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Corporations (Aboriginal and Torres Strait Islander) Bill 2006

Part 6-2 Appointment, remuneration and cessation of appointment of directors

Division 240 Introduction

240-1   What this Part is about

This Part deals with the directors of an Aboriginal and Torres Strait Islander corporation.

Division 243 deals with the minimum and maximum number of directors that a corporation may have.

Divisions 246 and 249 deal with the appointment, resignation and removal of directors.

Division 252 deals with the remuneration of directors.



 

Division 243 Number of directors

243-1   Minimum number of directors

Corporations with 1 member

             (1)  An Aboriginal and Torres Strait Islander corporation that has 1 member must have at least 1 director.

Corporations with 2 members

             (2)  An Aboriginal and Torres Strait Islander corporation that has 2 members must have at least 2 directors.

Corporations with more than 2 members

             (3)  An Aboriginal and Torres Strait Islander corporation that has more than 2 members must have at least 3 directors.

243-5   Maximum number of directors

                   An Aboriginal and Torres Strait Islander corporation must not have more than:

                     (a)  12 directors; or

                     (b)  if the regulations prescribe a different number of directors for the purpose of this paragraph—that number of directors.

Note:          An application may be made to exempt the corporation from the requirements of this section (see section 310-5).



 

Division 246 Appointment of directors

246-1   Eligibility for appointment as a director

             (1)  Only an individual who is at least 18 years of age may be appointed as a director of an Aboriginal and Torres Strait Islander corporation.

             (2)  An individual who is disqualified from managing Aboriginal and Torres Strait Islander corporations under Part 6-5 may only be appointed as a director of an Aboriginal and Torres Strait Islander corporation if the appointment is made:

                     (a)  with permission granted by the Registrar under section 279-30; or

                     (b)  with leave granted by the Court under section 279-35.

             (3)  Unless an Aboriginal and Torres Strait Islander corporation’s constitution provides otherwise, the following may not be appointed as a director of the corporation:

                     (a)  an individual who is not a member of the corporation;

                     (b)  an individual who is not an Aboriginal and Torres Strait Islander person.

246-5   Majority of director requirements

             (1)  A majority of the directors of an Aboriginal and Torres Strait Islander corporation must be individuals who are Aboriginal and Torres Strait Islander persons.

             (2)  A majority of the directors of the corporation must ordinarily reside in Australia.

             (3)  A majority of the directors of the corporation must be members of the corporation.

             (4)  A majority of the directors of the corporation must not be employees of the corporation.

             (5)  If a person is performing a chief executive officer function in relation to the corporation, the person may be a director of the corporation but cannot chair the directors’ meetings. The person counts as an employee for the purposes of determining under subsection (4) whether a majority of directors are employees.

Note:          For the meaning of chief executive officer function , see section 694-85.

246-10   Consent to act as director

             (1)  An Aboriginal and Torres Strait Islander corporation contravenes this subsection if a person does not give the corporation a signed consent to act as a director of the corporation before being appointed.

Penalty:  10 penalty units.

             (2)  The corporation must keep the consent.

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 .

246-15   Corporation may appoint a director (replaceable rule—see section 60-1)

                   An Aboriginal and Torres Strait Islander corporation may appoint a person as a director by resolution passed in general meeting.

246-20   Directors may appoint other directors to make up a quorum (replaceable rule—see section 60-1)

Appointment by other directors

             (1)  Subject to section 243-5 (maximum number of directors), the directors of an Aboriginal and Torres Strait Islander corporation may appoint a person as a director.

             (2)  A person can be appointed under subsection (1) in order to make up a quorum for a directors’ meeting even if the total number of directors of the corporation is not enough to make up that quorum.

Confirmation by next AGM

             (3)  If a person is appointed under subsection (1), the corporation must confirm the appointment by resolution at the corporation’s next AGM. If the appointment is not confirmed, the person ceases to be a director of the corporation at the end of the AGM.

246-25   Term of appointment

Directors appointed on registration (replaceable rule—see section 60-1)

             (1)  If a director has been identified in the application for registration of an Aboriginal and Torres Strait Islander corporation as a director who is to be appointed for only one year, the director’s appointment ends at the first AGM that occurs more than one year after the date of the corporation’s registration.

Other directors

             (2)  Subject to subsection (4), a director of an Aboriginal and Torres Strait Islander corporation must not be appointed for a period exceeding 2 years.

Note:          An application may be made to exempt the directors of the corporation from the requirements of this subsection (see section 310-5).

Director may be reappointed (replaceable rule—see section 60-1)

             (3)  A director is eligible for reappointment.

Appointments continue to next general meeting

             (4)  If the terms of appointment of all of the directors of an Aboriginal and Torres Strait Islander corporation expire so that there are no directors appointed at a particular time, the terms are extended until the next general meeting occurring after the expiry of the term of the director whose appointment was last to expire.

246-30   Alternate directors (replaceable rule—see section 60-1)

             (1)  With the other directors’ approval, a director may appoint an alternate to exercise some or all of the director’s powers for a specified period.

             (2)  If the appointing director requests the Aboriginal and Torres Strait Islander corporation to give the alternate notice of directors’ meetings, the corporation must do so.

             (3)  When an alternate exercises the director’s powers, the exercise of the powers is just as effective as if the powers were exercised by the director.

             (4)  The appointing director may terminate the alternate’s appointment at any time.

             (5)  An appointment or its termination must be in writing. A copy must be given to the corporation.

Note:          The Registrar must be given notice of the appointment and termination of appointment of an alternate (see subsections 304-5(3) and (6)).

246-35   Effectiveness of acts by directors

             (1)  An act done by a director is effective even if his or her appointment, or the continuance of the appointment, is invalid because the Aboriginal and Torres Strait Islander corporation or director did not comply with the corporation’s constitution or any provision of this Act.

             (2)  Subsection (1) does not deal with the question whether an effective act by a director:

                     (a)  binds the corporation in its dealings with other people; or

                     (b)  makes the corporation liable to another person.

Note:          The kinds of acts that this section validates are those that are only legally effective if the person doing them is a director (for example, calling a meeting of the corporation’s members or signing a document to be lodged with the Registrar or minutes of a meeting). Division 104 contains rules about the assumptions people are entitled to make when dealing with an Aboriginal and Torres Strait Islander corporation and its officers.



 

Division 249 Resignation, retirement or removal of directors

249-1   How does a person cease to be a director?

                   A person ceases to be a director of an Aboriginal and Torres Strait Islander corporation if:

                     (a)  the person dies; or

                     (b)  the person resigns as a director of the corporation as provided for in section 249-5; or

                     (c)  the term of the person’s appointment as a director of the corporation expires; or

                     (d)  the person is removed as a director of the corporation by the members of the corporation as provided for in section 249-10; or

                     (e)  the person is removed as a director of the corporation by the other directors of the corporation as provided for in section 249-15; or

                      (f)  the person becomes disqualified from managing corporations under Part 6-5.

249-5   Director may resign

             (1)  A director of an Aboriginal and Torres Strait Islander corporation may resign as a director of the corporation by giving notice of resignation to the corporation.

Written notice to be given (replaceable rule—see section 60-1)

             (2)  The notice must be in writing.

249-10   Removal by members

Resolution for removal of director

             (1)  An Aboriginal and Torres Strait Islander corporation may, by resolution in general meeting, remove a director from office despite anything in:

                     (a)  the corporation’s constitution; or

                     (b)  an agreement between the corporation and the director; or

                     (c)  an agreement between any or all members of the corporation and the director.

Note:          See sections 201-1 and 201-5for the rules on who may call meetings, sections 201-20 to 201-30 on how to call meetings and sections 201-40 to 201-50 for rules on members’ resolutions.

Notice of intention to move resolution for removal of director

             (2)  Notice of intention to move the resolution must be given to the corporation at least 21 days before the meeting is to be held. However, if the corporation calls a meeting after the notice of intention is given under this subsection, the meeting may pass the resolution even though the meeting is held less than 21 days after the notice of intention is given.

Note:          Short notice of the meeting cannot be given for this resolution (see subsection 201-20(3)).

Director to be informed

             (3)  The corporation must give the director a copy of the notice as soon as practicable after it is received.

Penalty:  5 penalty units.

Director’s right to put case to members

             (4)  The director is entitled to put his or her case to members by:

                     (a)  giving the corporation a written statement for circulation to members (see subsections (5) and (6)); and

                     (b)  speaking to the motion at the meeting (whether or not the director is a member of the corporation).

Circulation of statement

             (5)  The written statement is to be circulated by the corporation to members by:

                     (a)  sending a copy to everyone to whom notice of the meeting is sent if there is time to do so; or

                     (b)  if there is not time to comply with paragraph (a)—having the statement distributed to members attending the meeting and read out at the meeting before the resolution is voted on.

Penalty:  5 penalty units.

             (6)  The written statement does not have to be circulated to members if it is defamatory.

Time of retirement

             (7)  If a person is appointed to replace a director removed under this section, the time at which:

                     (a)  the replacement director; or

                     (b)  any other director;

is to retire is to be worked out as if the replacement director had become director on the day on which the replaced director was last appointed a director.

             (8)  An offence against subsection (3) or (5) is an offence of strict liability.

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

249-15   Removal by other directors

             (1)  The only ground on which the directors of an Aboriginal and Torres Strait Islander corporation may remove a director from office is that he or she fails without reasonable excuse to attend 3 or more consecutive directors’ meetings. The directors may remove the director by resolution.

             (2)  Subsection (1) operates despite anything in:

                     (a)  the corporation’s constitution; or

                     (b)  an agreement between the corporation and the director; or

                     (c)  an agreement between any or all members of the corporation and the director.

Director to be given notice

             (3)  Before removing the director, the directors must give the director concerned notice in writing:

                     (a)  stating that the directors intend to remove the director concerned from office because he or she has failed without reasonable excuse to attend 3 or more consecutive directors’ meetings; and

                     (b)  stating that the director concerned has 14 days to object to the removal; and

                     (c)  stating that the objection must be:

                              (i)  in writing; and

                             (ii)  given to the corporation within the period of 14 days from the day the notice is given.

Penalty:  5 penalty units.

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

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

If director does not object

             (5)  If the director does not object as provided for in paragraph (3)(c), the directors must remove the director from the office.

If director does object

             (6)  If the director does object as provided for in paragraph (3)(c):

                     (a)  the directors cannot remove the director from office; and

                     (b)  the corporation, by resolution in general meeting, may remove the director from office in accordance with section 249-10.

Notice of resolution to be given

             (7)  If the director concerned is removed from office, the corporation must give him or her a copy of the resolution as soon as practicable after the applicable resolution has been passed.

Penalty:  5 penalty units.

Time of retirement

             (8)  If a person is appointed to replace a director removed under this section, the time at which:

                     (a)  the replacement director; or

                     (b)  any other director;

is to retire is to be worked out as if the replacement director had become director on the day on which the replaced director was last appointed a director.

             (9)  An offence against subsection (7) is a strict liability offence.

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



 

Division 252 Remuneration of directors

252-1   Remuneration

             (1)  Unless the constitution of an Aboriginal and Torres Strait Islander corporation provides otherwise, the directors of the corporation are not to be paid remuneration.

Note:          If a director is an employee of the corporation, the director is not precluded from receiving remuneration as an employee.

             (2)  If an Aboriginal and Torres Strait Islander corporation’s constitution permits the payment of remuneration, the remuneration is to be determined by the corporation by resolution in general meeting.

Expenses

             (3)  The corporation may pay the directors’ travelling and other expenses that the directors properly incur:

                     (a)  in attending directors’ meetings or any meetings of committees of directors; and

                     (b)  in attending any general meetings of the corporation; and

                     (c)  in connection with the corporation’s business.

252-5   Members may obtain information about directors’ remuneration

             (1)  An Aboriginal and Torres Strait Islander corporation must disclose the remuneration and expenses paid to each director of the corporation or a subsidiary (if any) by the corporation or by an entity controlled by the corporation if the corporation is directed to disclose that information by at least the required number of members under subsection (7).

Penalty:  5 penalty units.

             (2)  The corporation must also disclose the remuneration and expenses paid to each director of the corporation or a subsidiary (if any) by the corporation or by an entity controlled by the corporation if the Registrar directs the corporation in writing to disclose that information.

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)  Under subsection (1) or (2), the corporation must disclose all remuneration and expenses paid to the director, regardless of whether it is paid to the director as a director or in another capacity.

             (5)  The corporation must comply with the direction under subsection (1) or (2) as soon as practicable by:

                     (a)  preparing a statement of the remuneration and expenses of each director of the corporation or a subsidiary for the last financial year before the direction was given; and

                     (b)  having the statement audited; and

                     (c)  either:

                              (i)  in the case of a direction under subsection (1)—sending a copy of the audited statement to each person entitled to receive notice of general meetings of the corporation; or

                             (ii)  in the case of a direction under subsection (2)—sending a copy of the audited statement to each person entitled to receive notice of general meetings of the corporation and to the Registrar.

             (6)  If the Registrar directs the corporation under subsection (2) to disclose the remuneration and expenses paid to a director, the remuneration and expenses may be entered on the Register of Aboriginal and Torres Strait Islander Corporations.

             (7)  The required number of members for an Aboriginal and Torres Strait Islander corporation is the greater of:

                     (a)  5 members of the corporation; or

                     (b)  10% of the members of the corporation.

             (8)  The regulations may prescribe a different number of members for the purposes of applying paragraph (7)(a) to:

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

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

             (9)  The regulations may prescribe a different percentage for the purposes of applying paragraph (7)(b) to:

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

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

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