The Australian Government is committed to ensuring the highest quality of services for Aboriginal and Torres Strait Islander Australians. An important step in achieving this is to ensure organisations receiving Australian Government funding to deliver Indigenous programmes have high standards of governance and accountability.
Strengthening organisational governance to support effective services for Indigenous Australians
Governance refers to the processes by which organisations are directed, controlled and held to account, encompassing authority, accountability, stewardship, leadership, direction and control exercised in the organisation. Effective governance ensures that the organisation’s committee, its staff and its members are collectively accountable for the organisation’s plans, decisions, actions and results. Conversely, ineffective governance impacts on the capacity of organisations to meet the needs of Aboriginal and Torres Strait Islander people, the quality of service, and the achievement of agreed deliverables.
State and territory incorporation legislation is intended for small organisations and often does not provide the regulatory structure or resources to respond to governance issues in organisations. Incorporation under Commonwealth legislation provides a more robust regulatory framework and access to specialist assistance that helps to improve public confidence in the security and delivery of programmes that those organisations are funded to deliver.
From 1 July 2014, organisations receiving grants of $500,000 (GST exclusive) or more in any single financial year from funding administered by the National Indigenous Australians Agency (NIAA) are required to:
- incorporate under Commonwealth legislation – Indigenous organisations will be required to incorporate under the Corporations (Aboriginal and Torres Strait Islander) Act 2006; with other organisations incorporating under the Corporations Act 2001; and
- maintain these arrangements while they continue to receive any level of such funding.
Grants for capital works and funding sourced through procurement activities are not included.
Statutory bodies, government bodies and organisations operating under a specific piece of legislation are excluded from the requirements and do not have to apply for an exemption.
Indigenous organisations already incorporated under the Corporations Act 2001 are excluded from the requirements and do not have to change their incorporation status.
All new Indigenous organisations (those not previously incorporated) must be incorporated under the Corporations (Aboriginal and Torres Strait Islander) Act 2006 so they can access the assistance and support available to meet the needs of Indigenous Australians under the Act.
The Minister may review these exclusions at any time, including considering requirements for individual organisations. Affected organisations will be notified of any changes.
Benefits of Commonwealth Legislation
The advantages of incorporation under the Corporations Act 2001 or Corporations (Aboriginal and Torres Strait Islander) Act 2006 include:
- the members can choose not to be liable for the debts of the organisation;
- companies and corporations can operate nationally without further registration - they are not limited to the state or territory in which they are registered;
- modern legislation incorporating world best practice in terms of corporate governance and corporate regulation; and
- greater protections and rights for members and creditors.
Incorporation under the Corporations (Aboriginal and Torres Strait Islander) Act 2006 provides access to additional support to meet the specific needs of Indigenous people, including:
- advising Indigenous groups on how to become corporations and helping them register as a corporation;
- helping Indigenous corporations understand, create and adopt their own rule book according to their aims and objectives;
- offering support services, advice and corporate governance training to help corporations effectively represent the interests of their members; and
- helping corporations with complaints and providing mediation and dispute resolution services.
The Australian Government encourages all organisations providing services for Aboriginal and Torres Strait Islander Australians, irrespective of their level of funding, to incorporate under the relevant Commonwealth legislation.
Putting requirements in place
The requirements will be included in the terms and conditions of funding agreements entered into from 1 July 2014. Organisations currently receiving funding will not be affected until any funding agreements established before that date have expired or are renegotiated.
- Corporations (Aboriginal and Torres Strait Islander) Act 2006
The Registrar of Indigenous Corporations does not charge fees for incorporation under the Corporations (Aboriginal and Torres Strait Islander) Act 2006 and can provide additional support for Indigenous organisations transitioning their incorporation status. You can contact the Office of the Registrar of Indigenous Corporations (ORIC) on freecall 1800 622 431 or visit the ORIC website.
- Corporations Act 2001
Incorporation under the Corporations Act 2001 carries a registration fee of up to $457. Organisations seeking to incorporate under the Corporations Act 2001 can obtain information from the Australian Securities and Investment Commission (ASIC) on 1300 300 630 or visit the ASIC websites.
Organisations may incur some additional one-off costs for independent legal advice and accountancy services to support the transfer of incorporation. To assist organisations required to transfer their incorporation status, the Department will provide a one-off $10,000 payment from the granting activity upon receipt of evidence that the transfer has occurred.
Free legal advice about transferring incorporation under the Corporations (Aboriginal and Torres Strait Islander) Act 2006 is available for Aboriginal and Torres Strait Islander organisations through the LawHelp pro bono legal assistance scheme provided by the Office of the Registrar of Indigenous Corporations. More information is available at ORIC LawHelp.
The Minister for Indigenous Australians, or an approved delegate, may provide an exemption from the requirements. Exemptions will be considered where an organisation can demonstrate at least one of the following:
- That grant funding received from the NIAA is a small portion of its total revenue, and as such changing incorporation status may unfairly impose additional requirements on its operations and business model.
- It is required to incorporate under specific non-Commonwealth legislation as part of its licensing arrangements or funding received through other sources.
The Government will be encouraging all organisations providing services for Indigenous Australians, irrespective of their level of funding, to adopt these measures.
Organisations will have six (6) months to comply with the requirements from the execution of the funding agreement. Applications for exemption from the requirements should be lodged through your funding agreement manager in your Regional NIAA Office within the transition period, as soon as practical once an offer of funding has been made.
Organisations will be expected to comply with the requirements within the transition period should an exemption not be granted.
For organisations receiving grants of $500,000 (GST exclusive) or more in any single financial year from funding administered by the NIAA, the requirements will be built into programme guidelines and organisations’ funding agreements.
Non-compliance with the requirements will constitute a breach of the funding agreement and may result in the termination of the funding agreement. Breaches against funding agreements may be taken into consideration as part of a risk assessment for future funding.
If your organisation already receives funding from the NIAA, you can seek more information about the new requirements from your current funding agreement manager. Alternatively you can contact the Strengthening Organisational Governance central mailbox by emailing: 'SOG Mailbox'.