Report a concern – information for corporations

CATSI Act corporations are member-controlled. Members appoint directors to make decisions about the governance of the corporation. This includes setting the strategic direction of the corporation, appointing and overseeing the performance of senior executive of the corporation, such as the chief executive officer, and monitoring the finances and operations of the corporation. Directors need to act in the best interests of the corporation.

Directors are accountable to members. That does not mean that they need to do whatever members ask but that members are consulted on relevant matters, members’ concerns are listened to and addressed, when appropriate, and members have access to information they are entitled to.

Directors also need to work together with other directors and make sure decisions are made in accordance with the corporation’s rule book. When there is conflict on the board, it can lead to poor outcomes for the corporation so directors need to take action to resolve conflicts among themselves.

There are a number of ways members and directors can raise their concerns with the corporation including:

• informally raising your concerns with the directors of the corporation
• enacting the dispute resolution clause in the corporation’s rule book
• requesting that the directors of the corporation call a general meeting
• proposing a resolution at the corporation’s next general meeting.

If a corporation is unsure of its obligations in these circumstances, there is some guidance below for each scenario. Alternatively, you can contact ORIC for assistance if you are unsure of your obligations.

Concerns are raised informally with the corporation

Members and directors may approach the board with questions or concerns regarding the governance of the corporation. This may be done informally rather than formally, such as by enacting the corporation’s dispute resolution process as set out in its rule book.

In the interests of transparency and to avoid matters escalating, boards should facilitate members and directors raising any concerns and address them.

ORIC always encourages people to raise their concerns in writing, and in turn, encourages corporations to respond in writing. Correspondence should be respectful, address all of the matters raised and provide an explanation as to whether any action is being taken in response to the concerns.

Sometimes members or directors may ask for something they are not entitled to, and the corporation should advise them accordingly in their response. Alternatively, if a member or director is asking for something they are entitled to, the corporation should assist them.

Dispute resolution process is enacted

A member of director may approach the board enacting the corporation’s dispute resolution process as set out in the corporation’s rule book. Every CATSI Act corporation is required to have a dispute resolution clause in its rule book to help it resolve disputes itself.

Corporations need to respond to such a notice in accordance with the corporation’s rule book. Corporations should avoid diverging from the process set out in its rule book which would be a breach of its rules.

Even if the corporation is not required or is not willing to take action in response to the concerns raised, corporations should respond to the member or director explaining this and setting out its reasons.

If the dispute resolution clause has not been appropriately followed by the member or director, the corporation may also consider not following the process. However, in this circumstance, ORIC would encourage the corporation to act in good faith by following the process set out in the corporation’s rule book to respond to the member or director.

Members request a general meeting

Members can request directors call a general meeting. Under the CATSI Act, a minimum number of members is required to request directors to hold a general meeting as set out in the table below.

The request to hold a general meeting must be made to the directors of the corporation in writing, and:

• state any resolutions to be put to the meeting
• be signed by the required number of members in a valid format
• nominate a contact member on behalf of the members making the request.

The CATSI Act sets out the requirements for requesting directors hold a general meeting. It is important to follow these requirements to ensure the request is valid.

If the request for a general meeting is not in a valid format, the directors can deny the request. However, if the request has been made in good faith, the directors should consider whether denying the request is in the best interests of the corporation i.e. that it is likely to escalate a situation.

If the request is in a valid format, the directors have 21 days to consider it, and then can either:

• call a general meeting providing 21 days notice of the meeting to all members (meaning the meeting will be held no more than 42 days from when the request is made)
• seek permission from the Registrar of Aboriginal and Torres Strait Islander Corporations (the Registrar) to deny the request because it is frivolous or unreasonable; or not in the best interests of the members, in their opinion.

If directors do seek permission from the Registrar to deny the request, they need to advise the contact person nominated for the members requesting the meeting.

The Registrar has 21 days to consider the request, and can deny the directors’ request in which case the general meeting must be called 21 days after the corporation is advised that the request has been denied (meaning the meeting will need to be held no more than 63 days from when the request was made). The Registrar can also approve the request, in which case the general meeting will not need to be held.

It is important to keep in mind the timeframes set out in the CATSI Act to understand when you can expect a response or other type of action.

Propose a resolution at the next general meeting

Members can propose a resolution to be considered at the corporation’s next general meeting. Subject to a corporation’s rule book, the CATSI Act requires that the resolution be considered at the next general meeting that is being held more than 28 days after the request for the proposed resolution has been made. This means that if a general meeting is or has been called which is to be held:

• more than 28 days after the request, the proposed resolution must be considered at that meeting
• less than 28 days from the request, the proposed resolution does not have to be considered at that meeting but could be if agreed by the directors.

Where there is any inconsistency between a corporation’s rule book and the CATSI Act, the CATSI Act prevails.

Under the CATSI Act there is a minimum number of members requirement to propose a resolution which is the same as that required to ask directors to call a general meeting.

The proposed resolution must meet the minimum number of member requirement, be made to the directors of the corporation in writing, and:

• state any resolutions to be put to the meeting
• be signed by the required number of members.

The corporation is required to provide a copy of the notice to all members of the corporation.

Next steps

Corporations can contact us to confirm their obligations under the CATSI Act when approached by a member, director or another stakeholder with concerns. As noted above, if members request directors call a general meeting and directors believe the request is unreasonable, frivolous or not in the best interests of the corporation, they can seek permission from the Registrar to deny the request.

If someone is dissatisfied with the corporation’s response, including if the corporation does not respond to your concerns, they can contact ORIC.

We will assess the information provided by the person to consider if we should take any action.

We may consider action such as helping the corporation meet its requirements under the CATSI Act if it has acted in good faith and demonstrated a genuine attempt to address the concerns raised. In circumstances where the corporation was not required, or was unable, (i.e. a Court needs to make a decision) to take action in response to the person’s concerns, we will assess whether the corporation has provided an explanation to the person regarding its lack of action. If the corporation has not acted in good faith when responding to the person raising concerns, we may write to the directors of the corporations reminding them of their duties as directors.

We may also consider more formal action such as directing the corporation to take action, calling a Registrar initiated general meeting and/or changing the corporation’s rule book.

Part of our assessment will also include whether the person making the report acted respectfully and in good faith in raising the concern. Examples of where we may consider the person has not acted respectfully or in good faith includes if they have:

• falsified evidence relevant to the concern
• undermined the actions or decisions of the corporation’s board
• provided false or misleading information to ORIC such as a Notification of a change to corporation directors, contact person or secretary form that contains incorrect information
• did not provide critical information, such as advising that the corporation responded to your concerns.

If our assessment finds that the person did not act respectfully and / or in good faith, we will not progress their report. Further, if they have provided false or misleading information as part of their report, we will consider whether regulatory action may be appropriate noting that it is an offence under section 561-1 of the CATSI Act to do so which can result in a penalty of 200 penalty units, 5 years imprisonment, or both.