There are about 2500 Aboriginal and Torres Strait Islander corporations formerly registered under the Aboriginal Councils and Associations Act 1976, now registered under the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (CATSI Act).
Estimates suggest that there are at least as many as that again of Indigenous corporations registered under other legislation.
Corporations deliver a range of services—many deliver essential services to remote communities or hold land.
Most are publicly funded but some generate significant income through agreements and business operations.
Most native title corporations are registered under the ACA Act, as are many remote Indigenous arts centres.

DEVELOPING THE NEW LAW

Why new law? Why has the ACA Act been changed?

The ACA Act was 30 years old and out of line with modern corporate governance and accountability standards of the Corporations Act 2001.
The ACA Act also needed modernising to respond to the risks and requirements of modern Indigenous corporations.
The CATSI Act was developed following an independent review of the ACA Act in 2001–02.

Who was consulted?

The CATSI Act was developed after a process of independent review and broad consultation over two years, as well as further research conducted by the Registrar's office.
The consultation included:
- two workshops held in Alice Springs
- questionnaires being sent to all ACA Act associations and many other Indigenous organisations
- advertisements being placed in Indigenous publications and on Indigenous radio calling for submissions and comments
- the Registrar's website including details of the review and copies of the consultation papers and the questionnaires for Indigenous corporations
- consultation papers being sent to key stakeholders seeking submissions
- information sheets being distributed
- briefings being provided to ATSIC Regional Councils and the ATSIC Board.
When the CATSI Bill was introduced into the Australian Parliament in October 2005, the Senate Legal and Constitutional Affairs Committee received submissions on the Bill and held public hearings. Feedback received from corporations and other stakeholders during the Senate hearings and consultation conducted helped the Registrar improve the Bill.
Before the CATSI Act was passed in October 2006, the government made a number of amendments to improve the Act. For example, some of the amendments allowed the Registrar to provide exemptions from particular provisions dealing with internal governance. This made the Act more flexible and reduced red tape.
Information on the CATSI Act has also been presented to many Indigenous corporations at ORIC workshops and information sessions. Valuable feedback has been received from corporations during these workshops and sessions.

What did the review of the ACA Act recommend?

The review recommended that:

the special incorporation needs of Indigenous people be met through a new and modern incorporation statute with special forms of regulatory assistance to support good corporate governance
the ACA Act needed to be replaced as it was out-of-date and deficient.

The CATSI Act implements the key recommendations of the review (See the ORIC fact sheet on what recommendations were not implemented and why, The Bill and the review—some differences).

The main elements of the CATSI Act are summarised in the brochure, Get in on the Act.

What do the changes do?

The changes:

promote good governance and management
allow for modernised corporate governance practices and accountability standards
improve security for funding bodies, creditors and other parties doing business with corporations
provide flexibility for groups and communities when designing a corporation’s constitution.

Why is the CATSI Act so big?

The CATSI Act is bigger than the ACA Act because:

it incorporates many provisions from the Corporations Act, rather than just referring to them
it contains new rights, such as rights to review decisions and members’ rights, and duties such as those for directors and officers
it provides greater flexibility for corporations in constitutional design and gives the Registrar more discretion to allow for flexible administration
the language of the Corporations Act has been used in many areas to ensure consistency and to reflect existing case law.

IMPACT ON OTHER LAWS

What is the relationship between the Native Title Act and the CATSI Act? How is it managed?

Under the Native Title Act, most native title bodies, including PBCs or prescribed bodies corporate (also called registered native title bodies corporate or RNTBCs) that hold or manage native title, must incorporate under the ACA Act. This will continue under the new legislation.
The CATSI Act makes sure that when a person has a responsibility under the Native Title Act it does not conflict with what they are required to do under the CATSI Act. This means many provisions have been tailored for directors, managers and employees of native title bodies.
There is an ORAC paper—‘Interaction between the CATSI Act and the Native Title Act’—as well as a Native Title fact sheet available on the ORIC website www.oric.gov.au.

Why did the CATSI Act amend the Corporations Act?

The CATSI Act maximises alignment with the Corporations Act while it retains its purpose as a special measure for the benefit of Aboriginal and Torres Strait Islander corporations.
The Corporations Act was amended by the Corporations Amendment (Aboriginal and Torres Strait Islander Corporations) Act 2006.
These amendments are in their own Act because the Corporations Act is a special law which requires the agreement of the states and territories to be changed.
These amendments remove duplication between similar provisions in the CATSI Act and the Corporations Act and ensure that officers disqualified from managing Indigenous corporations under the CATSI legislation will also be disqualified from managing mainstream corporations.
The CATSI Act aligns with the Corporations Act in the following ways:
- It introduces the same duties for directors and officers under the CATSI Act.
- It ensures that there is no possibility of dual regulation of Aboriginal and Torres Strait Islander corporations by ASIC.
- It streams corporations according to their size.
- It requires related party transactions to be disclosed.
- It introduces penalties and offences that mirror those in the Corporations Act.
- It creates a register of disqualified directors.
- It introduces members’ rights that mirror those in the Corporations Act.

HOW WILL CORPORATIONS SWITCH OVER TO THE CATSI ACT?

What do corporations need to do to move to the CATSI Act?

A special Act was passed in the parliament to move ACA Act corporations across to the new system as seamlessly as possible—the Transitional Act (Corporations (Aboriginal and Torres Strait Islander) Consequential, Transitional and Other Measures Act 2006). On 1 July 2007 all corporations incorporated under the ACA Act became corporations under the CATSI Act.

The Transitional Act will maintain the existing legal status, office bearers, assets and liabilities of all ACA Act corporations. This will minimise the administrative burden on corporations while providing certainty of operation for corporations, their members and stakeholders.

Corporations need to:

find out what size they are under the CATSI Act. See ‘How big is big?’—the April 2007 edition of ORIC’s newsletter, The Oracle
understand their new reporting requirements for 2008–09, depending on their size (they continue to report as they did under the ACA Act for 2007–08)
start putting their Indigenous Corporation Number (ICN) on their important documents
start using new terminology (governing committee = directors, governing committee members = directors, public officers = secretaries or contact persons)
remember that there is no need to panic—corporations have until 30 June 2009 to fully transition to the new legislation.

Contact ORIC on 1800 622 431 or info@oric.gov.au if you need help.

How easy will it be to incorporate new groups under the CATSI Act? What will be different?

The registration process will be similar to that of the ACA Act. However there are new requirements to make sure groups are ready for incorporation. For example, to show that a group is ready they must have the names and contact details for directors and contact person and a copy of the prepared rule book. They also need to show that 75 per cent of the people who have consented to become members authorise the applicant to apply for incorporation.

When the CATSI Act commences, how long will corporations have to implement changes?

Corporations will have up to two years to comply with most internal governance rules requirements of the CATSI Act. This gives them a significant period of time to hold meetings so that they can make the necessary changes.
For the 2006–07 financial year corporations will report as they did under the ACA Act. For the 2007–08 financial year corporations that have not yet moved across to the CATSI Act will also have the option of reporting under the old reporting requirements. If they want to do this, though, they must write to the Registrar to request it. This will give corporations enough time to prepare for any new reporting requirements under the CATSI Act.
The transitional arrangements are set out in a separate Act called the Corporations (Aboriginal and Torres Strait Islander) Consequential, Transitional and Other Measures Act 2006 (the Transitional Act). The Transitional Act repeals the ACA Act and updates references to the ACA Act in a number of other Commonwealth laws.

What happens to applications being processed when the CATSI Act starts?

Under the Transitional Act any pending applications or decisions by the Registrar under the ACA Act will be taken to be applications or decisions made under the new Act. This removes the burden on corporations of having to re-apply under the new regime.

Will all corporations have to change their rule book?

Yes, but there will be a two-year period allowed for corporations to do this.
A rule book tool is available to help corporations make the changes—it guides corporations through the rules, allowing greater flexibility for making sure it reflects a corporation’s needs and circumstances. This will be available in hard copy and electronically. See more information on the rule book etool here.

IMPACT ON CORPORATIONS

How will reporting requirements change? What will the changes mean?

Corporations will be streamed into small, medium and large for reporting purposes.

Small corporations:

will only have to provide a general report that includes details of members, directors, employees, income and assets.

Medium corporations:

will have to report in a similar way to how they do under the ACA Act.

Large corporations:

will have to prepare a more comprehensive report, similar to what is required under the Corporations Act
will still have to submit audited financial statements because they have more resources available than small or medium corporations. This is consistent with mainstream requirements for large corporations.

Levels for financial reporting and streaming are defined in the CATSI Regulations rather than the CATSI Act so that they can be altered more easily if required.

A small corporation will have at least TWO of the following:

consolidated gross operating income of less than $100,000
consolidated gross assets of less than $100,000
less than 5 employees

A large corporation will have at least TWO of the following:

consolidated gross operating income of $5 million or more
consolidated gross assets of $2.5 million or more
more than 24 employees

All other corporations are medium and typically have:

consolidated gross operating income between $100,000 and $5 million
consolidated gross assets between $100,000 and $2.5 million
between 5 and 24 employees

For the 2006–07 financial year corporations will report as they did under the ACA Act. For the 2007–08 financial year corporations that have not yet moved across to the CATSI Act will also have the option of reporting under the old reporting requirements. If they want to do this, though, they must write to the Registrar to request it. This will give corporations enough time to prepare for any new reporting requirements under the CATSI Act.

More information on reporting according to size can be found in the April 2007 edition of The Oracle.

What effect will the CATSI Act have on a large corporation?

A large corporation:

will have reporting requirements similar to those of corporations under the Corporations Act
must notify the Registrar of its registered office, much the same as similar sized corporations under the Corporations Act
will have a corporation secretary—an official role—that will replace its public officer. The role of the corporation secretary is to ensure that a corporation is complying with legislative reporting and notification requirements.

What review rights will members and corporations have under the CATSI Act?

Members will have extra rights like those under the Corporations Act.
A person can ask ORIC to review many decisions made by the Registrar and his delegates. This is an internal review.
If the person is not satisfied with the internal review they can ask the independent Administrative Appeals Tribunal to review the decision. These review rights were not available under the ACA Act.
Other decisions of the Registrar can be subject to court challenge. The CATSI Act expands the jurisdiction of different courts to hear matters under the CATSI legislation.

How does the CATSI Act take culture into consideration?

The Registrar can consider tradition and circumstances of Aboriginal and Torres Strait Islander people in administering the CATSI Act.
The Registrar has greater flexibility to consider the unique circumstances of different corporations, for example, by exempting specific corporations or classes of corporations from particular parts of the Act.
The CATSI Act gives corporations greater flexibility to design their rules with regard to their traditions and circumstances.

What are directors’ duties?

Directors’ duties encourage good corporate governance as directors must make decisions in the best interests of the corporations and the members. They include:
- a duty of care
- a duty to be honest
- a duty to disclose any conflicts of interest
- a duty to avoid conflicts of interest
- a duty to make sure the corporation does not trade while insolvent—this means making sure that the corporation has the money available to pay debts when they are due.
The CATSI Act applies these duties not only to directors but also to officers of the corporation (senior management). This is consistent with the Corporations Act and it means that CEOs, finance officers and other people in charge of the corporation meet the same standards of good corporate governance that are required under the Corporations Act.

For more information, see the Duties of directors’ and other officers fact sheet.

Does the CATSI Act allow non-Indigenous people to be on the boards and be members of corporations?

The CATSI Act allows non-Indigenous members, however a majority of members (and directors) must be Indigenous. Corporations only have to allow non-Indigenous members if they want to or need to (for example, spouses, step-children, employees of the corporation or experts). The constitution of a corporation will still be able to require 100% Indigenous membership—it is up to the corporation whether they want to allow non-Indigenous members and how many.
The CATSI Act also allows corporations to appoint or elect a non-Indigenous person to their board, for example, a doctor or a lawyer who may have particular skills the corporation needs. Again, this is up to the corporation and if they want to allow non-Indigenous directors this needs to be set out in the corporation’s rule book.

For more information, refer to the What is the Indigeneity requirement? FAQ.

REGISTRAR’S ROLE AND POWERS

What regulatory powers does the Registrar have under the CATSI Act?

The Registrar will continue to regulate corporations and to use enforcement powers. The CATSI Act modernises the regulatory and enforcement powers currently in the ACA Act and also addresses problems arising from deficiencies in the current regime.
For example, the power in the ACA Act to call special general meetings when a corporation cannot or will not, is expanded to include AGMs. This aims to minimise disputes resulting from meetings not being held.
The CATSI Act also retains the power to appoint a person to examine a corporation’s affairs. This means ‘healthy organisation checks’ can continue to be used to identify problems and enable them to be solved by the corporations themselves.

The Registrar’s powers are:

to call and run general meetings and annual general meetings
to appoint authorised officers to examine corporation’s affairs
to appoint special administrator
to issue compliance notices
to give notice to produce books, provide information or answer questions
to apply to the court for warrants to obtain information
to disqualify people from managing corporations (see FAQ on How does a person become disqualified?).

ASSISTANCE FOR CORPORATIONS

What help, support and training will the Registrar give corporations under the CATSI Act to promote good governance?

The Act specifically gives the Registrar the ability to support, provide assistance and training to corporations through the functions of the Registrar. For example, the Registrar will continue to help corporations when incorporating, and will monitor and regulate through providing a range of capacity building measures. For example, it gives:
- more transparent information about corporations on the website
- training and compliance support
- research and reporting on systemic issues.
The Registrar will also be able to conduct research and public education campaigns about good corporate governance.

Will corporations receive support and assistance to implement these changes to move over to the CATSI Act?

Yes, they will. ORIC is already helping corporations gear up for the changes. This includes capacity building programs, such as training and information. Other support and assistance will be provided, such as self-help tools to design the corporation’s rule book.
ORIC is also working with new and existing corporations to help them prepare for the changes such as providing corporation redesign work in line with some of the changes in the Act.
ORIC is also working with other organisations and funding bodies to make sure their services can be used to help corporations make the necessary changes.

Requests for assistance can be made by contacting ORIC.

PENALTIES AND OFFENCES

What happens if corporations or individuals breach the CATSI Act?

Under the CATSI Act, there are more penalties and offences but most are based on offences in the Corporations Act. The aim is to support better governance of corporations.
For example, the CATSI Act prohibits false or misleading statements being made either to the Registrar, or by an officer or employee of a corporation to its directors, auditors and members.
A new civil penalties scheme, based on the Corporation Act, is introduced for serious contraventions of the CATSI legislation. It includes the option for a penalty notice scheme as an alternative to criminal prosecution. The Registrar can ask the Federal Court to declare a contravention has occurred.
Under other provisions, directors and officers who breach their duties under the Act may be disqualified from managing corporations. For more information, see the fact sheet Duties of directors and other officers.

How does a person become disqualified?

People who are undischarged bankrupts or have been convicted of certain offences (such as offences involving dishonesty with a minimum penalty of imprisonment for 3 months) are automatically disqualified from managing corporations.
People who are disqualified from managing corporations under the Corporations Act 2001 are also disqualified from managing Aboriginal and Torres Strait Islander corporations, and vice versa.
In some circumstances, the Registrar can apply to the court to have a person disqualified if they have breached the Act or been involved in 2 or more corporations that have experienced corporate failure.
The Registrar can disqualify people from managing corporations (without seeking a court order) under some circumstances, provided that the person has had an opportunity to respond to a notice of the Registrar.
The length of time that a person is disqualified for depends on why they were disqualified.
The Registrar and the court have the power to grant leave to a disqualified person to manage a corporation.
ORIC will maintain a register of people who have been disqualified by the court or the Registrar.

Frequently asked questions: Corporations (Aboriginal and Torres Strait Islander) Act 2006

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