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Corporations (Aboriginal and Torres Strait Islander) Bill 2006

Part 3-2 Rules dealing with the internal governance of corporations

Division 57 Introduction

57-1   What this Part is about

The rules dealing with the internal governance of an Aboriginal and Torres Strait Islander corporation are of 4 kinds:

               (a)     common law rules; and

              (b)     rules in this Act that cannot be replaced by the corporation’s constitution; and

               (c)     replaceable rules in this Act that may be modified or replaced by the corporation’s constitution; and

              (d)     rules that are in the corporation’s constitution.

Some of the rules in paragraph (d):

               (a)     may be required by this Act to be in the constitution; or

              (b)     may be there to modify or replace a replaceable rule; or

               (c)     may be there as a special rule applying to that particular corporation.

This Part deals with the rules in paragraphs (c) and (d) and refers to them as internal governance rules of the corporation (see section 63-1).

The corporation may choose to adopt all or some of the replaceable rules as rules of its internal governance.

The corporation’s internal governance rules must comply with the internal governance rules requirements (see Division 66).

There are a number of ways the corporation’s constitution may be changed. Any changes must comply with the internal governance rules requirements (see Division 69).

Division 72 deals with other matters concerning constitutions.



 

Division 60 What are the replaceable rules and when do they apply to a corporation?

60-1   Replaceable rules

Which are the replaceable rules?

             (1)  A section or subsection whose heading contains the words “replaceable rule—see section 60-1” is a replaceable rule.

To which corporations do the replaceable rules apply?

             (2)  The replaceable rules apply to:

                     (a)  an Aboriginal and Torres Strait Islander corporation (not being a corporation to which paragraph (b) applies) that is registered on or after the day this section commences (the commencing day ); and

                     (b)  an Aboriginal and Torres Strait Islander corporation:

                              (i)  that was registered under the Aboriginal Councils and Associations Act 1976 as an Aboriginal corporation immediately before the commencing day; and

                             (ii)  that repeals its constitution after the commencing day;

except to the extent to which the rules are modified or replaced by the corporation’s constitution as provided for in section 60-5.

60-5   Corporation’s constitution can modify or replace replaceable rules

                   A provision of a section or subsection of a replaceable rule that applies to an Aboriginal and Torres Strait Islander corporation can be modified or replaced by the corporation’s constitution.

Note:          In modifying or replacing a replaceable rule, an Aboriginal and Torres Strait Islander corporation must ensure that the matter covered by the original replaceable rule is provided for in the corporation’s constitution. If it is not, then the constitution may not be covering the matters provided for in the replaceable rules (see section 66-1).

60-10   Effect of constitution and replaceable rules

             (1)  An Aboriginal and Torres Strait Islander corporation’s constitution, and any replaceable rules that apply to the corporation, have effect as a contract:

                     (a)  between the corporation and each member; and

                     (b)  between the corporation and each director and corporation secretary; and

                     (c)  between a member and each other member.

             (2)  Under the contract, each person agrees to observe and perform the requirements of the constitution and rules so far as they apply to that person.

60-15   Failure to comply with replaceable rules

                   A failure to comply with the replaceable rules as they apply to an Aboriginal and Torres Strait Islander corporation is not of itself a contravention of this Act (so the provisions about criminal liability, civil liability and injunctions do not apply).

60-20   Modification by regulations

             (1)  The regulations may modify the replaceable rules in relation to:

                     (a)  a specified Aboriginal and Torres Strait Islander corporation; or

                     (b)  a specified class of Aboriginal and Torres Strait Islander corporation.

             (2)  Without limiting subsection (1), the regulations may:

                     (a)  modify or repeal the replaceable rules; and

                     (b)  set out new replaceable rules.

60-25   List of replaceable rules

                   The following table sets out the provisions of this Act that apply to Aboriginal and Torres Strait Islander corporations as replaceable rules.

 

Provisions that apply as replaceable rules

Item

Subject of provision

Provision





1

Chapter 4—Members and observers

Application for membership of corporation to be in writing





subsection 144-5(2)

2

Notice of rejection of membership application to be in writing





subsection 144-10(7)

3

Notice of resignation from membership of corporation to be in writing





subsection 150-10(2)

4

Member not eligible for membership etc.



section 150-20

5

Observer is entitled to attend a general meeting of the corporation



subsection 158-5(2)

6

Corporation or directors may allow member to inspect books





section 175-15

 

7

Chapter 5—Meetings

Director may call meetings

 

section 201-1

8

Notice to joint members

subsection 201-25(2)

9

When notice by post or fax is given

subsection 201-25(5)

10

When notice under paragraph (3)(e) is given

subsection 201-25(6)

11

Quorum for meeting of members of corporation



subsection 201-70(1)

12

Corporations with 10 members or less

subsection 201-70(2)

13

Adjourned meeting

subsection 201-70(5)

14

No quorum at resumed meeting

subsection 201-70(6)

15

Chairing general meeting

section 201-75

16

Business at adjourned meetings

subsection 201-85(2)

17

Who may appoint a proxy

section 201-90

18

How many votes a member has

section 201-115

19

Objections to right to vote

section 201-120

20

How voting is carried out

section 201-125

21

When and how polls must be taken

section 201-140

22

Calling directors’ meetings

section 212-5

23

Chairing directors’ meetings

section 212-15

24

Passing of directors’ resolutions

section 212-25

25

Circulating resolutions of corporation with more than 1 director

section 215-1

 

26

Chapter 6—Officers

Corporation may appoint a director

 

section 246-15

27

Directors may appoint other directors to make up a quorum

section 246-20

28

Directors appointed on registration

subsection 246-25(1)

29

Director may be reappointed

subsection 246-25(3)

30

Alternate directors

section 246-30

31

Written notice to be given of resignation as director of corporation





subsection 249-5(2)

32

Terms and conditions of office for secretaries

section 257-45

33

Terms and conditions of contact person’s appointment

section 257-50

34

Powers of directors

section 274-1

35

Negotiable instruments

section 274-5



 

Division 63 What are the internal governance rules of a corporation?

63-1   Meaning of internal governance rules

                   The following constitute the internal governance rules of an Aboriginal and Torres Strait Islander corporation:

                     (a)  the replaceable rules (if any) applying to the corporation;

                     (b)  the rules (if any) in the corporation’s constitution that modify or replace some or all of the replaceable rules;

                     (c)  the other rules dealing with the internal governance of the corporation that are in the corporation’s constitution.



 

Division 66 What are the internal governance rules requirements?

66-1   Requirements

             (1)  The following are the internal governance rules requirements for an Aboriginal and Torres Strait Islander corporation.

             (2)  The corporation must have a constitution written in English that sets out the corporation’s objects.

             (3)  The corporation’s constitution must cover the matters that this Act specifies must be covered in the corporation’s constitution.

             (4)  The internal governance rules must cover the matters that are provided for in the replaceable rules (see section 66-5).

             (5)  The internal governance rules must also be:

                     (a)  internally consistent; and

                     (b)  adequate and workable, given the context in which the corporation operates; and

                     (c)  consistent with this Act; and

                     (d)  consistent with the Native Title legislation if:

                              (i)  an application for registration of an Aboriginal and Torres Strait Islander corporation seeks registration of the corporation for the purpose of becoming a registered native title body corporate; or

                             (ii)  the corporation is a registered native title body corporate.

             (6)  The corporation must meet the requirements at all times after registration.

Note 1:       An application for registration of an Aboriginal and Torres Strait Islander corporation may not be successful unless the corporation, on registration, is complying with the requirements (see section 29-20).

Note 2:       If an Aboriginal and Torres Strait Islander corporation is making a change to its constitution and the Registrar is of the opinion that the corporation’s internal governance rules, after the change, would not comply with the internal governance rules requirements, the Registrar may refuse to register the change (see section 69-30).

66-5   Meaning of cover the matters provided for in the replaceable rules

If all replaceable rules apply or all are replaced

             (1)  The internal governance rules of an Aboriginal and Torres Strait Islander corporation cover the matters provided for in the replaceable rules if:

                     (a)  all of the replaceable rules apply to the corporation; or

                     (b)  none of the replaceable rules apply to the corporation and the corporation’s constitution covers all of the matters provided for in the replaceable rules.

If some replaceable rules apply and some are modified or replaced

             (2)  The internal governance rules of an Aboriginal and Torres Strait Islander corporation also cover the matters provided for in the replaceable rules if:

                     (a)  some of the replaceable rules apply to the corporation; and

                     (b)  the corporation’s constitution provides for the matters covered by the replaceable rules that the corporation has modified or replaced.

Corporation may also have other rules unrelated to the replaceable rules in its constitution

             (3)  To avoid doubt, and subject to the internal governance rules requirements, nothing in this Part precludes the constitution of an Aboriginal and Torres Strait Islander corporation providing for a matter that is in addition to those matters provided for in the replaceable rules.

Regulations may modify section

             (4)  The regulations may modify this section.

             (5)  Without limiting subsection (4), the regulations may provide for further situations in which the internal governance rules of an Aboriginal and Torres Strait Islander corporation cover the matters provided for in the replaceable rules .



 

Division 69 Constitutions and amendment and replacement of constitutions

Subdivision 69-A Constitution on registration

69-1   Constitution of an Aboriginal and Torres Strait Islander corporation

             (1)  The constitution of an Aboriginal and Torres Strait Islander corporation is the constitution that is registered in respect of the corporation.

Note:          75% of the persons specified in the application for registration as persons who consent to become members must approve the constitution before the application for registration is lodged (see section 29-15).

             (2)  A constitution is an instrument (other than this Act):

                     (a)  constituting, or defining the constitution of, an Aboriginal and Torres Strait Islander corporation; or

                     (b)  governing the activities of such a corporation or its members.

Subdivision 69-B Constitutional changes after registration

69-5   Overview—ways a constitution may be changed

Corporation wants to change its constitution

             (1)  For an Aboriginal and Torres Strait Islander corporation to change its constitution, the following steps must be complied with:

                     (a)  the corporation must pass a special resolution effecting the change;

                     (b)  if, under the corporation’s constitution, there are further steps that must also be complied with to make a constitutional change—those steps must be complied with (see section 69-15);

                     (c)  the corporation must lodge certain documents (see section 69-20);

                     (d)  the Registrar must make certain decisions in respect of the constitutional change and, if appropriate, must register the change (see section 69-30).

Note:          The constitutional change takes effect when it is registered (see section 69-40).

Court may change a constitution

             (2)  The court may also change an Aboriginal and Torres Strait Islander corporation’s constitution (see section 166-5).

Note:          The constitutional change takes effect as provided for in paragraph 69-40(b).

Registrar may change a constitution

             (3)  The Registrar may also change an Aboriginal and Torres Strait Islander corporation’s constitution (see section 69-35).

Note 1:       If the Registrar changes a constitution under section 69-35, the steps in subsection (1) of this section do not apply.

Note 2:       The constitutional change takes effect when it is registered (see section 69-40).

Special administrator may change a constitution

             (4)  A special administrator for an Aboriginal and Torres Strait Islander corporation may also change the corporation’s constitution (see section 499-5).

Note 1:       If the special administrator changes a constitution under section 499-5, the steps in paragraphs (1)(a), (b) and (c) of this section do not apply (but the administrator must lodge the change with the Registrar under section 69-25 and the Registrar must take the steps in section 69-30).

Note 2:       The constitutional change takes effect when it is registered (see section 69-40).

69-10   Meaning of constitutional change etc.

             (1)  For the purposes of this Act, an Aboriginal and Torres Strait Islander corporation’s constitution is changed if:

                     (a)  the constitution is repealed and a new constitution is substituted; or

                     (b)  a provision of the constitution is repealed and a new provision is substituted; or

                     (c)  a provision of the constitution is repealed; or

                     (d)  a new provision is added to the constitution; or

                     (e)  a provision of the constitution is modified.

             (2)  The particular constitutional change is:

                     (a)  in the case of paragraph (1)(a)—the new constitution; and

                     (b)  in the case of paragraphs (1)(b) and (d)—the repeal (if any) and the new provision; and

                     (c)  in the case of paragraph (1)(c)—the repeal; and

                     (d)  in the case of paragraph (1)(e)—the modification.

69-15   Extra requirements for constitutional change in constitution

             (1)  An Aboriginal and Torres Strait Islander corporation’s constitution may provide that a change to its constitution does not have any effect unless a requirement specified in the constitution relating to that constitutional change has been complied with.

             (2)  Unless the constitution provides otherwise, the corporation may modify or repeal a requirement described in subsection (1) only if the requirement is itself complied with.

Note:          Section 69-40 deals with when the constitutional change takes effect.

69-20   Corporation to lodge copy of constitutional changes

             (1)  If no requirement of a kind mentioned in section 69-15 is specified in the corporation’s constitution, within 28 days after the special resolution is passed, the corporation must lodge with the Registrar:

                     (a)  a copy of the special resolution; and

                     (b)  a copy of those parts of the minutes of the meeting at which the special resolution was passed that relate to the passing of the special resolution; and

                     (c)  a directors’ statement (see subsection (4)); and

                     (d)  a copy of the constitutional change.

Penalty:  5 penalty units.

             (2)  If a constitutional change is not to have effect until a requirement specified in the corporation’s constitution has been complied with, the corporation must lodge the documents referred to in subsection (1) in addition to proof that the requirement has been met within 28 days after the requirement has been met.

Penalty:  5 penalty units.

             (3)  An offence against subsection (1) or (2) is an offence of strict liability.

Note:          For strict liability , see section 6.1 of the Criminal Code .

             (4)  The Registrar may direct the corporation to lodge a consolidated copy of the corporation’s constitution. The consolidation must set out the constitution as it will be if the Registrar registers the constitutional change.

             (5)  A directors’ statement is a statement signed by:

                     (a)  2 directors of the corporation; or

                     (b)  if there is only 1 director—that director;

to the effect that the special resolution was passed in accordance with the internal governance rules.

Note:          See also section 265-40 for offences committed by the secretary of an Aboriginal and Torres Strait Islander corporation.

69-25   Special administrator to lodge copy of constitutional changes

                   If the special administrator of an Aboriginal and Torres Strait Islander corporation changes the corporation’s constitution under section 499-5, the special administrator must lodge a copy of the change with the Registrar.

69-30   Registrar to determine if constitutional change should be registered

Registrar to decide

             (1)  The Registrar must decide whether to register a constitutional change lodged under section 69-20 or 69-25.

Changed internal governance rules must comply with the internal governance rules requirement

             (2)  The Registrar must not register the change unless the Registrar is satisfied that, with the constitutional change, the internal governance rules of the corporation would comply with the internal governance rule requirements.

Proposed change after Registrar’s change

             (3)  In addition to being satisfied as required by subsection (2), the Registrar must not register a constitutional change lodged after the Registrar has changed the constitution under section 69-35 unless the Registrar is satisfied that:

                     (a)  the lodged change is consistent with the change made by the Registrar, taking into account the Registrar’s reasons for making that change; and

                     (b)  the reasons for the Registrar making that change are no longer applicable.

If Registrar is not satisfied

             (4)  If the Registrar is not satisfied as required by this section, the Registrar must:

                     (a)  refuse to register the change; and

                     (b)  notify the corporation or special administrator concerned in writing of the decision within 28 days after that decision.

If Registrar is satisfied

             (5)  If the Registrar is satisfied as required by this section, the Registrar must register the change within 28 days after making the decision.

69-35   Registrar may change an Aboriginal and Torres Strait Islander corporation’s constitution on own initiative

             (1)  The Registrar may, on his or her own initiative, change an Aboriginal and Torres Strait Islander corporation’s constitution in the circumstances set out in subsection (2) or (3).

             (2)  The Registrar may change the constitution if the Registrar is satisfied that the corporation is not meeting the internal governance rules requirements.

Note:          Section 66-1 sets out the requirements.

             (3)  The Registrar may change the constitution if the Registrar is satisfied that:

                     (a)  the conduct of the corporation’s affairs; or

                     (b)  an actual or proposed act or omission by or on behalf of the corporation; or

                     (c)  a resolution, or a proposed resolution, of members or a class of members of the corporation;

is either:

                     (d)  contrary to the interests of the members as a whole; or

                     (e)  oppressive to, unfairly prejudicial to, or unfairly discriminatory against, a member or members whether in that capacity or in any other capacity.

             (4)  The changes that the Registrar may make are the changes that the Registrar considers appropriate having regard to the internal governance rules requirements and the circumstances of the particular corporation.

             (5)  If the corporation is a registered native title body corporate, the Registrar must not change the constitution on the basis of:

                     (a)  an act (or omission from doing an act); or

                     (b)  a proposed act (or omission from doing an act);

if an officer or employee of the corporation does (or refrains from doing), or proposes to do (or refrain from doing), the act:

                     (c)  in good faith; and

                     (d)  with the belief that doing (or refraining from doing) the act is necessary to ensure that the corporation complies with a Native Title legislation obligation.

             (6)  The Registrar makes the change by registering it.

             (7)  If the Registrar changes the constitution, the Registrar must give the corporation written notice within 28 days after registration of the changes:

                     (a)  stating that the Registrar has changed the constitution; and

                     (b)  setting out the terms of the change.

             (8)  In making a change under this section, the Registrar does not have to comply with paragraph 69-5(1)(a) (special resolution), section 69-15 (satisfying extra requirements in constitution), section 69-20 (corporation to lodge copy of changes) or section 69-30 (Registrar to determine if constitutional change should be registered).

69-40   Date of effect of constitutional change

                   A constitutional change takes effect:

                     (a)  if it is the result of a special resolution—on the day the change is registered; or

                     (b)  if it is the result of a Court order made under section 166-5:

                              (i)  on the date on which the order is made if it specifies no later date; or

                             (ii)  on a date specified by the order; or

                     (c)  if the Registrar has made the change—on the day the change is registered; or

                     (d)  if a special administrator has made the change—on the day the change is registered.



 

Division 72 Other matters concerning constitutions etc.

72-1   Registrar may direct corporation to lodge constitution

             (1)  The Registrar may direct an Aboriginal and Torres Strait Islander corporation to lodge a copy of its constitution.

Note:          Under section 322-5, an Aboriginal and Torres Strait Islander corporation must keep an up-to-date copy of its constitution.

             (2)  A direction made under subsection (1) is not a legislative instrument.

72-5   Corporation must provide governance material to members

Corporation must provide member with constitution etc.

             (1)  If a member of an Aboriginal and Torres Strait Islander corporation asks for a copy of the corporation’s constitution or internal governance framework rules, the corporation must provide to the member a copy of the corporation’s internal governance framework rules:

                     (a)  free of charge; and

                     (b)  within 7 days.

Penalty:  5 penalty units.

             (2)  An offence against subsection (1) is an offence of strict liability.

Note:          For strict liability , see section 6.1 of the Criminal Code .

Registered office

             (3)  An Aboriginal and Torres Strait Islander corporation that is registered as a large corporation must make available for inspection by members and officers at its registered office, its internal governance framework rules. The rules must be available for inspection each business day from at least 10 am to 12 noon and from at least 2 pm to 4 pm.

Note:          Failure to comply with this subsection is an offence under section 376-1.

Document access address

             (4)  An Aboriginal and Torres Strait Islander corporation that is registered as a small or medium corporation must make available for inspection by members and officers at its document access address, its internal governance framework rules. The rules must be made available for inspection within 7 days of a member’s or officer’s written request for inspection.

Note:          Failure to comply with this subsection is an offence under section 376-1.

             (5)  A corporation must make rules available under subsections (3) and (4) free of charge.

Penalty:  5 penalty units.

             (6)  An offence against subsection (5) is an offence of strict liability.

Note:          For strict liability , see section 6.1 of the Criminal Code .

             (7)  The internal governance framework rules of an Aboriginal and Torres Strait Islander corporation are:

                     (a)  the corporation’s constitution; and

                     (b)  any replaceable rules that apply to the corporation; and

                     (c)  any other material concerning the internal governance of the corporation that is prescribed.

72-10   Constitution may limit powers

             (1)  An Aboriginal and Torres Strait Islander corporation’s constitution may contain an express restriction on, or a prohibition of, the corporation’s exercise of any of its powers. The exercise of a power by the corporation is not invalid merely because it is contrary to an express restriction or prohibition in the corporation’s constitution.

             (2)  An act of the corporation is not invalid merely because it is contrary to or beyond the objects set out in the corporation’s constitution.