Considerations for establishing a PBC
Key takeaways
- Native title holders must nominate a Prescribed Body Corporate (PBC) to hold or manage native title rights.
- A PBC must be an Aboriginal corporation incorporated under the CATSI Act.
- Rule Books cannot override the CATSI Act in key aspects.
- All native title holders must be represented in the membership, and eligible native title holders must be admitted as members.
- Key governance matters can be tailored, including:
- Direct or indirect membership structures
- Membership sub-groups (e.g. by country, language or ancestors)
- Board composition, election methods and skills-based directors
- Use of independent directors and advisory committees
- Each governance option involves considerations like inclusiveness, cultural representation, stability and administrative burden.
- There is no one-size-fits-all model.
- Early planning and specialist legal advice can reduce future disputes and compliance risks.
Background
Native title claim groups are required to nominate a Prescribed Body Corporate (PBC) to hold on trust or manage as agent their native title rights and interests following a determination of native title.[1]
Native title holders may nominate an existing organisation (that meets the requirements of a PBC) or set up a new corporation. More information on that process and the role of a PBC is available here.
This resource summarises key factors that native title groups may wish to consider when developing a Rule Book for a new corporation that will be a PBC.
This resource does not address broader considerations for a PBC’s establishment within a wider governance structure, which may include the following factors:
- A trust structure
- Other related corporate entities (under the CATSI Act or the Corporations Act)
- Charitable entities
- Gift funds
The relevance of those broader considerations will depend on the circumstances of the PBC, including the financial risks and opportunities. In summary, the more complex the structure, the greater the cost to establish and administer. Specialist advice should be sought in relation to each of these options and setting up any corporation.
Non-negotiables
A PBC must be an Aboriginal corporation that is incorporated under the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Cth) (CATSI Act). The CATSI Act imposes several requirements that are non-negotiable. Thia means the corporation can’t change them without getting an exemption, in some cases.
If your rule book has rules that are different to these non-negotiables in the CATSI Act, the CATSI Act prevails. This means that any rules that attempt to say something different than the non-negotiable CATSI Act rules are not valid, and unlikely to be approved by the regulator.
Key non-negotiables are summarised in the below table:
|
Topic |
Rule |
CATSI Act references |
Potential for an exemption? |
|
PBC Membership represents native title holders |
All the common law holders of native title must be represented, directly or indirectly. |
Sections 141-25 (2); 150-15 |
No |
|
Membership applications |
The directors must accept eligible common law holders who apply as members and there are only very limited grounds for cancelling membership. |
Sections 144-10(3A); 150-15 |
No |
|
Non-native title holders generally can’t be members |
Non-native title holders can’t be PBC members, unless the native title holders agree to allow this. |
See also PBC Regulations, regulation 4(2) |
No |
|
Dispute Resolution |
There must be a process for native title holders and people who claim to be native title holders to take up disputes with the PBC about matters relating to whether the person is a common law holder of native title and the corporation’s performance of its and the PBC functions. |
Section 66-1(3B) |
No |
|
Number of directors |
there must be at least 1 director and no more than 12 |
Sections 243-1, 243-5 |
Yes, an application can be made for an exemption to the maximum number of directors requirement |
|
Term of appointment – |
Director terms are 2 years |
Section 246-25 |
Yes, an application may be made to exempt the directors of the corporation from the imposed term |
|
Minimum age for members |
The lowest age allowed is 15 years old |
Section 29‑10 |
No |
What can be customised?
Set out below are some of the rule book categories that can be ‘personlised’ and some potential considerations to think about when developing or updating a PBC rule book.
|
Category |
Prompts |
Summary |
Potential considerations |
|
Membership |
Will there be ‘direct’ membership? |
Direct membership means all native title holders (over the prescribed age) can be a member |
· More inclusive – all native title holders can be involved in the PBC · Promotes information sharing and transparency · Encourages native title holders’ engagement and involvement in the PBC · However, smaller family groups may feel outnumbered · A large membership may lead to administrative burdens in relation to processing applications |
|
Membership |
Will there be ‘indirect’ membership?
How will the corporation ensure this is representative of the native title holders? |
Indirect membership limits the number of members of the corporation
Note: all native title holders must be represented in the membership – this will be determined on a case-by-case basis for each native title group, in accordance with the determination of native title |
· Indirect membership may promote stability · May minimise risks of membership disputes · May reduce workload of processing membership applications · May be more difficult to keep native title holders informed about the corporation’s activities · Less inclusive · Smaller pool of people for board positions – people with good skills may miss out on being eligible to be directors |
|
Membership |
Will there be membership sub-groups?
How will the size of the different groups be managed? |
Some PBCs choose to have membership groups. By way of example, these can be based on: · language groups · country · ancestors · identity
|
· If there are different membership groups, careful consideration should be given to the purpose of the groups, and how they might impact decision-making. · Some people belong to multiple groups and may not neatly fit into groups · May align with cultural protocols · Ensures representation for all sub-grounds · May minimise perceptions of ‘stacking’ · May impact feelings of unity and create conflict or division · May require anthropological advice |
|
Board of directors |
What will the board look like? Will the board be elected by the persons with the most votes, or by some other way? |
Some PBCs elect directors by a general vote at a general meeting.
There are also other ways of voting (such as by apical ancestor, or language group). |
Elections based on majority vote from all members, may promote unity by avoiding a perceptions of ‘different’ groups.
However, smaller family groups may not feel represented.
|
|
Board of directors |
Will the board be skills-based? |
Some PBCs set criteria for directors – e.g. cultural knowledge, skills in finance, governance, legal experience etc. |
· Encourages skills-based appointments · Promotes strong governance · May be different ideas about what skills are most relevant · May limit eligibility if skills not yet readily available |
|
Board of directors |
Will there be allocated seats for certain groups, e.g.: · membership groups · families · genders · ages – e.g. youth, Elders |
Will all members get a vote? If there are sub-groups of members, will they elect a certain number of directors? |
· The directors must act in the best interests of the corporation as a whole, not just their group · May align with cultural protocols · Ensures representation for all sub-grounds · May be difficult for directors belonging to different groups · May create division or conflict |
|
Independent directors |
Will you have independent directors? Will this be optional or mandatory? |
Some PBCs have the option, or a mandatory requirement, that there be an independent director with expertise in a relevant field such as accounting, law, governance |
Can be helpful in promoting good governance May create perceptions of lack of self-determination |
|
Committees |
Will there be committees that advise the board?
Optional or mandatory? |
Some Corporations set up different committees, like youth groups, Elders groups, cultural heritage committees, native title committees, |
· May provide a way of promoting traditional decision-making/ governance · Allows the board to focus on core governance · There needs to be a good line of communication with the board, and clear roles and responsibilities · Requiring in the Rule Book that there to be certain committees may be too prescriptive, and hard to implement · Consider costs implications – is there any funding to support the committees? |
|
Decision-making |
Is there a way a traditional decision-making process can be incorporated for certain types of decisions? |
|
This could involve corporation decisions involving the members, or native title decisions. This may require anthropological advice, and the definition of traditional decision-making processes may create internal conflicts
Note the need for compliance with the PBC regulations in relation to including native title decision processes in a rule book. |
|
Quorum |
What is the minimum for a quorum at board meetings? Member meetings? |
If there are sub-groups, consider whether that needs to be considered when establishing quorum? |
This needs to be practical and workable. What will happen if quorum isn’t met? |
Tailoring your Rule Book
There is no one-size-fits all answer to the right Rule Book. The best Rule Book and governance structure for a corporation depends on the circumstances of the native title group. It is important to take the time when setting up your PBC to work out what your vision and priorities are and how the PBC could be structured to meet the needs of the claim group. Where possible and appropriate, this process should be started early and well-before a determination of native title.
This is general advice only and is not legal advice. If you are unsure how this information applies to you, seek specialist legal advice. Contact us for more information.
[1] NTA, ss 55-57.