The COVID-19 pandemic will require many Registered Native Title Bodies Corporate (Corporations) to adopt innovative practices in the day-today running of their corporations. The Office of the Registrar of Indigenous Corporation’s (ORIC) has released a temporary special set of rules (Special Rules) to support Corporations with their governance needs during these uncertain times.
The 13 Special Rules look at annual reporting, holding meetings and passing resolutions, as well as the value of technology in assisting Corporations with their governance and administrative needs.
How does this affect your organisation?
If your Corporation is registered under the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (CATSI Act), then the Corporation relies primarily on the provisions in the CATSI Act as well as the rules in the Corporations Rule Book.
As the rules surrounding COVID-19 continue to evolve, it is becoming increasingly harder for Corporations to not only comply with their Rule Books, but also to adapt to changing circumstances. To the extent that your Rule Book or Constitution becomes unworkable in light of COVID-19, you may request the Registrar to use its powers to amend the Rule Book. The amendment can include these Special Rules without needing to pass a special resolution.
ORIC has said that to ensure the Special Rules are consistent with the CATSI Act, the Registrar will make complementary determinations under section 225-15 exempting corporations that adopt the Special Rules from certain provisions in Chapter 5 of the CATSI Act.
What are the Special Rules?
The 13 Special Rules are in place for the purpose of enabling the directors to respond appropriately to risks associated with the spread of COVID-19. At this stage they will operate until 30 November 2020 (and will be further extended if needed). Existing problematic rules include the physical locations of meetings, attendance, and voting logistics. The Special Rules intend to allow Corporations, maximum flexibility to hold meetings using any suitable means of technology, interestingly, including social media platforms. Some examples of the rules are:
- Meetings: Under usual circumstances, a newly formed Corporation is required to have its first annual general meeting within the coming months. Under these Special Rules, ORIC has granted a six-month extension for new corporations to hold their first meeting.
- Annual Reporting: Corporations, with a financial year ending 31 December 2019, are no longer required to lodge their Annual Reports until 31 August 2020. If your Corporation isn’t newly formed and you think you need more time, you are encouraged to contact ORIC prior to 31 May 2020 to request an extension.
- Circular Resolutions: These rules will allow members to pass a circulating resolution other than special resolutions as well as resolutions to remove directors, which are ordinarily reserved for general meetings.
How do we adopt these Special Rules?
- If you believe that your Corporation may need to adopt the Special Rules to ensure proper its administration and compliance with its governance obligations in these uncertain times, the following steps need to be taken:
- Your Corporation should review its Rule Book and Constitution to see what new rules might be needed. Your Corporation may already have rules in place that will assist with its operation in uncertain times. If this is the case, not all of the Special Rules will need to be adopted. Each Corporation will need to decide which Special Rules best apply to its particular circumstances.
- Where your Corporation decides to adopt some, or all of, the Special Rules, it must do so by a majority vote of its members, proof of which must be provided when the Corporation later applies to the Registrar for approval of these changes (see below). Lavan recommends having members sign a ‘resolution’ stating they support the relevant Special Rules being adopted, a copy of which can later be provided to the Registrar.
- The Corporation should then request that the Registrar formally amend its Rule Book to reflect any of the Special Rules adopted. The Corporation should lodge a copy of any signed resolution and any other necessary documentation with its request to the Registrar.
- Lavan also suggests that Corporations keep their members regularly updated about changes to its Rule Book to ensure transparency during this period.
Lavan recognises the significant challenges associated with holding meetings and ensuring the proper governance of your Corporation at this time. We suggest you consider how COVID-19 will impact your Corporation’s ability to comply with its administrative and governance obligations and then develop a plan to address these impacts. We are available to assist your Corporation to develop a plan to deal with these challenges, including how to adopt and implement the Special Rules.
What can Lavan do to help?
At this time, Lavan can assist your Corporation in a number of ways, for example we can:
- Undertake a detailed review your Rule Book and Constitution, and assist you to implement any amendments that may be needed.
- Review and update your existing contracts to ensure that the Corporation is protected should the uncertainty associated with COVID-19 continue for many months to come.
- Review any leases the Corporation may have and assist in any negotiations that might be needed with landlords and tenants.
- Advise on JobSeeker and JobKeeper applications.
- Draft resolutions for your Board of Directors, and members.
- Assist you in understanding the protective measures available to directors during this period
- Advise you in relation to the restructuring options that might be available to the business during this period
- Provide resources and precedents going forward.
As ORIC has stopped providing face to face training to Directors and Corporations, in line with Government restrictions, Lavan can also deliver online governance training.