How healthy is your native title corporation?

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Native title corporations hold, manage, and protect recognised native title rights and interests.  We have developed a checklist to see how healthy your corporation is.

 

Native title corporations should:

  • be managed in a way that is transparent and promotes accountability;
  • act in accordance with the law; and
  • ensure their directors act professionally, responsibly and plan for the future.

MPS Law has worked with native title corporations (or ‘RNTBCs’) and Aboriginal and Torres Strait Islander corporations across Australia and has developed a checklist to assist you in determining how healthy your corporation is.  We encourage you to read this document in conjunction with our heritage survey checklist, native title benefits checklist, RNTBC AGM checklist and template letter agreement for heritage surveys in native title land.

The checklist is available here.

Note: This document is intended as a guide only to assist directors and members in ensuring their corporation is well managed.  This does not constitute legal advice.  The issues and questions set out are of a general nature and may not reflect your specific circumstances.  There may be additional and important issues that should be considered when evaluating the actions of the corporation.  If you or your organisation has a legal problem you should obtain professional advice from a legal practitioner.

AGM checklist for Registered Native Title Body Corporates

This checklist is to help RNTBCs plan and hold Annual General Meetings.

Registered Native Title Body Corporates are required to hold an Annual General Meeting before December each year. Procedurally, these meetings are held to ensure that RNTBC members have an opportunity to comment, make decisions and elect directors.

Practically, these meetings are a key opportunity for community to hold the RNTBC accountable. These meetings provide community with a platform to make key decisions which effect their interests and enjoyment of country.

You can view the checklist here.

 

Note: This document is intended as a guide only to assist with the facilitation of RNTBC AGMs in accordance with the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Cth). This does not constitute legal advice. The issues and questions set out are of a general nature and may not reflect your specific circumstances. There may be additional and important considerations that should be taken into account in your specific circumstances, depending on the requirements of your corporation and its rule book. If you or your organisation has a legal problem, you should obtain professional advice from a legal practitioner.

Native title decision checklist for RNTBCs

This checklist sets out necessary considerations to ensure that native title decisions are properly made.

A native title decision is a decision by common law holders that will either surrender or otherwise affect their native title rights or interests. The Native Title (Prescribed Bodies Corporate) Regulations 1999 (Cth) (the Regulations) set out the requirements that RNTBCs and PBCs must satisfy to ensure that a native title decision is validly and effectively made. These requirements include requirements to consult and obtain the consent of common law holders in relation to the decision.

Aside from the Regulations, effective consultation with common law holders is vital for the principle of free, prior and informed consent of traditional owners for decision-making processes affecting their interests and enjoyment of country.

The checklist is available here.

An explanatory summary that takes into account changes to the law in 2021 is available here.

We have also prepared a factsheet on native title decisions, to help directors of Prescribed Body Corporates (or Registered Native Title Body Corporates) to understand and comply with the law.

 

Note: This document is intended as a guide only to assist with the facilitation of native title decisions in accordance with the Native Title (Prescribed Bodies Corporate) Regulations 1999 (Cth). This does not constitute legal advice. The issues and questions set out are of a general nature and may not reflect your specific circumstances. There may be additional and important considerations that should be taken into account in your specific circumstances, depending on the requirements of your corporation and its rule book. If you or your organisation has a legal problem you should obtain professional advice from a legal practitioner.

Template & Checklist: Heritage survey procedures for native title parties

We have created a free checklist to set out the necessary steps to review a survey request, organise an appropriate survey team and correctly report survey findings. More generally, this checklist identifies issues Traditional Owners should consider so that heritage can be effectively managed.

Heritage surveys are a necessary part of ensuring explorers and miners comply with their obligations under agreements and heritage legislation when conducting activities on country. More importantly, heritage surveys play an important role in ensuring Traditional Owners are consulted and informed about what happens on country. This allows Traditional Owners to assess any risks to heritage during exploration and mining activities and how those risks can be minimised

Aside from complying with the law and managing risks, heritage surveys also play an important role in establishing an effective relationship between companies and Traditional Owners. Being proactive in conducting heritage surveys ensures that Aboriginal heritage issues form an integral consideration from the initial stages of a project. This also helps to establish lines of communication for Traditional Owners to voice heritage concerns or report issues.

To put Traditional Owners in the best position to assess risks to heritage, establish an effective relationship with companies and explorers and uphold heritage considerations during all stages of activities on country, there are several factors you will need to consider. This checklist has been prepared to set out the necessary steps and identify issues Traditional Owners should consider so that heritage can be effectively managed.

The checklist is available here.

MPS Law strongly encourages you to read this document in conjunction with our Heritage Survey Workflow. This template workflow (or process) is available here.

Note: These documents are intended as a guide only to assist with the preparation and conduct of a heritage survey. This does not constitute legal advice. The issues and questions set out are of a general nature and may not reflect your specific circumstances. There may be additional and important considerations that should be taken into account in your specific circumstances, depending on the parties’ contractual requirements and any internal survey procedures. If you or your organisation has a legal problem you should obtain professional advice from a legal practitioner.

Benefits checklist for native title parties negotiating agreements

Native title parties are often required to negotiate agreements with project proponents on mining, oil and gas and exploration agreements. We have created a checklist to help with negotiations.

Negotiations are complex, but can result in significant benefits to native title parties, as well as certainty for project proponents.

We have been fortunate to negotiate several landmark agreements, and continue to act for native title parties and project proponents in land access matters.

We have developed a checklist to help native title parties, like claim groups and registered native title body corporates, check their processes and agreements. You can download the checklist here.

MPS Law strongly encourages you to read this document in conjunction with our Healthy Contract Checklist and Native Title Decision Checklist. Click here to access the Heathy Contract Checklist and here to access the Native Title Decision checklist.

Like all templates and checklist, this is intended as a guide only to assist with the negotiation of a native title mining agreement. This does not constitute legal advice. The issues and questions set out are of a general nature and may not reflect your specific circumstances. There may be additional and important issues that should be covered by an agreement in your specific circumstances, depending on the nature of the arrangement you wish to enter into and the circumstances of the contracting parties. If you or your organisation has a legal problem you should obtain professional advice from a legal practitioner.

For more information, contact Michael Pagsanjan (michael@mpslaw.com.au).

Four quick tips for effective drafting

Effective drafting will help you to write clearly and strengthen your position when exchanging written documents. This article provides four tips for effective drafting.

1.     An intelligent start

Before you start writing, we recommend ‘an intelligent start’ by asking yourself four questions:

  1. What is my goal?
  2. How important is my goal?
  3. How will my goal be received by the reader?
  4. Should I write this at all?

This will assist you to organise your thoughts, save time and determine whether or not you need to write something or if it is better to wait, or, pick up the mobile and call someone to discuss.

2.     Brainstorm to organise thoughts and language

After brainstorming as many thoughts as possible, sort through your thoughts and edit your ideas, ensuring that you get to your stated goal. It may cause you to revisit your goal. We recommend grouping your thoughts into key themes, which may then form headings for each section of your document. Re-organise your thoughts so that each section will make as much sense as possible to the reader, logically flowing to each key theme.

3.     Write a knock-out lead sentence

You need to get to the point. Once you have sorted your sections using headings, take the time to draft a clear lead sentence. Give the reader the answer they are looking for, or make the point you want to make, without requiring the reader to sift through detail.

4.     Keep it simple

Try not to over-complicate your message and always use plain English. Avoid words and terms that aren’t used in everyday language and keep sentences short. Less is more. As best as you can, try to avoid emotive language – although it can add passion, it tends to cause your key messages to be lost. Emotive language will likely make it harder for you to achieve your goal through writing.

For more information, contact Barbara Kekes (barbara@mpslaw.com.au) or Michael Pagsanjan (michael@mpslaw.com.au).

Checklist: Golden rules healthy contracts

This article provides a summary of the golden rules for good contracts, and should be read together with our Healthy Contract Checklist available here. We have also prepared a template consultancy agreement, designed for Prescribed Body Corporates (or Registered Native Title Body Corporates) when engaging consultant anthropologists. The template consultancy agreement is available here. 

 

General commentary

The golden rule for agreements is that terms should be capable of clear interpretation as to their meanings in an ordinary and natural sense of the word (or words) in the context of the clause in which they appear. Words or noun phrases that have special meaning should be defined in a dictionary to the agreement. Are there any terms intended to have a meaning which is specific to how the word is used by a particular trade or group of persons? 

To ensure clarity and certainty of terms within the agreement, consideration should be given to syntactic ambiguity.  Do any words have multiple ordinary meanings which are affected by syntax or context? Are there any phrases which describe a quality of continuous variation and which may require assessment of whether a given set of circumstances are within or outside the contractual stipulation – for example, although day and night are antonyms, there a range of graduations in the transition from day to night, such that it is difficult to say where one stops and the other begins.

Does the contract define ‘rules’ for how to interpret it? For example, it is common for clauses within the agreement to clarify what a particular terms mean by identifying what is “included” within the meaning of that term.  A question then arises whether if what is listed as being “included” is exhaustive (nothing else is included) or if other things that fall within the natural meaning of the term (or phrase), in context of the particular contract, are also included.  Note that where the word “means” is used to define what a word or phrase means, the definition given is exhaustive.

 

Nature of relationship (contractors providing services)

Where applicable, ensure the agreement specifies it is the express intention of the parties that there is not an employment relationship. This is important because if an employment relationship exists, the contracting party has obligations under the National Employment Standards and employment legislation.

Remember that even where such a relationship is specifically excluded by words within the agreement, courts will examine the substance of the agreement and the relationship between the parties outside of the contract.  Care should be taken to clarify matters such as, who provides tools and equipment, who is responsible for defects in the work performed, who has control over hours, time and place of work, whether subcontractors can be used, and whether the contractor can undertake other work or engage in other business activities.

 

Restraint of trade and non-compete (contractors)

Where applicable, consideration should also be given to risk for the business if the other party works with a rival competitor during the term of the agreement, or within a specified period of time after the agreement ends.  Similarly, the business may also need to ensure that the contractor does not ‘poach’ clients or employees, interfere with the business or engage in a competing business.

These kinds of clauses require careful drafting. If a restriction is too broad it may be unenforceable or it may indicate to a court that in substance, the parties are in an employment relationship.

Where the agreement is to engage a contractor, any clause that attempts to prevent the contractor from ‘engaging in’ or working for a competing business should be considered carefully.  Generally, a contractor is free to pick and choose who they work for. If there is a requirement that the contractor works exclusively for one party, this may impact how a court assesses the contractual relationship.  If the substance of the engagement (which include the written terms of the agreement) is deemed to bring the parties into an employment relationship, the hiring party has obligations and duties under employment law.

 

Agreement to other party’s policies

A contracting party may require that the other party comply with its policies for such things as anti-bribery, human trafficking, conflicts of interest, data protection or safeguarding of vulnerable persons.

The party requesting compliance usually retains discretion to update such documents and the obligations of any updated versions will apply. If the agreement states that the party is required to comply with such documents “as updated from time to time” or words to that effect, consider including a requirement for the requesting party to notify the other party prior to policy change, be consulted on changes that increase the burden of compliance in a material way or to terminate the agreement if there is a material change in policy.

 

Assignment and subcontracting

Consider, is there a need to limit or prevent a party to the agreement from subcontracting or assigning its obligations and rights under the agreement?  Are the risks and consequences of a subcontractor not performing their duties significant?  Remember that where the agreement engages a contractor, limits on the right to subcontract may indicate an employment relationship between the parties.

 

Risk: liability, indemnity and insurance

Scope of parties’ liability

Some agreements attempt to impose obligations and liabilities “jointly and severally” to all parties.  This may happen explicitly, or by referring to parties, a group of entities or persons collectively, and in doing so, create or extend rights and obligations under the contract. Where these clauses are included, consideration should be given to whether this enlarges the parties’ rights and obligations beyond those provided by the operative provisions of the agreement. When interpreting contracts, courts are cautious of attempts to impose secondary liability as an additional safeguard to primary liability of the principal party to whom the obligation (under the agreement) belongs. If such a clause is capable of being applied to the agreement in more than one way, it may be applied in a way that serves its purpose rather than in a way that extends parties’ obligations beyond what is contemplated in the operative clauses of the agreement.

Indemnity clauses

Careful consideration should be given to clauses which seek to limit (or remove) liability for a particular party. Indemnity clauses may limit liability by restricting liability only to certain losses or setting a cap on the level of liability. If it is appropriate to include an indemnity clause, consider if a party should be required to indemnify against other third parties (i.e. subcontractors, agents, consultants).

Indemnity clauses should be considered carefully because they affect who bears risk. Other mechanisms for assigning or managing risk in a contract are to limit the form of damage that is compensable (i.e. to direct losses, not indirect or consequential loss), the quantum of damages payable, or to require the contractor to effect and maintain such insurance policies as are appropriate for the nature of the work to be performed.

Insurance

Unless specifically required under the agreement, each party is responsible for obtaining their own insurance. Consideration should be given to risks if either or both parties do not have insurance and whether there should be a contractual requirement to effect and maintain specific types of insurance to mitigate the financial impact of those risks.  If insurance is required, what is the scope or coverage of such insurance?

If performance of the agreement carries a high risk, consider including a requirement for the delivering party to effect and maintain insurance.  For example, where the contract involves producing or installing equipment or delivery of a service to third parties, and there is a potential for harm if not delivered or carried out correctly, it may be appropriate to include a requirement for insurance.  If insurance is required, what is the scope or coverage of such insurance?  Public liability insurance should be a minimum. Other insurances may include professional indemnity, workers compensation (if staff are engaged) or personal accident (for sole traders). Will each party bear their own costs or will this be shared?

 

Warranties

A warranty is not a guarantee; it is a mere promise that, if breached, may be enforced by an award for damages.  If a party has made a representation or undertaking about something that relates to performance of their obligations but which is not an essential condition of the agreement, consider if this should be included as a warranty. Warranties may be express or implied, so it is important to clarify whether only warranties stated in the agreement will apply. 

Where the agreement seeks to exclude non-contractual warranties, assess if warranties stated in the agreement are adequate and appropriate. Are there any important assurances or promises that were made about a contracting party’s qualifications, skills or experience? Are there any licenses, consents or permits that must be held or obtained? Are there any regulatory requirements or industry codes of practice that the contractor is expected to abide by?

Typically, the agreement will confirm that the parties have not relied on any representation or warranty, other than as expressly provided in the agreement.  Remember however, that some warranties, such as those under the Australian Consumer Law, cannot be excluded by contract. 

 

Ethical requirements

Where applicable, clauses dealing with relevant ethical issues should be included in supply contracts or contracts that anticipate a supply chain relationship.  These clauses are most suitable where the other party is part of a sector where compliance with ethical norms and standards is proscribed by regulation (such as aged care and the NDIS). For NDIS providers, this may include such things as compliance with the NDIS Practice Standards, respecting participant privacy and dignity, acting on and reporting abuse, neglect, violence and discrimination, and compliance with the NDIS Practice Standards.

 

Ending or suspending a contract

Termination

Ensure the contract does not have terms that give an excessively broad discretion to cancel the contract unilaterally. It is common for there to be key ‘material’ terms, a breach of which allows one party to terminate (with or immediately without notice).  There may also be events which bring the agreement to an end – such as insolvency or bankruptcy.

If there are specific ethical, cultural or other values that are important in the contracting relationship, consider including these as grounds for termination.  For example, if the contractor is convicted of an offence involving dishonesty, or the contractor’s personnel are subject to an adverse finding from a workplace investigation or regulatory inquiry.

Suspension (contract for services)

Typically, if something happens which materially impacts rights and obligations under the agreement, the impacted party has the ability to cancel or suspend delivery of the services.  Ensure that any such terms in the agreement are reasonable – that they only apply to matters which are significant to performance of the agreement. Consider including an option to enable fulfillment of the contract at a later date and any requirements for notice so that the impacted party has time to make alternative arrangements.

Force majeure

The COVID-19 pandemic highlights the importance of making allowances for unforeseen events.  In contractual terms, a ‘force majeure’ clause sets out who bears the risk of loss or damage if the agreement cannot be performed due to circumstances beyond the reasonable control of a party.  These clauses usually provide that neither party has liability or is deemed to be in breach for any delays or failures in performance which result from such circumstances.

For more information, contact Michael Pagsanjan (michael@mpslaw.com.au).

 

Select commentary on the CATSI Act Report

This articles provides a summary of the draft report on the review of the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (“the CATSI Act” or “the Act”). The draft report (“the Report”) requests feedback on ideas and proposed changes to the Act.  The following summary provides select commentary in response to the Report.

Background to the review

The Report builds on the work of earlier reviews that were carried out between 2016–2018. For example, an amendment bill incorporating recommendations made in the previous reviews was introduced to Parliament in 2019, however the bill was not passed before Parliament dissolved for the 2019 general election. Concerns were raised that the scope of earlier reviews had been too narrow and there had not been enough consultation. To address these criticisms, the National Indigenous Australians Agency (NIAA) was engaged to carry out a comprehensive review that will consider:

  • whether the CATSI Act is meeting its objects and continues to be desirable as a special measure for the advancement and protection of Indigenous people as set out in the Act’s preamble;
  • whether the functions and powers of the Registrar of Indigenous Corporations are appropriate, effective and adequate; and
  • possible amendments to the CATSI Act to better support the regulation of CATSI corporations.

This review is also considering the consistency and interaction of the CATSI Act with other relevant legislation, including the Corporations Act, Australian Charities and Not-for-profits Commission Act 2012 (Cth) and Native Title Act 1993 (Cth).

The Report incorporates suggestions and ideas received through online surveys, written submissions, consultations with ORIC staff and contractors who undertake examinations and special administrations.  Feedback was requested on proposals and ideas on what should change in the CATSI Act and what issues should be taken into consideration when making such changes.  Relevant feedback will be incorporated into a final report and presented to the Federal Government (Government) in October 2020.

 

Summary of review findings to date

Findings from review so far are that the protections for Aboriginal and Torres Strait Islander people included in the CATSI Act can be strengthened. Respondents to the NIAA’s online survey raised a number of questions that they suggested should be considered as part of the review including:

  • whether the CATSI Act is meeting the needs and expectations of Aboriginal and Torres Strait Islander people;
  • whether the CATSI Act is putting CATSI corporations on an even playing field with companies incorporated under the Corporations Act;
  • whether changes can be made to the regulatory and enforcement powers of the Registrar with particular consideration to the traditions and circumstances of Aboriginal and Torres Strait Islander people;
  • whether the CATSI Act is flexible enough to meet the needs of a whole range of different Aboriginal and Torres Strait Islander corporations; and
  • how can the Registrar and ORIC better support corporations to pursue economic and community development opportunities?
  • How can the Registrar and ORIC further develop the capacity of corporations, including ensuring that directors and members have a sound understanding of their rules as well as those of others.

 

Previous reviews of the CATSI Act

Background on previous reviews of the CATSI Act

In 2016, the Commonwealth Government engaged KPMG to review the CATSI Act and identify opportunities to improve the effectiveness of ORIC and to strengthen the Act.  The KMPG report ‘Regulating Indigenous Corporations’ concluded that there were significant opportunities to enhance ORIC’s contribution to better governance of Indigenous corporations in the future.  The report recommended a technical review of the CATSI Act to look at changes to the legislation that should be made to better align the Act with mainstream corporate regulation.  A comprehensive “technical review” (Technical Review) was completed in 2017 and made 69 recommendations across a broad range of issues (See DLA Piper, Technical Review of the Corporations (Aboriginal and Torres Strait Islander) Act 2006, ORIC, 2017, available from <https://www.oric.gov.au/catsi-review> (‘DLA Technical Review’)). The review also highlighted the difficulty and tension between getting the regulatory balance right so that interest of members and local communities are safeguarded, while also ensuring that regulation does not impose an excessive burden on CATSI corporations.

In December 2018, the Corporations (Aboriginal and Torres Strait Islander) Amendment (Strengthening Governance and Transparency) Bill 2018 was introduced to the Senate (“the Bill”).  The Bill was scrutinised by an internal Government committee who received submissions from stakeholders, many of whom called for greater consultation on the changes.  Despite this, the Committee recommended that the Bill be passed, however the Bill was not passed before Parliament dissolved for the 2019 general election and the Bill lapsed in July 2019.

 

Summary of findings of Technical Review

In late October 2017, the Technical Review of the Corporations (Aboriginal and Torres Strait Islander) Act 2006 report was provided to the Registrar. The Technical Review made 69 recommendations, across a broad range of issues arising from the terms of the review. It also identified a number of themes that emerged from stakeholder consultation including that:

  • Indigenous corporations play a unique role in Indigenous communities and in the provision of services to Indigenous peoples;
  • there is no ‘single’ form of CATSI corporation, and ‘one size does not fit all’;
  • smaller CATSI corporations require additional support, and it is appropriate to reduce the regulatory burden that is imposed upon small CATSI corporations;
  • while CATSI corporations look to the Registrar and ORIC for assistance and support, the autonomy of CATSI corporations requires that regulation is often based upon additional disclosure; and
  • the Registrar can play a greater role with respect to certain matters relating to native title regulation.
  • Supporting corporations

CATSI corporations play an important role in support of Indigenous communities.  The Report acknowledges that this role is very important in remote areas.  Feedback was requested on how the CATSI Act can better support corporations in remote areas, how the Registrar can develop the capacity of corporations and work that should be done to build directors and members understanding of their roles and rights.

Our view is that there needs to be significantly more financial support for Registered Native Title Body Corporates (RNTBCs).  RNTBCs play a critical role in facilitating the native title system and require more support so that they can support communities to realise their aspirations, goals and achieve self-determination.

 

Overview of the Registrar of Aboriginal and Torres Strait Islander Corporations

The Registrar is appointed by Government and is responsible for Office of the Registrar of Indigenous Corporations (ORIC), a Commonwealth Government agency that is responsible for the CATSI Act. The Registrar is responsible for administering the Act; the role of ORIC staff is to assist the Registrar to perform their functions (CATSI Act s 673-1). ORIC staff carry out the day-to-day regulatory work under delegations of authority from the Registrar and Deputy Registrar (CATSI Act ss 668-1 and 673-1).

The Registrar’s powers include the ability to:

  • call Registrar-initiated general meetings and meetings of interested persons (CATSI Act ss 668-1 and 673-1);
  • direct a CATSI corporation to change its name (CATSI Act s 88-5);
  • apply various enforcement powers, including issuing compliance notices, appointing someone to examine a corporation’s books, requiring attendance to answer questions and applying for a warrant to seize books (see Part 10-3 of the CATSI Act);
  • appoint a special administrator (CATSI Act s 490-1);
  • fulfil outstanding obligations of a deregistered CATSI corporation (CATSI Act s 546-30); and
  • Intervene in court proceedings relating to a matter arising under the CATSI Act (CATSI Act s 581-1).
  • Other functions a performed under the CATSI Act to support corporations to:
  • manage their membership bases;
  • establish appropriate corporate structures and consider their corporation size;
  • manage their meeting and reporting obligations; and
  • develop and utilise their rule books (See CATSI Act ss 658-1 and 658-5 setting out the functions and aims of the Registrar. In carrying out those functions and aims, the Registrar supports and regulates corporations by: providing advice in relation to incorporation requirements; training directors, members and key staff on good governance practices; monitoring compliance with CATSI Act requirements; and intervening when needed).

The Registrar also provides factual and procedural advice about registration, rules and operation of the corporation (CATSI Act s 658-1(1)(d)). These functions are intended to help resolve disputes and establish the Registrar as a source of information and advice about the CATSI Act.  The Registrar’s dispute resolution functions also include referring parties to mediation and arbitration and investigating complaints made about corporations (by members or others).

 

Select commentary on some of the proposals

 

Issue 1: RNTBCs report on native title benefits

Neither the CATSI Act nor the PBC Regulations address how native title benefits must be reported and there is no express statutory requirement to keep separate records or report to common law holder beneficiaries about these holdings.

Currently, there is no requirement for Registered Native Title Body Corporates (RNTBCs) to report on native title monies, except where monies are allocated for corporate use (i.e. meeting costs). The report that occurs depends on legal requirements that apply. For example, if it is an ASIC corporation, financial reports must be given to the shareholders (who may be a single corporate member).  For trust structures, joint ventures and commercial enterprises, there may be no or limited requirement to report to native title holders.

The proposal is to establish regulatory requirements for reporting about native title benefits. The Report asks for feedback on whether reporting on native title benefits (including non-cash benefits) is appropriate and if so, whether there should be a threshold amount that triggers the reporting requirement.

More commentary on this proposal is at the end of this article.

The requirement to report on native title benefits may improve clarity and transparency about native title benefits.  The goal of empowering native title holders to participant more actively in the management of benefits is supported. However, it is not clear how the cost of reporting will be met.  We consider that this invites tension and dispute. The requirement for additional reporting to the regulator is not consistent with the principle of self-determination.

 

Issue 2: Change Regulations to include native title benefit decisions as ‘native title decisions’

Under the Native Title (Prescribed Body Corporate) Regulations 1999 (“the Regulations”), the RNTBC must consult and seek consent from native title holders in relation to all native title decisions. The Regulations state that the RNTBC have to invest (or apply) native title monies (held in trust) as directed by the native holders, but do not outline how these directions need to be given. In addition, the PBC regulations do not apply to decisions about native title monies held outside of the RNTBC. Often, this means that requirements for consultation under the Regulations do not apply in relation to benefits held in trusts and other benefit management structures.

Currently, matters involving native title benefits are not covered by the definition of “native title decision”.  The proposal is to amend the PBC regulations so that RNTBCs must consult and seek the consent of common law holders before native title benefits can be invested or otherwise applied.

In many cases, the cost of meetings to bring native title holders together to consider decisions about things that impact or impair native title are borne by project proponents. If the concept of a “native title decision” is extended to cover native title benefits, the costs of those meetings are likely to be borne by the corporation. This has the potential to significantly increase the costs of administering native title benefits.

 

Issue 3: Allowing trusts under the CATSI Act

Regulatory oversight of RNTBC benefit management structures is fragmented. They may be regulated by ASIC, the ACNC, state and territory jurisdictions (for charitable trusts) or have no external regulator, such as for private discretionary trusts.  These arrangements can be costly to establish and maintain.

The Report asks for feedback on the idea of allowing for the creation of trusts under the CATSI Act. In turn, the Registrar could hold a Register of Trust Deeds ensuring accessibility and transparency for members and common law holders and could require regular reporting on trust activity.

ORIC is not a trusts regulator and is not experienced administering or regulating trust structures.  A register of trust deeds gives transparency, however that can be achieved without widening the regulator’s functions.  It is also unclear if existing trust structures would be transitioned to ORIC. If so, we have concerns as to the capacity of ORIC to competently oversee trusts that are subject to varying legal requirements across different jurisdictions.

 

Issue 4: Membership details and application timeframes

Feedback was requested about whether the corporation should be able to determine what kind of contact is acceptable.  For example, should email or phone only be allowed for certain kinds of notices or events? When might a community notice board and social media be acceptable forms of contact?  If alternative forms of contact are accepted, how should the corporation make this decision – through resolution at a general meeting?

It is proposed that alternative contact details do not need to be published on the public register, but that corporations may be required to keep record of alternative contacts information, where provided.

Many people use email and most people have a mobile phone.  Enabling corporations to use other methods such as email or phone to notify members may result in more effective and timely communication.

It is not clear when one method of communication would be required or when different forms of contact might be optional, and whether letters (i.e. meeting notices) would still be required.  If a member provides someone else’s email address, the person who receives a meeting notice via email may think they are invited to attend a members’ meeting.

Currently the public register has details of members’ addresses and other personal information.  The proposal was that this information should be removed if it is in the interests of ensuring safety of a member, or members.

If the removal of personal information is requested by the individual or the corporation, it would be appropriate for the personal information not to be published.  One way to implement this could be for members to “opt out” of the publication of personal information when a person applies for membership, or, when members “sign in” when attending corporation meetings.

Feedback is requested on whether there should be a timeframe for assessing memberships.

The timeframe for assessing memberships should be determined by the corporation.  If a timeframe was set, it could be linked to two cycles of the minimum number of directors’ meetings.  For example, if there is a requirement in the rule book for the directors to meet at least every three months, six months is likely to be reasonable.

 

Issue 5: Membership cancellation and appeals

Feedback was requested on whether a person who has had their application refused should be able to have their membership application presented and considered by the members at a general meeting.

Allowing aggrieved persons, whose membership has been cancelled or refused (on the basis that they are ineligible) to put forward their membership application at a meeting of members may increase politicking and lead to public disputes about an individual’s identity, including public shaming. For many RNTBCs, membership assessments require interpretation of complex laws and customs, which may require the knowledge of elders.  If there is a need for public deliberation about a person’s identity under law and custom, this may breach traditional law and custom. There may be a risk of breaching traditional laws and customs by the imposition of a public deliberation of a person’s identity. That could, in turn, lead to cultural punishments for those in attendance at the meeting.

Grounds for cancelling membership in s 150-25(3) of the CATSI Act include where members are not contactable and unable to contact member at the registered address for period of two years and there has been two or more reasonable attempts to contact member during that period.  The proposal is to reduce period that member must be not contactable for to 12 months.  Feedback was requested on these processes.

For RNTBCs that have members who live in remote locations, contact can be difficult – members in these areas may have limited phone and internet access and may not have fixed addresses.  We consider that 18 or 24 months is an appropriate amount of time and a minimum of three attempts to contact them should be made.

 

Issue 6: “Examinable affairs” and broadening grounds for administration

After completing examination of the “affairs of the corporation” the examiner gives a report to the Registrar. Section 700-1 of the CATSI Act defines “affairs” of the corporation.  Section 453-1 of the CATSI Act sets out the issues that the examiner reports to the Registrar on.  It was proposed to include “irregularity in financial affairs” as one of the issues that can be reported on.

Although it is not explicit that the examiner can report on financial irregularities, in practice any financial irregularity is reported. Note that the definition of “examinable affairs” in s 700-1 of the CATSI Act includes a broad range of matters, which include “profits and other income, receipts, losses, outgoings and expenditure”.  Therefore, we are of the view that the proposed amendment does not impact the substance of what the examiner considers or the content of the examination report in a material way.

To place a corporation in special administration, the Registrar must decide that one of the criteria listed in s 487-5 of the CATSI Act has been met.  Currently, one ground for appointing a special administrator is if the Registrar believes the corporation has traded at a lost for at least six of the last 12 months (CATSI Act s 487-5(1)(a)). In practice, this is difficult to establish, particularly where there is poor record keeping.

It was proposed that the requirement that the corporation must have traded at a loss should be replaced. Instead, a corporation can be placed into special administration when there has been “irregularity” in management of the corporation’s affairs.

The proposal lowers the threshold for special administration from “trading at a loss” to any “irregularity in management of financial affairs”.  “Irregularity in management of financial affairs” is not a term used in accounting standards. If the legislation does not define the criteria or principles that must be applied, the Registrar will have a broad discretion to place a corporation into special administration.

We note that the Act provides a definition for “business affairs” and “affairs” but not financial affairs (CATSI Act ss 694-15, 700-1). It is unclear how the phrase “financial affairs” is to be defined.  Noting that the definition of “examinable affairs” extends to the “business affairs” of connected entities, there is a risk that financial irregularities of connected entities may be grounds for special administration.

In our view, affairs that are examinable (which extend to connected entities) must be distinct from “financial affairs”.

 

Issue 7: Show cause notices

Under the CATSI Act, before placing a corporation into special administration, the Registrar must first issue a “show cause” notice. The purpose of this notice is to give the corporation an opportunity to respond and provide evidence to show why there is good cause that the corporation should not be put into administration.

The requirement to issue a show cause notice where all directors have requested special administration creates an unnecessary step in the process that may negatively impact some corporations that require urgent help.

The Report asks for feedback on whether it is appropriate that there be no “show cause” notice where a majority (most but not all) of the directors made a request to the Registrar asking that the corporation be placed into special administration.

The show cause notice is an important mechanism for making sure the corporation can respond to claims against it.  Removing the requirement for a show cause notice where only a majority have requested may impact on minority directors.  If only a majority of directors have made the request, this suggests there may be a disagreement.  In those circumstances, a show cause notice is appropriate.

 

Issue 8: Presumption of insolvency

To wind up a CATSI Corporation, a court must be satisfied that one of the grounds listed in s 526-5 of the CATSI Act exist.  The proposal was to broaden the criteria for winding up of the corporation to include circumstances where the examiner or special administrator has concluded that the corporation failed to keep adequate financial records.  Feedback was requested on whether this is appropriate, and whether this should apply to records within the last seven years or at any time whatsoever.  We understand that this change has been proposed by ORIC because there are a large number of ‘ghost’ corporations that are inactive but cannot be deregistered.

In our view, although this lowers the threshold for insolvency significantly, the presumption of insolvency is rebuttable with evidence showing that the corporation is able to pay its debts as they fall due in the ordinary course of business.   Also note that the orders to wind up can only be made the court; this helps to safeguard corporations from being wound up involuntarily.

We support this proposal on the basis the presumption applies only where an examiner or special administrator (or other authorised person) has formed an opinion that the corporation failed to keep adequate financial records for the last seven years.

 

Issue 9: Registrar power to call or cancel a meeting

The purpose of the general meeting is to keep members informed of the corporation’s activities and obtain feedback / decisions on major plans or projects.  An annual general meeting must be held once a year, but meetings may be held at other times when there are issues to discuss.  Sometimes, meetings may be delayed or held in a way that means people were not given an opportunity to ask questions or obtain all the information they are entitled to.

The power for the Registrar to require directors to hold a general meeting is subject to the condition that “it is reasonable to do so”.  This means that the Registrar must have a good reason for exercising the power – examples of this might be where members did not have a reasonable opportunity to ask questions of the Board or answers to questions raised by members were not provided at the meeting or in the annual report.

The requirement of reasonableness gives the Registrar wide discretion, which is consistent with the nature of a regulator’s powers. For many RNTBCs, the costs of holding a general meeting are significant and are logistically extremely challenging. We note that s 201-5 of the CATSI Act also allows members to require the directors to call and arrange to hold a general meeting.  It is unclear whether members are expected to first petition the directors for a meeting, or, whether it is intended that members’ can informally request the Registrar to use this power to require directors to hold a meeting.

 

Issue 10: Corporation cancelling or delaying a meeting

Feedback is requested on whether the CATSI Act should be amended to define circumstances in which a meeting can be cancelled (once notice has been sent), and when the meeting be cancelled.

A further proposal is to allow a corporation to notify the Registrar (do not need to request exemption) that an AGM is being delayed by 30 days where there has been death, natural disaster, cultural activity or unavoidable delay but the corporation must not have notified Registrar of extension for more than three years in row.

If the time is extended, directors can issue updated meeting notice within 30 days of original meeting date if there has been a death, natural disaster, cultural activity that has impacted date, time or place of the meeting.

Small corporations can pass a special resolution not to hold AGM for up to three years but directors must not vote on that resolution.

We support this proposal.. Meetings in remote areas involve significant costs.  Flexibility to cancel meetings is important when there are important cultural practices that must be observed and respected.  We consider that one week is a reasonable amount of notice to cancel a scheduled meeting.

 

Issue 11: Wholly owned subsidiaries

The proposal is to change the CATSI Act rules to remove the requirement that a majority of directors must also be members and that directors must be natural persons to make it easier to establish wholly‑owned subsidiaries or joint ventures. Subsection 246-5(3) of the CATSI Act requires that the majority of directors are members and the Revised Explanatory Memorandum to the CATSI Act states that this is to ensure that members’ interests are protected. The proposal will allow a corporation to establish wholly-owned CATSI Act subsidiary (unless rule book does not allow), and, allow a group of corporations to establish a CATSI corporation (similar to a joint venture) where the ‘parent entities’ meet the indigeneity requirement (that a majority of corporate members must be Indigenous).

These issues are discussed further at the end of this article.

Although not immediately relevant to all RNTBCs at this time, we support these changes because they promote greater flexibility in the structures that are allowed to be registered under the CATSI Act.

 

Issue 12: Director remuneration

The proposal is that the annual report to ORIC will include information about corporate structure, such as where the CATSI corporation has “associated” subsidiaries and/or trusts.  Annual reports will also need to include the names of key management personnel (CEO, Chief Financial Officer etc.).

It is also proposed that information about director sitting fees and salary packages (remuneration) of key personnel (including key personnel of entities in the corporate structure) is reported in financial reports that are lodged with the Registrar.  Information about remuneration of individuals will not be publicly available, but de-identified figures what is reasonable for different sectors, industries or areas will be published by ORIC to provide guidance to boards on what is a reasonable.

The requirement for reporting on corporate structures, executive officer salaries and director sitting fees aims to improve transparency for members.

Many RNTBCs do not yet have executive staff positions in its governance structure, but it is likely that members would want information about their salaries reported if executive officers were employed. Currently there is no guidance for boards or members about what a reasonable level of remuneration might be given the corporation’s circumstances and the skills, experience, and performance of the executive in question.  Publishing of de-identified salary information will assist Boards to make informed decisions about salary packages for executive managers.

The Report also identified the apparent inconsistency in the CATSI Act about membership approval for director remuneration.

Our experience is that most RNTBCs seek membership approval for the payment of meeting attendance fees. Indeed, membership approval can be a good indicator of what is ‘reasonable’ in the circumstances. In saying this, readily accessible and publicly available information about CATSI Act director remuneration would be useful to inform reasonableness of remuneration. We consider that a clarification of the relationship between subsections 252-1(2) and 287-1(2) would be helpful.

 

Issue 13: Board composition and independent directors

The Report invites comment on whether there should be legislated board membership and composition controls.

Many RNTBCs already have rules about board composition. However, flexibility is required to adapt and update these rules as expectations and standards change. Indeed, it is consistent with self-determination to allow the corporation to make its own rules about board composition.

The Report also invited comments on whether the CATSI Act should make it easier for corporations to appoint independent directors, and, whether there should be legislated requirements for independent directors for large corporations.

We consider that independent directors can add significant value to the effectiveness of a corporation and is good governance. Independent directors complement the principle of skills-based director appointments. However, the decision for a corporation to have independent directors, and the rules around the necessary qualifications, appointment, and roles of those directors, should be a decision for each corporation.

 

Issue 14: Incorporation of traditional law

The Report invites comment on how the incorporation of laws and traditions into the operation of the corporation would work in practice.

We are aware of several RNTBCs that have attempted to incorporate laws and traditions in its rules in relation to issues like membership. In our experience, this has proved to be very difficult. The incorporation of laws and traditions into the operation of the corporation risks complexity, issues with interpretation and is indicative of the inherent tension between differing legal systems. We consider that the appropriateness of the incorporation, and the extent of the incorporation, will vary significantly. We consider caution should be exercised so as not to inadvertently undermine traditional laws and traditions by attempting to codify and incorporate a traditional legal system that is different to the Australian legal system.

 

Issue 15: Arbitration of RNTBC disputes

The Report invited comment on whether a new arbitration function would assist in resolving RNTBC disputes.

We consider there is a risk that arbitration may be misused by disgruntled members. Arbitration may also be inconsistent with self-determination by the imposition of a decision that was not reached by the corporation and members on their own accord.  On the other hand, it may promote resolution of disputes. In any event, we consider that it may be preferable to utilise dispute resolution specialists approved by the Federal Court of Australia on the Federal Court’s list of approved external mediators, who are assessed through a robust and transparent court managed registration process.

 

Further special commentary: Governance and reporting on subsidiaries, executive officers and payments to directors

A wholly owned subsidiary is a corporation or other entity that is controlled by another corporation (the ‘parent’ entity).

Under s 246-5(3) of the CATSI Act, the majority of a corporation’s directors must also be members and a majority of directors must be individuals (natural persons). Consequently, a CATSI corporation could not be established as a subsidiary with only one corporate member unless a class of members is established for individuals who can be directors.  This makes it difficult to establish wholly-owned subsidiaries, particularly where the corporation will be established as a subsidiary with only one corporate member. A way around this is for CATSI corporations to establish subsidiaries by ensuring the majority of directors are members of the subsidiary for the term of their directorship, and the sole corporate member is the only member with voting rights. While effective, this solution imposes unnecessary administrative burden on corporations.

Depending on their size, corporations are required to prepare specific reports within six months of the end of their financial year, unless granted an extension or exemption from the Registrar. Small corporations are required to prepare a general report while large corporations are required to prepare a general report, financial report, audit report and directors’ report.

Where there are complex entity structures, members may be given little information about the structure itself or the business of entities (trusts or other corporations) within the structure.  The Report suggested that consideration needs to given to supporting more flexible corporate structures while also providing transparency to members about these structures.

The proposed changes aim at improving visibility of structures that co-exist with CATSI corporations, by requiring that certain information about subsidiaries and trusts are included in annual reports to ORIC:

  • information about their corporate structure, for example, where the CATSI corporation has associated subsidiaries and/or trusts; and
  • the names of the key management personnel such as the Chief Executive Officer (CEO), Chief Operating Officer and Chief Financial Officer within that structure.
  • In addition, it was also proposed that reports to ORIC include:
  • salary packages of key personnel (of CATSI corporations and subsidiaries), and.
  • directors’ sitting fees.

For further information, contact Kai Sinor (kai@mpslaw.com.au) or Michael Pagsanjan (michael@mpslaw.com.au).

Five Management ‘Musts’

Management is difficult, particularly in times of rapid change. This article provides five quick tips to help managers get the job done, better. Indeed, a manager’s ability to help their organisation navigate commercial risks and opportunities will depend on their ability to manage effectively in the first place.

 

1. Set the scene

Context is important, as is communicating that environment to your team. Reality is, we operate in a VUCA world – one that is Volatile, Uncertain, Complex and Ambiguous. Acknowledging that reality with your team helps set the scene for your role within your team. It also provide an opportunity to emphasise what is important. All managers should be mindful of how the VUCA world impacts their teams, stakeholders and, of the upmost importance, their customers or clients.

2. Communicate effectively

A good manager wins over hearts, heads and hands. That is, they communicate on different levels to take into account people’s emotions and their thinking while appealing to their practical side too. To do this requires active listening to all views and promoting robust discussion. For example, if one person is dominating a team meeting, it may mean that others are less inclined to voice an idea. Managers should not shy away from tough discussions either. In fact, facilitating those difficult decisions – or a willingness to engage an independent person to facilitate those discussions – ensures relevant views are heard and builds trust within your team.

3. Facilitate processes

At the end of the day, your role is to get things done, consistent with the values of your organisation. To do this, managers require processes. Processes are interrelated steps or decisions that have an input and an output. Across a department or organisation, you are likely to have many connected processes. Without processes, confusion and distrust is highly likely. The best managers facilitate processes that allow autonomy, have been tested and are continually reviewed. When reviewing your processes, have the user at the forefront of your mind and consider how the process will be implemented. A good manager will be open to using technology to add value and quality to processes, whilst balancing the need not to over-engineer steps.

4. Have methods for decision making

We all have bias. The ideal manager is aware of their bias. Managers must acknowledge that they don’t have all of the answers and that their views will be impacted by their experiences. Managers should test their and their team’s assumptions by using methods for decision making. Those methods should focus on who has the right skills to contribute, rather than a simple reliance of organisational hierarchy. While consensus decision making is the most widely used method, managers may want to also consider other processes like devil’s advocacy or dialectical inquiry. Ultimately, a sound decision will need to be a made in a timely manner, and a good manager will be able to stand by their decision not just because they think it is right, but by reference to the method (or methods) adopted.

5. Learn

Circumstances change rapidly and requires ongoing review. Effective managers are open to learning new skills and promoting organisational learning. This is not just about signing yourself or individuals up for courses. Neither is this about finger pointing – that will only serve to create fear and cause distrust and dislike for management. Rather, the role of a manager is to seek out opportunities for the organisation to learn and grow. Every setback, flaw, dispute or wrong decision is an opportunity for the organisation to get better. This is a feedback culture, and is most fruitful when a manager leads by example by creating opportunities to receive feedback on their own performance and that of their team. For example, be open to asking a trusted mentor for help or advice. It is okay not to know the answer, and you should be clear with your team when this is so. This personal commitment by a manager compliments consistent de-briefs within and between teams. If managers and teams wait for the next client satisfaction survey or staff performance cycle, the opportunity to meaningfully institute change may have been lost.

MPS Law is committed to assisting organisations – including their managers – get to where they want to go, though commercial advice and dispute resolution services. MPS Law can also assist organisations to improve by conducting organisational and governance reviews. If MPS Law is not best placed to provide assistance, we can provide referrals to reputable professionals who may be better placed to provide assistance.

For more information, contact Michael Pagsanjan (michael@mpslaw.com.au).

 

Michael Pagsanjan is the Principal at MPS Law and holds directorships with not-for-profit companies. He has studied leadership at RMIT University and management at Harvard Business School.

Guidance note on director duty to disclose interests, conflicts of interest and related party benefits

Directors have a legal duty to tell other directors of “material personal interests”. This article discusses rules governing disclosure of, and voting on matters involving material personal interests and provides guidance on how to assess a material personal interest.

We have also prepared factsheets on related party benefits and conflicts of interest, to help directors of Prescribed Body Corporates (or Registered Native Title Body Corporates) to understand and comply with the law.

 

 


Background

The Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Cth) (CATSI Act) sets out important legal duties that directors must comply with, commonly referred to as “directors’ duties”.  These duties have their origins in decisions made by judges over many years recognising that where there is a special relationship of trust, confidence and reliance, there should be a legal duty (“fiduciary duty”) to put the best interest of others first.

The principle that directors should avoid conflicts of interests and not take advantage of their position for personal benefit is reinforced in the legal duties set out in legislation. 

A conflict of interest occurs when the interests of a director conflict with the best interests of the corporation.  The director’s interests may be personal, professional or business in nature. The conflict arises when there is a “real or substantial possibility of conflict” or a “real, sensible possibility of conflict”.[1]Some conflicts of interests will involve a “material personal interest”.  However, not all conflicts of interests are material personal interests.  Equally, a material personal interest can arise even where there is no conflict of interest.

What does the CATSI Act require?

Section 268-1 of the CATSI Act requires directors to give notice of any material personal interest in a matter that relates to the affairs of the corporation to the other directors.  This requirement does not apply where the interest:

  • arises because the director is a member of the corporation;
  • arises from the director’s salary or payment for their role as a director of the corporation, for example, ‘sitting fees’;
  • arises because the director is a native title holder
  • relates to a contract which requires approval by the members
  • arises only because there is a contract with another corporation and the director is a member of the corporation
  • relates to directors’ insurance against liabilities as officer of the corporation.[2]

What happens after notice of a material interest is given?

A director with a material personal interest in a matter that relates to the business of the corporation is not allowed to be present while the matter is being considered at the meeting or to vote on the matter.[3]

Exceptions to this rule apply where the other directors have passed a resolution stating that they are satisfied the interest should not disqualify the person from voting or being present or where the Registrar has given approval.[4] It is not enough for a director to withdraw from voting – the interest must be disclosed.[5] A director cannot use a material personal interest to exclude themselves from discussions as a way to avoid giving information to other directors that is relevant to the decision; such information may still need to be given to the board to meet the duty exercise reasonable care and skill.[6]

Directors that participate in discussions or vote on a matter in which they have a material personal interest are in breach s 268-20(1) of the CATSI Act and could be fined up to 5 penalty units ($1,050 as of October 2019).[7]  It is a defence to a breach of s 268-20(1) to show that “for any other reason” the interest does not need to be disclosed, for example, the interests arises solely because a director is a common law holder of native title.

When is an interest considered “material” and “personal”?

The interest must be both personal and material.  Not all personal interests are considered material interests that must be disclosed.

Material

  • Whether an interest is personal requires an assessment of the relationship between the advantage or benefit the director may personally expect, and the particular matter being considered at the directors meeting.[8]
  • The interest involves a relationship of some real substance to the matter or decision.   The interest needs to be of some substance or value, rather than just a slight interest or low value.[9]
  • The nature of the interest has the capacity to influence the vote of the director on the decision to be made, and it is a kind of interest that gives rise to a conflict of interest which is real and substantial.[10]
  • The interest can be non-financial and indirect, such as an interest of an associate or relative, where the advantage is substantial.  It is the substance of the interest, its nature and capacity to impact the directors ability to perform their duties which is important.[11]

Personal

  • The interest must be of the directors themselves.
  • It will not be personal if it is an interest of someone else only.
  • The interest may not be personal if it affects the official as a member of a wide group or class and in the same manner and to the same degree that it affects other members of the group or class, for example as a member of the native title holder group

Possible examples

The following may be examples of material personal interests:

  • Approving the purchase of goods or services supplied by the business owned by a director’s family.
  • Participating in decisions on a tender submitted to the corporation where a relative or close friend is also submitting a bid.
  • Participating in negotiations and/or decisions that involve hiring a relative or friend to provide goods or services to the corporation.
  • Involvement in selection of a relative or friend as an employee.
  • Sales of corporation property or asset to a relative or friend.

Giving notice of the interest to the other directors

Notice of a material interest must be given to the other directors as soon as possible after the director becomes aware that they have a material personal interest in the matter.[12] The disclosure must identify the nature and extent of the interest and how the interest relates to the business of the corporation.[13]  As a general rule, this means ensuring that enough information has been given to enable other directors to give informed consent.[14]

Directors can give standing notice of an interest to the directors.  This notice must also provide information about the nature and extent of the interest and how it relates to the business of the corporation. A standing notice can be given at a directors’ meeting, or individually to each director in writing.  However given, the director is responsible for ensuring the nature and extent of the interest given in the notice is recorded in the minutes of the directors’ meeting.

When a new person is elected to the board of directors the notice ceases to have effect until such time that the new director, or directors, are given standing notice of the interest.[15] Standing notice of a conflict also ceases to have effect if the nature or extent of the interest materially increases above that disclosed.[16]

It is important that directors and boards seek advice on directors duties and any issues that are specific to the particular issue being considered. For more information, contact MPS Law at info@mpslaw.com.au.

[1] Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41, 103; Boardman v Phipps [1967] 2 AC 46, 124.

[2] Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Cth) ss 268-1(3)(a)(i)-(iii), (vi)-(vii), 268-5.

[3] CATI Act (n 2) s 268-20.

[4] CATI Act (n 2) ss 268-20(4) and (5).

[5] Darvall v North Sydney Brick & Tile Co Ltd (1989) 16 NSWLR 260.

[6] See CATSI Act (n 2) s 265-1.

[7] See Crimes Act 1914 (Cth) s 4AA.

[8] McGellin v Mount King Mining NL (1998) 144 FLR 288, 304.

[9] Grand Enterprises Pty Ltd v Aurium Resources (2009) FCA 513 [68].

[10] McGellin v Mount King Mining NL (1998) 144 FLR 288, 304.

[11] Bell Group Ltd (In liq) v Westpac Banking Corporation [No 9] [2008] WASC 239 at [4509].

[12] CATSI Act (n 2) s 268-1(4)(a).

[13] CATSI Act (n 2) s 268-1(4)(b).

[14] Woolworths v Kelly (1991) 22 NSWLR 189.

[15] CATSI Act (n 2) s 268-10(5).

[16] CATSI Act (n 2) s s 268-10(6).