Reporting concerns as a member/director

CATSI Act corporations are member controlled. Members appoint directors who appoint corporation officers, such as the Chief Executive Officer. If members are dissatisfied with the decisions made by directors or the performance of corporation officers, members need to raise their concerns with the directors of the corporation. ORIC is limited in the action it can take in relation to directors and other corporation officers.

If you are a member or director of a corporation and have concerns regarding your corporation, there are a few things you can do before contacting ORIC.

Before taking action, you should understand whether:

• You are entitled to the remedy you are seeking. For example, you may want access to minutes from a directors’ meeting but under the CATSI Act, the corporation is not obligated to provide these to you.
• A Court needs to provide the remedy you are seeking. For example, ORIC cannot deem a meeting to be invalid – only a Court can do this.

If you have questions about whether you are entitled to the outcome you are seeking or whether a Court needs to determine the outcome, please contact us.

If you are satisfied that you are entitled to the remedy you are seeking and that Court intervention is not required, there are 4 paths you can consider taking:

• 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.

Informally raise with directors

You can raise your concerns with the directors of the corporation informally. You might consider this approach if you are a member or director and a broader group does not share your concerns.

Examples of the types of matters that members and directors could raise directly with the directors of the corporation include (but are not limited to):

• obtaining information that is accessible to you based on their position as a member or director within the corporation

• the performance of the Chief Executive Officer and/or other officers of the corporation

• calling or conduct of a meeting

• approval and payment of related party transactions.

It is best to raise your concerns in writing. You can do this informally by emailing or writing a letter to the directors. You should be clear about:

• What your concerns are including what part of the CATSI Act or corporation’s rule book has been breached.
• To enact the dispute resolution clause in the corporation’s rule book, you need to write to the directors of the corporation. You need to follow the steps as set out in the clause.

When you write to the directors, you need to include the:

• outcome/action you are seeking from the directors.
• timeframe within which you expect to see this outcome/action.

The outcome/action and timeframe should be reasonable and achievable for directors.

Enact the dispute resolution clause in the corporation’s rule book

You can raise your concerns formally with the corporation by enacting the dispute resolution clause in the corporation’s rule book. Every corporation registered under the CATSI Act is required to have a dispute resolution clause in its rule book to help it resolve disputes itself.

You might consider enacting this clause if you have already raised your concerns with the directors and are not satisfied that they gave them due consideration. Alternatively you might opt to first enact the dispute resolution clause in lieu of raising your concerns informally with directors.

To enact the dispute resolution clause, you need to do so in writing. In your notice to the directors, you need to:

• specify that you are enacting the dispute resolution clause as set out in the corporation’s rule book and refer to the clause number
• clearly explain your concerns, being specific about what parts of the CATSI Act and/or corporations rule book have been breached
• outline any previous action you have taken to resolve your concerns with the directors
• explain why you remain dissatisfied
• set out the outcome you are seeking and the timeframe within which you expect a response (this must align with the timeframes in the dispute resolution clause).

Request directors call a general meeting

If a group of members share the same concerns and they relate to a range of alleged breaches of the CATSI Act or the corporation’s rule book and / or are serious in nature, you could consider requesting directors call a general meeting.

Examples of when it may be appropriate to request directors call a general meeting (including an annual general meeting (AGM)) could be to:

• remove a director(s) or appoint a new director(s)
• request changes to the rule book
• ask questions about the corporation’s finances or any other matter of concern
• hold an AGM if the directors are not fulfilling their obligation to do so.

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. You need to meet this requirement to take this action.

The request to hold a general meeting must be made in writing, and:

• state any resolutions to be put to the meeting (why you want a general meeting)
• be signed by the required number of members
• nominate a contact member on behalf of the members making the request.

If the request for a general meeting is not in a valid format, the directors can deny the request.

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
• 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. The Registrar can also approve the request, in which case the general meeting will not be held.

Propose a resolution at the next general meeting

If you only have one or a small number of concerns, there are other members who share your concerns and the concerns do not need to be urgently resolved, you can consider putting a members’ resolution to the next general meeting.

Examples of when this may be appropriate include:

• changes to a rule book
• removing directors.

The proposed resolution 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.

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

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 is be considered at that meeting
• less than 28 days from the request, the proposed resolution does not have to be considered at that meeting

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

Next steps

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

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

Part of our assessment will include whether you have acted respectfully and in good faith in raising the concern. Examples of where we may consider that you have not acted respectfully or in good faith includes if you 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 you have not acted respectfully and in good faith, we will not progress your report. Further, if you have provided false or misleading information as part of your 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.