What is CATSI? Why was it legislated?

The Corporations (Aboriginal and Torres Strait Islander) Act 2006 (CATSI) commenced on 1 July 2007. It replaced the Aboriginal Councils and Associations Act 1976 (Cth) (ACA Act).
 
The CATSI Act aligns with modern corporate governance standards and corporations law but maintains a special statute of incorporation for Aboriginal and Torres Strait Islander peoples that takes account of the special risks and requirements of the Indigenous corporate sector. It is a measure for the advancement and protection of Aboriginal peoples and Torres Strait Islanders.
 
Section 1 – 25 of CATSI recognises that Aboriginal and Torres Strait Islander peoples, in some circumstances, have special needs for incorporation, assistance, monitoring and regulation which the Corporations Act 2001 (Cth) (Corporations Act) is unable to meet.
 
CATSI provides for the establishment of the role of the Registrar and the Registrar’s functions and powers, and the incorporation, operation and regulation of appropriate bodies under CATSI, as well as the imposition of duties on, and regulation of, officers of those bodies.

Directors’ and Officers’ Duties, and Disqualified Directors

Duties of directors and officers have been clarified and are based on the general law and the Corporations Act.
 
The following duties apply to directors of CATSI corporations and their officers (which include corporation secretaries, special administrators and generally those people that make decisions affecting the business of the corporation)
 
• duty of care and diligence;
• duty of good faith;
• duty to use position and information properly;
• duty to disclose conflicts of interest; and
• duty to not trade while insolvent.

Penalty and Offence Provisions

CATSI creates a new range of penalties and offences that are consistent with the Corporations Act.
 
There are strict liability offences – these are offences that are committed regardless of whether the person intends to commit the offence, or was reckless or negligent in doing so. Strict liability offences include failing to lodge documents with the Registrar within specified time periods or not maintaining proper records such as a register of members. Penalties for the strict liability offences are fines starting from $110.
 
There are also a range of civil penalty provisions and criminal offences under CATSI. Breaches of these provisions can result in disqualification from managing corporations, financial penalties, compensation, fines, or in very serious cases, terms of imprisonment. The consequences depend on the circumstances of the breach.

Example of where directors got themselves into difficulties
 
Registrar of Aboriginal and Torres Strait Islander Corporations v Murray [2015] FCA 346

Facts

  •  A Ms Murray, Mr Brown and Ms Nichols were directors and officers of Bunurong Land Council in Victoria (Bunurong) from September 2008 to 28 January 2014.
  • Ms Murray was responsible for the day to day management of Bunurong.
  • She was the contact person for Bunurong (CATSI requires a corporation to have a named contact person).
  • Ms Murray admits that she issued invoices on behalf of Bunurong, undertook administration and bookkeeping for Bunurong, managed Bunurong’s cultural heritage work program, engaged individuals to undertake cultural heritage work on behalf of Bunurong n and made arrangements for the payment of money to and by Bunurong.
  • From 30 June 2000 to the end of the relevant period, all decisions in relation to the day to day management of Bunurong were made by Ms Murray.
  • Ms Murray sometimes consulted with one or more of Mr Brown and Ms Nichols before making decisions relating to the day to day management of Bunurong, but otherwise Mr Brown, and Ms Nichols played no active role in the management of Bunurong.
  • Ms Murray regularly consulted with Mr Brown and Ms Nichols as elders as to Aboriginal cultural heritage and history.
  • Bunurong owed the Australian Tax Office (ATO) $16,059.21
  • Pursuant to Bunurong Rule Book, the committee was to meet at least every 3 months with a majority of family representatives present and proper minutes of the meeting were to be kept. These requirements had not been adhered to.
  • Ms Murray paid herself around $200 to $250 per day.
  • The accounts of Bunurong were not approved by the Board and there was no ICN (Indigenous Corporation Number) on the accounts. These are requirements found in CATSI.
  • An amount of $924,111.50 was deposited into Bunurong’s bank account without providing any details as to the source of the funds; and
  • There was no organised system of maintaining source documentation for business records, nor for recording transactions (a register for example) and no bank reconciliations were completed by Bunurong to verify the accuracy of the records that were kept.

In Part 2 of this article the basis on which these Orders were made will be considered.  Should you have any queries in relation to CATSI, please don’t hesitate to contact Chris McDuff at Havilah Legal.

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