how these
meetings are to be conducted. There are two kinds of meetings held by
corporations—directors' meetings and general meetings.
Chapter 6 — Officers
Chapter 6 deals with the duties of officers and their disqualification
for breaches of those duties. In particular, proposed Chapter 6 implements the
2002 review findings that provisions of the Bill relating to directors and
directors' duties in the ACA Act should be modernised and brought into line
with the Corporations Act, with some modification for the special circumstances
of Aboriginal and Torres Strait Islander corporations.
For example, the 2002 review recommended that the scope of relevant
directors' duties under the ACA Act should be extended to include 'officers' as
is the case under the Corporations Act. Proposed Chapter 6 achieves this, but
does not extend the obligation to contact persons who have a more limited role
than the ACA Act public officer.
Similarly, proposed Chapter 6 also implements the 2002 review's
recommendation that statutory directors' duties under the ACA Act should
generally be brought into line with the Corporations Act. These duties include
the duty of care, the duty of honesty, the duties of disclosure and to avoid
conflicts of interest, and a duty not to trade while insolvent. However, there
are some modifications relating to the Native Title legislation obligations.
In accordance with the 2002 review, Chapter 6 (in combination with other
offences in the Bill)
also adopts a range of civil and criminal penalties, similar to the approach
adopted in the Corporations Act, particularly regarding cases of dishonest or
bad faith actions. The Explanatory Memorandum states that proposed section
658-5, aims of the Registrar, 'supports the flexible application of these
Finally, other provisions in Chapter 6 deal with matters such as internal
governance aspects of the appointment, cessation and powers of directors.
Chapter 7 — Record keeping,
reporting requirements and books
Chapter 7 deals with the reporting requirements imposed on an Aboriginal
and Torres Strait Islander corporation. Chapter 7 also includes a general
requirement to keep proper financial records and provisions relating to the books
kept by a corporation.
In particular, under section 59 of the ACA Act, all corporations are
required to submit the same information. Chapter 7 implements the 2002 review
recommendations by 'streaming' corporations into small, medium and large and
developing size-specific reporting for the different sizes of corporations in
the regulations. For example, the Explanatory Memorandum states that under
Chapter 7 it is planned that small corporations will only have to meet the
general reporting requirements which do not include audited financial statements.
Chapter 8 — Civil consequences of
contravening civil penalty provisions
Chapter 8 creates a civil penalty scheme with sanctions for serious
contraventions of the Bill, including breaches of directors' duties.
Chapter 9 — Lodgments and registers
Chapter 9 sets out provisions relating to the lodgement of information
by Aboriginal and Torres Strait Islander corporations and the registers of
information maintained by the Registrar.
Chapter 10 — Regulation and
Chapter 10 contains provisions dealing with regulation and enforcement powers
that the Registrar may use in the regulation of Aboriginal and Torres Strait
Islander corporations. Chapter 10 also deals with the protection of
Chapter 11 — External
Chapter 11 provides for the administration of an Aboriginal and Torres
Strait Islander corporation by persons outside the corporation (for example, in
a winding up). Importantly, the Registrar may appoint a 'special administrator'
for an Aboriginal and Torres Strait Islander corporation in certain circumstances.
Other chapters of the 2005 Bill deal with the following matters:
the deregistration of an Aboriginal and Torres Strait Islander
corporation and unclaimed property (Chapter 12);
general offences against the Bill, for example, offences for
providing false and misleading information (Chapter 13);
the jurisdiction of courts to hear matters under the Bill,
injunctions and court proceedings (Chapter 14);
general administration of the Bill, including the protection of
information and review of decisions (Chapter 15);
the appointment of the Registrar and Deputy Registrars, who are
charged with the administration of the regime proposed by the Bill (Chapter 16);
interpretation and definition provisions (Chapter 17).
Navigation: Previous Page | Contents | Next Page