Chapter 4 - Key Issues
This chapter canvasses the key issues and concerns raised in submissions
and evidence. While several witnesses recognised the need to replace the outdated
ACA Act, the 2005 Bill generated significant concern with several groups
questioning its viability, particularly in regard to the Indigenous sector's
capacity to adapt to a new regulatory regime. However, as the chapter shows,
the 2006 Transitional and Amendment bills have addressed or overtaken much of
this concern. The Parliamentary Amendments to the 2005 Bill, some of which
respond directly to matters raised in evidence to the committee, also address a
number of perceived problems with the legislation.
The chapter discusses the following issues in turn:
whether the Bill is too large and complex;
interaction with native title and other legislation;
size of corporations;
officers and directors;
members requesting meetings;
provision of information to members;
minimum membership age;
absence of provisions for Aboriginal councils; and
access to corporation books.
Is the Bill too large and complex?
As noted in Chapter 2, the ACA Act was originally envisaged as an
incorporation statute to provide a simple and flexible means for incorporating associations
of Indigenous people.
However, the 2002 review found that the Act had not kept pace with significant
external developments, in addition to suffering from a large number of
Several submissions acknowledged that the ACA Act is outdated and out of
step with corporations law in Australia. For example, Professor Garth Nettheim
Generally, the Bill responds appropriately to key criticisms of
the existing Act...the ACA Act is long overdue for replacement. The current Bill
is based on the careful analysis provided by the 2002 Review, and addresses the
major concerns in a flexible and imaginative manner. Coupled with the
pro-active support provided to Indigenous peoples through ORAC, and its
capacity-building programs, it should be a welcome and valuable improvement to
the current regime.
The Australian Institute of Aboriginal and Torres Strait Islander
Studies (AIATSIS), while expressing some reservations about aspects of the Bill,
...in recent years many Indigenous organisations have sought
incorporation under the Corporations Act 1991 (Cth) to overcome the
onerous and arguably discriminatory aspects of the current [ACA Act], as well
as technical shortcomings, for example in relation to corporate membership,
non-Indigenous membership and directors, and the like.
In contrast, a number of land councils criticised the 2005 Bill for
being too large and complex, for departing from the recommendations of the 2002
review and for imposing a new layer of administration and compliance. These
bodies contended that the Bill would not meet the special incorporations needs
of Indigenous people and, consequently, questioned whether the Bill would
achieve its aims. The Central Land Council (CLC) represented this perspective.
Instead of being a simple incorporation statute tailored to the
special needs of the Indigenous population it is a complex statute designed to
regulate large corporations. Large corporations require regulation,
particularly if they are administering large amounts of Government funding. But
instead of shifting such large corporations towards the Corporations Law the Bill
is specifically designed to regulate them. But by so doing, the needs of the
majority of Aboriginal corporations, at least in Central Australia, are not met
by the main provisions of the Bill but rather by the provisions providing for
exemption from obligations created by the Bill.
The Goldfields Land and Sea Council (GLSC) also criticised the Bill as too
complex, describing it as 'a mallet to crack a very small nut'.
The GLSC argued that attempting to replicate the Corporations Act regime was
not appropriate. It pointed out that the Corporations Act regulates
corporations designed for profit-making purposes in the commercial market
place, whereas Indigenous corporations usually receive funding to provide
services to Aboriginal people and are often governed by volunteers. The GLSC
In these circumstances, to impose a regime of such extreme
complexity as the 500 page Bill on Aboriginal people, incorporating over 100
penalty provisions of strict liability, and discretionary wide range and
compulsive bureaucratic investigative powers can only be regarded as punitive
A major concern of these bodies was that the 2005 Bill may be
self-defeating and deter Indigenous organisations from incorporating under it.
At best, Indigenous organisations would opt to remain or incorporate under
State and Territory associations incorporation law rather than the new bill.
Or in some cases the Bill might result in a decline in Indigenous people
assisting in service delivery through involvement in Aboriginal corporations.
In response, ORAC explained the size of the Bill and its apparent
complexity reflected significant changes in both corporations law and
Indigenous affairs since the ACA Act was introduced in the 1970s. The
Registrar conceded the 2005 Bill's size is of concern but maintained that it incorporated
a 'huge amount of ... case law', which the old Act failed to do.
In addition, the 2005 Bill incorporated rights of review of the Registrar's
decisions which were absent in the ACA Act. In the Registrar's words, with the
2006 Bill 'we are leaping from a seventies concept of Corporations Law to one
Contrary to arguments that the Bill is ill-suited for Indigenous bodies,
the Registrar stated that it has been designed to take account of the diversity
and fluidity of the Indigenous sector. This is another major reason for its
size. The Registrar explained that the Bill is attempting to deal with a sector
far more diverse than the corporate sector ASIC regulates, one with corporate
entities that differ from typical corporations and possess complex features. In
We probably have a much more diverse range of corporations than
you would find under ASIC because of the nature of Indigenous affairs. It would
be very unlikely that you would find a lot of corporations with ASIC that are
purely land-holding and get absolutely no money. Certainly they are not interfacing
with the native title arena like we are. I am not sure if there are any that
are trying to do municipal services under ASIC. Diversity under our legislation
of corporations is much wider, so flexibility has to be much broader than you would
find in other incorporating regimes.
The statutory and regulatory flexibility needed to address a sector of
this kind meant, the Registrar explained, a bill large in size. The rapid
growth and change which marks the Indigenous sector had also influenced the Bill's
design. It was another factor contributing to its size. The Registrar stated:
...we have tried to draft a bill that does not set too many things
in stone, because we know if you look forward another 20 or 30 years things
might emerge—possibly even rights—that we are not even discussing in the
mainstream in Indigenous affairs right now. Hence the need for flexibility, and
flexibility requires drafting space in a piece of legislation.
This flexibility has taken the form of exemption provisions, regulation
making powers that also allow for exemptions and scope for determinations to be
made to cater for different types of corporations or circumstances.
These are discussed in later sections of this chapter.
To allay concerns the Bill will impose a corporate regulatory model on
the Indigenous sector, the Registrar stressed that the purpose of the Bill is
to avoid a 'one size fits all' approach. In her view, this is one of the
problems with the old Act which suffers from a lack of flexibility and imposes
obligations regardless of the capacity of organisations to meet them.
The other point the committee notes in this regard is that the 2005 Bill
does not make it mandatory for corporations to incorporate under its terms. As
ASIC observed, in addition to the 2005 Bill Indigenous corporations will have a
number of incorporation options available to them under the Corporations Act
2001 and the various State and Territory incorporations acts.
With approximately 2600 Aboriginal and Torres Strait Islander
corporations currently registered under the ACA Act, transitional arrangements
for these corporations are essential. However, when the committee's inquiry
started neither the Transitional Bill nor the Amendment Bill had been drafted, nor
had the detail of any transitional arrangements been made public.
At the time, the absence of transitional arrangements and consequential
amendments caused concern for several witnesses. Some found that this made it
difficult to assess the 2005 Bill in its own right. With a commencement date at
that stage of 1 July 2006 there was concern about the limited amount of time
available for bodies to adjust to a new, seemingly more complex, regime.
A key question related to how corporations incorporated under the ACA
Act would move to and be covered by the new Bill once it became law.
The North Queensland Land Council Native Title Representative Body Aboriginal
Corporation (NQLC) pointed out that some corporations may wish, or even need,
to amend their constitutions in light of the 2005 Bill's provisions.
The fear that the 2005 Bill would impose additional administrative and
compliance burdens on a sector already subject to substantial reform also gave
rise to a request for increased assistance, training and education for Indigenous
people involved in the management of corporations, whether generally or in
relation to the transitional arrangements.
It is possible that uncertainty around the transitional arrangements
compounded concerns or confusion about the 2005 Bill when it was introduced and
contributed to the critical tenor of the evidence to the committee.
The introduction of the 2006 bills, particularly the Transitional Bill, has
at least answered questions about transitional arrangements, if not gone a
considerable way to meeting a number of concerns. Implementation of the 2005 Bill
should be smoothed with the provision for a two year transitional period to
allow corporations time to adjust to the new regime. As noted in chapter 3, a
special provision will also exist for the Registrar to determine an extra six
months in some circumstances.
The administrative burden entailed in Indigenous corporations shifting
from the old ACA Act to the new framework has also been eased with provisions
giving automatic effect to registering transitional corporations, recognising
existing corporation rules as constitutions for the purposes of the 2005 Bill
and members and directors retaining their status.
The draft Parliamentary Amendments, among other things, change the
commencement date of the 2005 Bill to 1 July 2007.
In view of the time that will have elapsed since the Bill was introduced
in June 2005, and the scrutiny it has been subject to, the committee considers
that most corporations should have had sufficient time to ready themselves for
its commencement next year. When the two-year transitional period is also taken
into account, corporations will have had close to four years to prepare for the
To help corporations adjust to the new regime, ORAC has developed a range
of tools including a new model constitution, a Guide to Good Constitutions, as
well as a number of sector specific guides.
ORAC has also prepared fact sheets on transitional arrangements and directors
duties relating to the new legislation.
ORAC indicated that it envisages its entire budget will be dedicated to
assisting bodies with the new legislation. In view of the scale of the Indigenous
corporations sector and the potential complexity involved in the change to the
new regime, the committee considers funding to assist corporations through this
transition should be monitored and increased if necessary.
Specific concerns about the detail of the 2005 Bill's provisions, and the
way in which the 2006 Bills address them, are discussed in the sections that
Interaction with native title and other legislation
As explained in Chapter 2, a key aim of the 2005 Bill is to ensure that it
interacts appropriately with native title legislation.
However, several submissions expressed concern about the likely interaction
between the Bill and native title and other legislation, particularly in regard
to reporting and other duties.
The Kimberly Land Council (KLC) argued that the Bill may be
unnecessarily complex and overly prescriptive in light of the current
regulatory regime for representative bodies under the Native Title Act 1993.
The KLC pointed out that recognised representative bodies under the Native Title
Act are already subject to a highly detailed regulatory regime covering
accountability, governance and reporting, as set out in Part 11 of the Native
The KLC was concerned that the Bill may duplicate reporting and directors
duties that exist under the Native Title Act.
COALS expressed a similar concern, noting that Aboriginal organisations
are largely government-funded. COALS pointed out that:
Each government department responsible for the provision and
management of such funding requires comprehensive performance and financial
reports at 3- or 6-monthly intervals. Groundless checks would simply add
another layer of compliance to an already onerous reporting scheme. In
addition, staff in such government departments are expert in their particular
field. For this reason, they are best placed to receive and assess information
from Aboriginal community organisations.
The Registrar acknowledged that there is duplication between
requirements under the 2005 Bill and requirements under other legislative
regimes such as the application of provisions of the Commonwealth
Authorities and Companies Act 1997 (CAC Act) to representative bodies by
the Native Title Act. However, the Registrar emphasised the point that the 2005
Bill makes provision for recognising reporting under other regimes as
reporting for the purposes of the Bill. She told the committee:
...one of the things our bill does is it allows ORAC to recognise
reporting for other purposes as reporting to us. It provides a statutory basis,
if you like, to avoid duplicate reporting by allowing our office to recognise,
for example, the reports that the native title rep bodies might provide under
the CAC Act for our purposes.
The 2006 Transitional Bill also makes provision for the Registrar to
determine certain exemptions for corporations or directors, particularly in
relation to matters which might cause an excessive burden.
Two other issues of concern related to Registered Native Title Bodies
Corporate (RNTBCs) and representative bodies.
AIATSIS pointed out that the 2005 Bill contains specific provisions
concerning RNTBCs to ensure that, in performing their obligations under the
Native Title Act, directors and officers are not breaching duties owed to the
The 2005 Bill does not provide similar protection for the officers of
AIATSIS considered that some of the roles of representative bodies under the
Native Title Act could be in conflict with directors' duties under the Bill.
AIATSIS proposed that the 2005 Bill should provide the same protection for
representative body directors and officers that it provides for directors and
officers of an RNTBC. AIATSIS also suggested that representative bodies may
need to be treated as a 'particular class' of Indigenous organisation under the
2005 Bill, particularly in relation to reporting.
On the other hand, the Central Land Council (CLC) argued that the unique
nature and specific functions of RNTBCs should not be covered by the 2005 Bill
but instead be addressed within the Native Title Act, possibly as a separate
division to that Act.
These bodies are already subject to a number of complex laws. The CLC expressed
concern that the 2005 Bill could prove:
...far too complicated for remote Aboriginal people to administer
should they be successful in a Native Title determination application and
incorporate as a prescribed body corporate.
As noted already, the Transitional Bill provides for the Registrar to
exempt a corporation or its directors from a provision of the 2005 Bill or the
Transitional Bill. It also permits the Registrar to exempt a class of
transitional corporation, and directors of those corporations, from these
In addition, the 2005 Bill provides some flexibility for the Registrar to make
declarations exempting a class of corporations or directors from the
requirements of the 2005 Bill.
The committee understands the draft Parliamentary Amendments will provide
further flexibility in this regard. These exemptions should provide the
flexibility and scope to adapt the regulatory framework to fit the capacity and
requirements of different classes of corporations including RNTBCs and
As for the appropriate place for legislation for incorporation of PBCs,
it is arguable that creating a separate division of law under a different Act
to the 2005 Bill would reduce complexity, let alone the risk of confusion for
corporations adjusting to new regulatory requirements.
The committee also notes the two year transitional period should provide
sufficient time for Indigenous corporations and the Registrar to monitor the
operation of the new regulatory regime, identify any problems that might arise
and develop remedies if required.
As noted in Chapter 2, the 2002 review recommended restricting
membership of corporations to Indigenous people. In contrast, the 2005 Bill
provides that only a majority of members (and directors) must be Indigenous.
The 2005 Bill also permits other corporations to be members of Indigenous
corporations. This again differs from the 2002 review, which recommended that
corporate members should not be permitted.
Professor Garth Nettheim welcomed the flexibility provided by the
provisions extending membership to other corporations or a minority of
In contrast, the CLC did not support these provisions:
The measures in the Bill which place the question of
non-indigenous membership into the realm of the constitution of individual
corporations are weak and they may not work in practice. The provisions in the Bill
of permitting minority membership of non-Aboriginal people will not be sufficient
to ensure Aboriginal control.
Similarly, the CLC did not believe that compelling reasons have been
given for permitting corporate membership of Indigenous corporations. The CLC
...there is no need for a special statute for the incorporation of
large resource agencies or peak bodies. The Corporations Law is
perfectly adequate for that purpose.
Mr David Dalrymple agreed that opening up the membership eligibility to
non-Indigenous members would mean that there is no substantive difference
between incorporation proposed under the 2005 Bill and incorporation under
Mr Dalrymple further elaborated on this:
The one point of difference between [the ACA Act] and equivalent
“mainstream” legislation was the restrictions on voting membership contained in
the [the ACA Act] itself. It was possible under “mainstream” legislation to
restrict membership to Aboriginal people by drafting the body’s constitution in
a particular way, but that constitution could always be changed and undone. The
attraction to the Aboriginal clients I dealt with was always that the [the ACA
Act] itself contained the restriction and therefore the protection and
security. [The 2005 Bill] in its present form has abandoned that feature of
[the ACA Act], which is going to engender grave concerns for the many bodies
that incorporated as associations under [the ACA Act]...
According to the Explanatory Memorandum to the 2005 Bill, these extended
membership provisions are intended to provide corporations with the flexibility
to permit non-Indigenous membership. The Explanatory Memorandum says that, as
some corporations are the only providers of essential services in some
communities, these provisions also ensure that non-Indigenous members of such
communities are not disadvantaged.
At the time of the committee's hearing on the 2005 Bill, the Registrar
explained that numerous bodies had lobbied for non-indigenous people to be
eligible for membership of corporations. She said that some corporations had
called for non-indigneous professionals such as doctors, trustees or key
employees to be allowed membership and voting rights. She also said some
communities had indicated they wanted non-indigenous people such as spouses,
adopted children, step children and long-accepted members of communities to be
permitted as members of corporations.
However, the Registrar stressed the point that the 2005 Bill allows the
membership of corporations to determine their own rules of membership and
whether non-indigenous members, or certain defined types of non-indigenous
member (that is, professionals, spouses and so on), are permitted.
This flexibility should enable individual corporations to determine for
themselves the membership which best matches their communities and needs.
As a protection of Indigenous control over Indigenous corporations, the
draft Parliamentary Amendments provide that, unless a corporation's
constitution provides otherwise, a non-member or non-Indigenous person may not
be appointed as a director of a corporation under the 2005 Bill.
The Registrar explained that permitting corporate membership was intended
to reflect the situation where a number of Indigenous corporations have corporate
entities or 'support corporations' attached to them. She said it made more
sense to have support corporations and parent corporations covered under the
one regulatory framework, rather than divided across different frameworks.
The Registrar also said that corporate membership was occurring already
in practice under the ACA Act. Again, she emphasised that the 2005 Bill allows
for corporations to structure themselves to include corporate membership but
does not make it mandatory.
Size of corporations
Emeritus Professor Garth Nettheim welcomed the reporting requirements
and other provisions which differentiate between small, medium and large
However, the NQLC expressed concern that the provisions for categorising
corporations would be based 'on a formula as yet to be disclosed as it is to be
set in regulations':
It is therefore at this point in time unknown as to whether the
application of some of the clauses in the Bill will vary depending on the size
of the corporation or whether the transitional provisions will allow for
example a greater period of time for small corporations to comply than the
As noted in chapter 2, classifying corporations according to size is
intended to match reporting to a corporation's size and purpose, thereby avoiding
the 'one size fits all' approach of the ACA Act. Under the Transitional Bill, for
the two-year transitional period all transitional corporations become medium
corporations but the Registrar may reclassify a corporation as small or large.
At the committee's hearing in 2005, the Registrar outlined her view on possible
threshold levels. The Registrar told the committee:
The review recommended that anything over half a million dollars
should be medium and anything over $1 million should be large. My comment on
that is that the review was probably too low, because to ask a $1 million
corporation to put in an audit by a registered auditor is probably too heavy a
burden. However, I think corporations that are getting less than $10 million should
be putting in an audited financial statement. I think we should notionally look
at a figure of somewhere between $2 million and $5 million. Most of our
corporations, even if you just took the figure of $2 million, would be small or
medium. So their reporting will drop under the new legislation and compliance
will go up.
In a supplementary submission received in October 2006, the Registrar
provided more detail on the likely threshold levels and explained the reason
for using regulations to define the levels rather than specifying them in the
provisions of the 2005 Bill. The proposed 'size thresholds' for reporting under
the 2005 Bill are expected to be as follows:
A small corporation is likely to be one which satisfies
at least two of the following:
- Total consolidated gross operating income is less than $100,000;
- Total consolidated gross assets is [sic] less than $100,000;
- Total employees less than 5.
A medium corporation is likely to be one which satisfies
at least two of the following:
- Total consolidated gross operating income from $100,000;
- Total consolidated gross assets from $100,000;
- Total employees less from 5.
A large corporation is likely to be one which satisfies
at least two of the following:
- Total consolidated gross operating income is $5 million or more;
- Total consolidated gross assets is [sic] $2.5 million or more;
- Total employees more than 25.
The Registrar attached the caveat that as the regulations defining the
thresholds have not yet been made, these figures are 'intended only as a guide
to the criteria that are being proposed'.
The reason for classifying thresholds in regulations rather than in
statute is that it allows more flexibility to alter thresholds to match changes
in the size and nature of the Indigenous corporate sector, which as noted
earlier in this chapter is characterised by dynamic change. As the Registrar
informed the committee, using regulations to determine the thresholds should
'enable the  Bill to maintain relevance over time and give greater
flexibility to alter these thresholds in the future'.
Officers and directors
The North Queensland Land Council (NQLC) raised a number of concerns
with the 2005 Bill relating to the stipulated number of directors, the term of
appointments and provisions for calling meetings and removing directors.
Number of directors and term of
The NQLC noted that there were some inconsistencies between the 2005 Bill's
provisions and their current arrangements. For example, the maximum number of
directors of a corporation is set at 12 by proposed section 243-5. The NQLC
pointed out that its board consists of 17 persons, and that it was aware of
other representative bodies with higher numbers of directors on their boards.
The NQLC observed that:
...it must be recognised that prescribed body corporates are
likely to be set up and incorporated under the new [A]ct once it is in power
and again, the structure of their boards may well represent a careful mix
designed to ensure that native title holders from various different sub-groups
are ensured of a position on the board and it may be that to achieve this it is
inappropriate to limit the number to 12.
Similarly, clause 246-25 provides that the maximum term of appointment
for directors is a period not exceeding two years. The NQLC argued this term
was too short and restrictive. It pointed out that the NQLC directors are
elected for a period of three years. The NQLC explained:
The three year term was introduced to provide some stability in
the corporate governance of the association and was in fact with the approval
and consent of the then ATSIC office and those responsible for considering our
application for renewal of our status of a native title representative body.
The Registrar told the committee during the hearing that regulations
would allow an exemption for boards with more than 12 directors but that a
board of 12 directors was considered 'good practice' unless there were sound
reasons to increase the size of a board.
The Transitional Bill states that during the two-year transitional
period the limit of 12 directors will not apply. It also provides for directors
to serve the remainder of their current elected term.
The draft Parliamentary Amendments also extend the Registrar's ability
to exempt corporations or directors from these requirements.
Proposed section 212-5 provides that a directors' meeting may be called
by a director giving reasonable notice to every other director. The NQLC
acknowledged that this was a replaceable rule, but nevertheless suggested that
this was undesirable. The NQLC submitted that:
In the case of a Board that has divided into a number of
competing factions there is the very real danger that if this rule was in place
that you would have a multiplicity of meetings being called because any
individual director can initiate the same. This would be an unacceptable[,]
unworkable situation and costly for the corporation.
The NQLC suggested that an alternative might be to:
...give the Registrar some power in directing that a meeting of
the directors takes place after hearing submissions from any particular
director who had been unsuccessful at persuading a Chairperson to call a
meeting. Before the Registrar made any such direction one would expect the
Registrar to invite submissions from all sides of the argument.
Removal of directors by other
Proposed section 249-15 provides for the removal of directors by other
directors on the grounds of failure to attend three consecutive directors'
meetings without reasonable excuse. If a director objects to their removal
under this provision, the director can only be removed by a resolution passed
at a general meeting (proposed section 249-20).
The NQLC suggested that in practice this might prove difficult if the
only ground of removal is failure to attend three meetings.
The NQLC argued that if there were a 'stubborn' and 'ineffective' director who
objected to their removal, calling a general meeting for their removal could be
prohibitively expensive in a large corporation.
The NQLC suggested that:
...there should be a power in the Board to remove directors that
bring the organisation into disrepute, who breach agreed codes of conduct or
who become through one reason or another either incapable of acting efficiently
[or] unwilling to do so.
The committee understands that the draft Parliamentary Amendments
address these concerns to the extent that they take the power to remove a
director away from directors and limit it to a resolution of a general meeting.
Members ability to request general meeting
The NQLC also drew attention to proposed sections 201-5 and 201-10 of
the 2005 Bill, which require the directors to call a general meeting if
requested by the greater of either five (5) members or 10% of the members of
the corporation. The NQLC was concerned that these provisions make no
distinction between voting and non-voting members. The NQLC suggested that the
test should be '10% of the members entitled to vote rather than 10% of the
The committee notes that under the Transitional Bill some meeting
provisions, including sections 201-5 and 201-10, of the 2005 Bill will not
apply during the transitional period. While this should allay concerns during
the transitional period, the committee considers that the question of whether
the ability to request a meeting should be limited to voting members should be
revisited. The committee considers there is a case for linking the right of
members to request general meetings to voting rights.
Provision of information to members
Several proposed sections in the 2005 Bill require certain notices and
information to be copied and distributed to members. For example, proposed
sections 201-40 and 201-45 require a corporate to give all its members notice
of proposed members resolutions at the same time and in the same way as it
gives notice of a general meeting.
The NQLC observed that, in its case, the cost of copying and
distributing notices to over 900 members would be significant. The NQLC pointed
out that the only exclusion to this rule was where the resolution is
The NQLC suggested that this burden was unfair, particularly in situations
where a resolution is put forward that is 'nonsensical, unworkable, in conflict
with other parts of the rules or otherwise totally lacking merit but not
Similarly, proposed section 342-5 provides that a corporation required
to have audited financial reports must present each member of the corporation a
copy of that report.
Again, the NQLC observed that in corporations with large numbers of members:
...the copying and distribution of the auditor's report to each
member is an unnecessary and costly process. It has been our experience that
most members are not particularly interested in the financial report and
certainly the production of 900 odd copies for the very few interested, seems
to be unwarranted.
The NQLC suggested that this provision could be amended to require the
financial report be made available at the Annual General Meeting and to members
who have specifically requested the report.
The Registrar informed the committee that reports would only have to be
given on request and in many cases where corporations no longer have to report
this matter will not arise. The Registrar told the committee:
The financial reports would only have to be given to members
where they are required, and many of the corporations that are with us now
would no longer be required to do financial reports because their income would
be too low. So it does not apply to all corporations. Also, there are exemption
provisions that would allow us to exempt classes of corporations or sectors
from meeting that requirement. ... we do not envisage all corporations having to
give every single one of their members a financial report.
The committee notes the draft Parliamentary Amendments provide that a corporation
that is required to prepare a financial report, a directors’ report and an
auditor’s report is only required to provide these reports to a member on
request. This measure is intended to reduce the potential administrative burden
Minimum membership age
The NQLC noted that Clause 141-15 of the 2005 Bill sets the minimum age
of members at 15 years of age. The NQLC observed:
There appears to be no particular rationale for picking this
age. Whilst it may be a matter for each corporation to consider whether they
wish to have the ability to admit minors as members, there appears to be no
reason why minors of a lesser age could not be members especially given the
fact that one can create different classes of membership and minors could be a
However, the Explanatory Memorandum to the 2005 Bill points out that
proposed section 29‑10 sets out that each member of the corporation must
be at least 15 years of age. The current ACA Act restricts membership to
persons over the age of 18.
The Explanatory Memorandum explains the rationale for lowering the membership
age is to allow younger Indigenous persons access to participation in
corporations and leadership opportunities. The age of 15 is also when people
are eligible to participate in the Community Development Employment Projects
(CDEP) program. The Explanatory Memorandum notes that corporations providing
CDEP services comprise a large part of ACA Act corporations.
The committee considers that the promotion of leadership opportunities
for younger Indigenous persons has much merit and should be supported.
Councils, associations and corporations
Two submissions noted that the provisions in Part III of the ACA Act,
which provide for establishment of Aboriginal Council areas and Aboriginal
Councils, appear to have no equivalent under the 2005 Bill.
The committee notes that the 2002 review considered this issue and
concluded Part III of the ACA Act should be repealed. Stakeholders consulted
during that review also supported the repeal of Part III.
However, AIATSIS expressed its disappointment at the failure of the 2002
review and the Bill to 'revise and reinvigorate' Part III of the ACA Act:
The rationale for not revisiting the provisions was based on an
argument that they were unworkable and had therefore not been utilised.
However, this is a lost opportunity to underpin a style of governance for
Indigenous communities based on a more public institutional model. This would
have facilitated current calls for greater regional autonomy in the post-ATSIC
era and would have been a suitable tool for government in negotiating certain
types of Shared Responsibility or Regional Partnership Agreements...It would also
have been appropriate for some RNTBCs, particularly in areas covered by
exclusive possession native title under traditional laws and customs. The
reversion to a singularly corporate model of Indigenous governance does not
meet the full gamut of needs of Indigenous peoples in the long term.
Similarly, Mr David Dalrymple argued that there was still a need for the
Commonwealth to retain an option for Aboriginal communities to seek legal
recognition as quasi-local government bodies:
The absence from [the Bill] of a statutory option of
establishing an Indigenous self-governing body at the local level with features
more akin to a local government council than to an incorporated association
deprives Aboriginal communities of a choice which should have been retained in
The Transitional Bill explains that the 'creation of councils under the
ACA Act has been superseded since 1976 by other means of delivering community
services'. The Transitional Bill also notes that State and Territory
legislation provides for local government services, including the capacity to
make community by-laws.
Access to and examination of a corporation's books
COALS raised an issue of concern relating to the power of the Registrar under
proposed Division 453 of the 2005 Bill to appoint a suitably qualified person
to examine the 'books' of an Aboriginal and Torres Strait Islander corporation.
COALS noted that proposed section 453-1 of the new Bill is in similar terms to
section 60 of the ACA Act, which does not require the Registrar to have any
particular concern before exercising the power.
COALS argued that:
...it is inappropriate for the Registrar to conduct reviews of
'healthy organisations' or of organisations generally in the absence of
appropriate grounds. Groundless checks are time-consuming and stressful for
even the healthiest of organisations. Such checks are also costly to the
COALS concluded that rather than maintaining this power, ORAC should:
...focus on providing extensive training and education for
Aboriginal people involved in the management of corporations to ensure good
governance practices and compliance with the requirements imposed...
COALS was also concerned that the power under proposed Division 453 of
the 2005 Bill is not limited to financial records and could potentially result
in interference in solicitor‑client relations.
Indeed, the Committee notes that 'books' is broadly defined to include a
register, any other record of information, financial reports or financial
reports and a document.
The NQLC raised a similar concern in relation to proposed section
274-15, which provides that a director or ex-director (within seven years) has
access to the books of the corporation other than its financial records. The
NQLC pointed out that the interaction between legal professional privilege, the
law of confidentiality, and this provision is unclear.
The Committee notes the Explanatory Memorandum to the 2005 Bill states
that the provisions in this regard reflect equivalent provisions in the Australian
Securities and Investments Commission Act 2001.
The Explanatory Memorandum further states that the current power under section
...often used by the Registrar, with the consent of corporations,
to undertake diagnostic examination of corporations in difficulty. This
'special regulatory assistance' is also important in the context of 'capacity
building' for these corporations.
The Registrar's staff told the committee at its hearing that most of the
examination powers under the new Bill are contained in the ACA Act but have
been modernised. The Registrar's staff also assured the committee that the
power to access books would not result in the examination of documents covered
by legal privilege or other privacy rules, such as medical files for instance.
The committee heard that the purpose of these provisions is to assist with
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