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Corporations (Aboriginal and Torres Strait Islander) Bill 2006

Part 4-4 Protection of members’ interests

Division 163 Rights and remedies to protect interests of members

163-1   Rights and remedies

                   The rights and remedies that are conferred by this Part to protect the interests of members of Aboriginal and Torres Strait Islander corporations are:

                     (a)  the right to seek a Court order concerning oppressive conduct of the affairs of the corporation as provided for in Division 166; and

                     (b)  the right to bring or intervene in proceedings on behalf of the corporation as provided for in Division 169; and

                     (c)  the rights relating to the changing of class rights as provided for in Division 172; and

                     (d)  the right to apply to the Court for an order to inspect the corporation’s books as provided for in Division 175.



 

Division 166 Oppressive conduct of affairs

166-1   Grounds for Court order

             (1)  Subject to subsection (2), the Court may make an order under section 166-5 if:

                     (a)  the conduct of an Aboriginal and Torres Strait Islander corporation’s affairs; or

                     (b)  an actual or proposed act or omission by or on behalf of an Aboriginal and Torres Strait Islander corporation; or

                     (c)  a resolution, or a proposed resolution, of members or a class of members of an Aboriginal and Torres Strait Islander 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.

             (2)  If the corporation is a registered native title body corporate, the Court must not make an order under subsection 166-5(1) 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.

166-5   Orders the Court can make

             (1)  The Court can make any order under this section that it considers appropriate in relation to the corporation, including the following:

                     (a)  an order that the corporation be wound up;

                     (b)  an order that the corporation’s existing constitution be modified or repealed and replaced;

                     (c)  an order regulating the conduct of the corporation’s affairs in the future;

                     (d)  an order for the corporation to institute, prosecute, defend or discontinue specified proceedings;

                     (e)  an order appointing a receiver, or a receiver and manager, of any or all of the corporation’s property;

                      (f)  an order restraining a person from engaging in specified conduct or from doing a specified act;

                     (g)  an order requiring a person to do a specified act.

Order that the corporation be wound up

             (2)  If an order that the corporation be wound up is made under this section, the provisions of this Act relating to the winding up of Aboriginal and Torres Strait Islander corporations apply:

                     (a)  as if the order were made under section 526-1; and

                     (b)  with such changes as are necessary.

Without limiting this, section 526-35 (which applies certain provisions of the Corporations Act) applies to the winding up.

Changes to constitution made after order that are inconsistent with the Court ordered change

             (3)  If:

                     (a)  the constitution of the corporation is changed by an order made under this section; and

                     (b)  after the order, a change to the constitution is proposed; and

                     (c)  the proposed change is inconsistent with the change made by the order;

the Registrar must not register the proposed change unless:

                     (d)  the order states that the constitution can be changed; or

                     (e)  the leave of the court is obtained by:

                              (i)  in any case—the Registrar; or

                             (ii)  if the change is not to be made under section 69-35—the corporation.

Note:          See section 69-10 for the meaning of changed in relation to an Aboriginal and Torres Strait Islander corporation’s constitution.

166-10   Who can apply for an order?

                   An application for an order under section 166-5 in relation to an Aboriginal and Torres Strait Islander corporation may be made by:

                     (a)  a member of the corporation, even if the application relates to an act or omission that is against:

                              (i)  the member in a capacity other than as a member; or

                             (ii)  another member in that member’s capacity as a member; or

                     (b)  a person who has ceased to be a member of the corporation if the application relates to the circumstances in which the person ceased to be a member; or

                     (c)  a person whom the Registrar thinks appropriate having regard to investigations the Registrar is conducting or has conducted into:

                              (i)  the corporation’s affairs; or

                             (ii)  matters connected with the corporation’s affairs; or

                     (d)  the Registrar.

166-15   Requirement for person to lodge order

             (1)  If an order is made under section 166-5, the applicant must lodge a copy of the order with the Registrar within 14 days after it is made.

             (2)  Subsection (1) does not apply if the applicant is the Registrar.

             (3)  A person commits an offence if the person contravenes subsection (1).

Penalty:  50 penalty units or imprisonment for 12 months, or both.

             (4)  An offence against subsection (3) is an offence of strict liability.

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



 

Division 169 When may a person bring or intervene in proceedings on behalf of an Aboriginal and Torres Strait Islander corporation?

169-1   Bringing, or intervening in, proceedings on behalf of a corporation

             (1)  A person who is:

                     (a)  either:

                              (i)  a member, former member, or person entitled to be registered as a member of an Aboriginal and Torres Strait Islander corporation or of a related body corporate; or

                             (ii)  an officer or former officer of the corporation; or

                            (iii)  the Registrar; and

                     (b)  acting with leave granted under section 169-5;

may:

                     (c)  bring proceedings on behalf of an Aboriginal and Torres Strait Islander corporation; or

                     (d)  intervene in any proceedings to which an Aboriginal and Torres Strait Islander corporation is a party for the purpose of taking responsibility on behalf of the corporation for those proceedings, or for a particular step in those proceedings (for example, compromising or settling them).

             (2)  Proceedings brought on behalf of the corporation must be brought in the corporation’s name.

             (3)  Any right a person may have otherwise had at general law to bring, or intervene in, proceedings on behalf of an Aboriginal and Torres Strait Islander corporation is abolished.

Note:          This section does not prevent a person bringing, or intervening in, proceedings on the person’s own behalf in respect of a personal right.

169-5   Applying for and granting leave

Who may apply for leave?

             (1)  A person referred to in paragraph 169-1(1)(a) may apply to the Court for leave to bring, or to intervene in, proceedings.

Court to grant the application in certain circumstances

             (2)  The Court must grant the application if it is satisfied that:

                     (a)  it is probable that the corporation will not itself bring the proceedings, or properly take responsibility for them, or for the steps in them; and

                     (b)  the applicant is acting in good faith; and

                     (c)  it is in the best interests of the corporation that the applicant be granted leave; and

                     (d)  if the applicant is applying for leave to bring proceedings—there is a serious question to be tried; and

                     (e)  either:

                              (i)  at least 14 days before making the application, the applicant gave written notice to the corporation of the intention to apply for leave and of the reasons for applying; or

                             (ii)  it is appropriate to grant leave even though subparagraph (i) is not satisfied.

This subsection has effect subject to subsections (3) and (5).

When leave is not in the best interests of the corporation

             (3)  A rebuttable presumption that granting leave is not in the best interests of the corporation arises if it is established that:

                     (a)  the proceedings are:

                              (i)  by the corporation against a person who is not a related party of the corporation; or

                             (ii)  by such a person against the corporation;

                            (including any appeal from a decision made in proceedings by or against the corporation); and

                     (b)  the corporation has decided:

                              (i)  not to bring the proceedings; or

                             (ii)  not to defend the proceedings; or

                            (iii)  to discontinue, settle or compromise the proceedings; and

                     (c)  all of the directors who participated in that decision:

                              (i)  acted in good faith for a proper purpose; and

                             (ii)  did not have a material personal interest in the decision; and

                            (iii)  informed themselves about the subject matter of the decision to the extent they reasonably believed to be appropriate; and

                            (iv)  rationally believed that the decision was in the best interests of the corporation.

Note:          Related party is defined in section 293-1.

             (4)  A director’s belief that the decision was in the best interests of the corporation is a rational one unless the belief is one that no reasonable person in his or her position would hold.

Decision taken to give effect to Native Title legislation obligation

             (5)  The Court must not grant the application if:

                     (a)  the corporation has decided:

                              (i)  not to bring the proceedings; or

                             (ii)  not to defend the proceedings; or

                            (iii)  to discontinue, settle or compromise the proceedings; and

                     (b)  an officer or employee of the corporation made that decision:

                              (i)  in good faith; and

                             (ii)  with the belief that making the decision was necessary to ensure that the corporation complies with a Native Title legislation obligation.

169-10   Substitution of another person for the person granted leave

             (1)  Any of the following persons may apply to the Court for an order that the person be substituted for a person to whom leave has been granted under section 169-5:

                     (a)  a member, former member, or a person entitled to be registered as a member of the corporation or of a related body corporate;

                     (b)  an officer, or former officer of the corporation;

                     (c)  the Registrar.

When may Court make order

             (2)  The Court may make the order if it is satisfied that:

                     (a)  the applicant is acting in good faith; and

                     (b)  it is appropriate to make the order in all the circumstances.

             (3)  An order substituting one person for another has the effect that:

                     (a)  the grant of leave is taken to have been made in favour of the substituted person; and

                     (b)  if the other person has already brought the proceedings or intervened—the substituted person is taken to have brought those proceedings or to have made that intervention.

169-15   Effect of ratification by members

             (1)  If the members of an Aboriginal and Torres Strait Islander corporation ratify or approve conduct, the ratification or approval:

                     (a)  does not prevent a person from bringing or intervening in proceedings with leave under section 169-5 or from applying for leave under that section; and

                     (b)  does not have the effect that proceedings brought or intervened in with leave under section 169-5 must be determined in favour of the defendant, or that an application for leave under that section must be refused.

Effect of ratification on court

             (2)  If the members of an Aboriginal and Torres Strait Islander corporation ratify or approve conduct, the Court may take the ratification or approval into account in deciding what order or judgment (including as to damages) to make in:

                     (a)  proceedings brought or intervened in with leave under section 169-5; or

                     (b)  in relation to an application for leave under that section.

             (3)  In doing this, it must have regard to:

                     (a)  how well-informed about the conduct the members were when deciding whether to ratify or approve the conduct; and

                     (b)  whether the members who ratified or approved the conduct were acting for proper purposes.

169-20   Leave to discontinue, compromise or settle proceedings brought, or intervened in, with leave

                   Proceedings brought or intervened in with leave must not be discontinued, compromised or settled without the leave of the Court.

169-25   General powers of the Court

             (1)  The Court may make any orders, and give any directions, that it considers appropriate in relation to proceedings brought or intervened in with leave, or an application for leave, including:

                     (a)  interim orders; and

                     (b)  directions about the conduct of the proceedings, including requiring mediation; and

                     (c)  an order directing the corporation, or an officer of the corporation, to do, or not to do, any act; and

                     (d)  an order appointing an independent person to investigate, and report to the Court on:

                              (i)  the financial affairs of the corporation; or

                             (ii)  the facts or circumstances which gave rise to the cause of action the subject of the proceedings; or

                            (iii)  the costs incurred in the proceedings by the parties to the proceedings and the person granted leave.

Persons appointed under paragraph (1)(d) may inspect books

             (2)  A person appointed by the Court under paragraph (1)(d) is entitled, on giving reasonable notice to the corporation, to inspect any books of the corporation for any purpose connected with his or her appointment.

Remuneration and expenses for persons appointed under paragraph (1)(d)

             (3)  If the Court appoints a person under paragraph (1)(d):

                     (a)  the Court must also make an order stating who is liable for the remuneration and expenses of the person appointed; and

                     (b)  the Court may vary the order at any time; and

                     (c)  the persons who may be made liable under the order, or the order as varied, are:

                              (i)  all or any of the parties to the proceedings or application; and

                             (ii)  the corporation; and

                     (d)  if the order, or the order as varied, makes 2 or more persons liable, the order may also determine the nature and extent of the liability of each of those persons.

             (4)  Subsection (3) does not affect the powers of the Court as to costs.

169-30   Power of the Court to make costs orders

             (1)  The Court may at any time make any orders it considers appropriate about the costs of the following persons in relation to proceedings brought or intervened in with leave under section 169-5 or an application for leave under that section:

                     (a)  the person who applied for or was granted leave;

                     (b)  the corporation;

                     (c)  any other party to the proceedings or application.

             (2)  An order under this section may require indemnification for costs.



 

Division 172 What protections apply to variations or cancellations of class rights?

172-1   Varying and cancelling class rights

If constitution sets out procedure

             (1)  If an Aboriginal and Torres Strait Islander corporation’s constitution sets out the procedure for varying or cancelling rights of members in a class of members, those rights may be varied or cancelled only in accordance with the procedure. The procedure may be changed only if the procedure itself is complied with.

If constitution does not set out procedure

             (2)  If an Aboriginal and Torres Strait Islander corporation’s constitution does not set out the procedure for varying or cancelling rights of members in a class of members, those rights may be varied or cancelled only by special resolution of the corporation and:

                     (a)  by special resolution passed at a meeting of the class of members whose rights are being varied or cancelled; or

                     (b)  with the written consent of members with at least 75% of the votes in the class.

Notice of variation

             (3)  The corporation must give written notice of the variation or cancellation to the members of the class within 7 days after the variation or cancellation is made.

             (4)  The corporation commits an offence if it contravenes subsection (3).

Penalty:  5 penalty units.

             (5)  An offence against subsection (4) is an offence of strict liability.

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

172-5   Certain actions taken to vary rights etc

             (1)  If the members in a class of members of an Aboriginal and Torres Strait Islander corporation are divided into further classes of members and, after the division, the rights of all of those members are not the same:

                     (a)  the division is taken to vary the rights of every member who was in the class existing before the division; and

                     (b)  members who have the same rights after the division form a separate class.

             (2)  If the rights of some of the members in a class of members are varied:

                     (a)  the variation is taken to vary the rights of every other member who was in the class existing before the variation; and

                     (b)  members who have the same rights after the variation form a separate class.

172-10   Variation, cancellation or modification without unanimous support of class

             (1)  If members in a class of members of an Aboriginal and Torres Strait Islander corporation do not all agree (whether by resolution or written consent) to:

                     (a)  a variation or cancellation of their rights; or

                     (b)  a modification of the corporation’s constitution (if any) to allow their rights to be varied or cancelled;

members with at least 10% of the votes in the class may apply to the Court to have the variation, cancellation or modification set aside.

             (2)  An application may only be made within 28 days after the variation, cancellation or modification is made.

             (3)  The variation, cancellation or modification takes effect:

                     (a)  if no application is made to the Court to have it set aside—28 days after the variation, cancellation or modification is made; or

                     (b)  if an application is made to the Court to have it set aside—when the application is withdrawn or finally determined.

             (4)  The members of the class who want to have the variation, cancellation or modification set aside may appoint one or more of themselves to make the application on their behalf. The appointment must be in writing.

             (5)  The Court may set aside the variation, cancellation or modification if it is satisfied that it would unfairly prejudice the applicants. However, the Court must confirm the variation, cancellation or modification if the Court is not satisfied of unfair prejudice.

             (6)  Within 14 days after the Court makes an order, the corporation must lodge a copy of the order with the Registrar.

             (7)  The corporation commits an offence if it contravenes subsection (6).

Penalty:  5 penalty units.

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

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

172-15   Variation, cancellation or modification with unanimous support of class

                   If the members in a class of members of an Aboriginal and Torres Strait Islander corporation all agree (whether by resolution or written consent) to the variation, cancellation or modification, it takes effect:

                     (a)  if no later date is specified in the resolution or consent—on the date of the resolution or consent; or

                     (b)  on a later date specified in the resolution or consent.



 

Division 175 When may a member inspect a corporation’s books?

175-1   Order for inspection of books of corporation

             (1)  On application by a member of an Aboriginal and Torres Strait Islander corporation, the Court may make an order:

                     (a)  authorising the applicant to inspect books of the corporation; or

                     (b)  authorising another person (whether a member or not) to inspect books of the corporation on the applicant’s behalf.

The Court may only make the order if it is satisfied that the applicant is acting in good faith and that the inspection is to be made for a proper purpose.

             (2)  A person authorised to inspect books may make copies of the books unless the Court orders otherwise.

             (3)  A person who:

                     (a)  is granted leave under section 169-5; or

                     (b)  applies for leave under that section; or

                     (c)  is eligible to apply for leave under that section;

may apply to the Court for an order under this section.

             (4)  On application, the Court may make an order authorising:

                     (a)  the applicant to inspect books of the corporation; or

                     (b)  another person to inspect books of the corporation on the applicant’s behalf.

             (5)  The Court may make the order only if it is satisfied that:

                     (a)  the applicant is acting in good faith; and

                     (b)  the inspection is to be made for a purpose connected with:

                              (i)  applying for leave under section 169-5; or

                             (ii)  bringing or intervening in proceedings with leave under that section.

             (6)  A person authorised to inspect books may make copies of the books unless the Court orders otherwise.

             (7)  If the person authorised by the Court under paragraph (1)(b) or paragraph (4)(b) is the Registrar, the Registrar may appoint another person to inspect the books of the corporation on the Registrar’s behalf.

175-5   Ancillary orders

                   If the Court makes an order under section 175-1, the Court may make any other orders it considers appropriate, including either or both of the following:

                     (a)  an order limiting the use that a person who inspects books may make of information obtained during the inspection;

                     (b)  an order limiting the right of a person who inspects books to make copies in accordance with subsection 175-1(2).

175-10   Disclosure of information acquired in inspection

             (1)  A person who inspects books on behalf of an applicant under section 175-1 must not disclose information obtained during the inspection.

             (2)  Subsection (1) does not apply to the extent that the disclosure is to:

                     (a)  the Registrar; or

                     (b)  the applicant.

Note:          A defendant bears an evidential burden in relation to the matter in subsection (2) (see subsection 13.3(3) of the Criminal Code ).

             (3)  A person commits an offence if the person contravenes subsection (1).

Penalty:  50 penalty units or imprisonment for 12 months, or both.

             (4)  An offence against subsection (3) is an offence of strict liability.

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

175-15   Corporation or directors may allow member to inspect books (replaceable rule—see section 60-1)

                   The directors of an Aboriginal and Torres Strait Islander corporation, or the corporation by a resolution passed at a general meeting, may authorise a member to inspect books of the corporation.