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Consideration of CATSI amendment bill currently underway in Senate

19 October 2021

4 min read

#Native Title & Indigenous Cultural Heritage

Published by:

Jean Lukin

Consideration of CATSI amendment bill currently underway in Senate

The Corporations (Aboriginal and Torres Strait Islander) Amendment Bill 2021 (Bill) responds to a recent review of the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (CATSI Act), authored by the National Indigenous Australians Agency and released in February 2021, which made 72 recommendations on how the CATSI Act can better respond to the expectation and needs of Aboriginal and Torres Strait Islander people.

The Bill, which was introduced to the Senate on 2 September this year, proposes broad amendments to the governance of Aboriginal and Torres Strait Islander Corporations (Corporations) under the CATSI Act. The salient features of the proposal are as follows:

  • changing oversight powers:
    • where, in its current form, the CATSI Act relies heavily on criminal prosecution to enforce legislative obligations, the Bill provides the Registrar with new regulatory powers which are analogous to those held by ASIC (e.g., the ability to accept enforceable undertakings or issue infringement notices)
    • the CATSI Act currently includes a provision that makes ‘intentionally dishonest’ behaviour by directors a criminal offence (in certain circumstances). The Bill would remove the requirement that the dishonesty of a director or other officer be ‘intentional’ before the offence can be made out. The new definition of ‘dishonest’ would become “dishonest according to the standards of ordinary people”)
    • the CATSI Act would be reviewed every seven years.
  • managing member information:
    • Corporations would be able to collect additional contact details for members
    • Corporations would be able to redact member or former member personal information (and would have the corresponding responsibility of managing these requests)
    • a six-month timeframe would be imposed for assessing membership applications (as well as extension and exemption provisions)
    • the membership cancellation process would be revised
    • there would be the introduction of a ‘proper purpose’ test for individuals seeking to inspect or receive a copy of a register of members.
  • embracing technology:
    • the COVID-19 special arrangements that have allowed meetings to occur and resolutions to pass through virtual means would become permanent
    • small Corporations (with under $1,000 of consolidated revenue in the past financial year) would be able to take an option to not hold an AGM for the next one or two years
    • information would be able to be stored by Corporations on cloud servers.
  • adhering to the replaceable rules
    • all corporations would be required to ensure that their constitutions identify the replaceable rules (if any) that apply to them. This introduction of a positive engagement requirement is aimed at removing the risk that Corporations are unaware of the replaceable rules that have previously been applied by default (unless removed or replaced in the Corporation’s rule book)
    • an additional replaceable rule would be introduced, which allows the directors of a Corporation to appoint an individual who is not a member of the Corporation as a director.
  • streamlining business:
    • there would also be a new replaceable rule about cancelling meetings (currently,  Corporations cannot cancel meetings unless their rule book specifically allows this)
    • under the current CATSI Act, even low-value financial benefits require approval from members, and there is a substantial administrative burden on Corporations (under section 290-5 to 290-15) in relation to seeking and justifying that approval. The Bill repeals the burdensome provisions and introduces a simpler process of addressing related-party financial benefits. Financial benefits of a value less than a prescribed threshold will not require approval from members
    • in the event of natural disaster, death in the community, cultural business, or unavoidable delay, Corporations will be able to opt for an extension of 30 days to hold an AGM and lodge reports. In certain circumstances, members would also be able to defer meetings for an equal timeframe
    • contracts, agreements or arrangements would not be able to be cancelled merely because a Corporation has been placed under special administration
    • the Bill would introduce reviews of financial reports as an alternative to audits (which are more expensive than reviews).
  • structural changes:
    • Corporations would be able to be formed with only one member if the Corporation is a wholly-owned subsidiary of a body corporate, or with only two members if the Corporation’s only members are bodies corporate
    • two-member Corporations where only one member is Indigenous would be permissible, provided that the Indigenous member has a casting vote
    • the Bill would carve out from the current CEO definition a ‘Chief Financial Officer’ role. Corporations would be required to report to the Registrar changes in the person performing the CFO or CEO roles, in addition to the current requirement for reporting changes to the secretary
    • the requirement for the Corporation’s employees to refrain from directorship would be repealed. It would also allow the appointment of independent directors – a provision that encourages individuals with relevant knowledge, skills and experience to take up director roles.

We will continue to monitor for developments regarding this Bill. If you have any questions about this article or need any legal assistance with issues concerning native title, please speak to us or contact us here.

Author: Jean Lukin

Disclaimer
The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this article is accurate at the date it is received or that it will continue to be accurate in the future.

Published by:

Jean Lukin

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