PBC constitutions: designing rule books

Disclaimer

The commentary contained in this section is general. All native title claim groups or PBCs should seek legal advice that considers their specific circumstances.

Constitution or rule book?

The constitution of a PBC, often called the ‘rule book’, lists the rules of the corporation. Under the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (CATSI Act) PBCs must have a rule book, compiling:

  • The legal requirements dictated by the CATSI Act that cannot be changed. These are known as inflexible rules or non-replaceable rules.
  • The rules that individual PBCs can modify or remove to suit their needs. These are known as flexible or replaceable rules.
  • Exemptible rules, if the Office of the Registrar of Indigenous Corporations (ORIC) exempts a PBC from an inflexible rule under special circumstances. See the policy statement on exemptions.

Rule books are effectively a contract between the members and directors of a corporation, guiding how the PBC should operate.

A PBC’s rule book must cover the corporation’s name, objectives, and internal dispute resolution mechanisms. A PBC rule book also includes information about membership application, meetings, director duties, record keeping and finance.

Creating a rule book

ORIC provides rule book templates. Further, the rule books of existing PBC are publicly and freely available on the ORIC website. Search for the name of a PBC, click on ‘documents’ and open the rule book. These can be useful resources when attempting to create your own. ORIC also provides services through reviewing drafted rulebooks. .

When setting up a PBC draft rules must be approved by ORIC prior to incorporation. The Registrar can write to the corporation asking for more information and 75 per cent of members must also approve the proposed rule book, which can be shown through passing a resolution at a pre-incorporation meeting.

The corporation then sends the completed resolution, proposed rule book and completed application for registration form to the Registrar. The new rules only take effect when the Registrar has approved and registered them with ORIC.

Changing a rule book

PBCs are able to make changes or add to their rule book after it has been initially approved by ORIC. In order to make changes to their rules, PBCs are required to first hold a general meeting to receive approval from members. ORIC must then be provided with the required documentation for the change. Again, new rules do not take effect until approved and registered.

CATSI Updates

The CATSI Act is currently under review. Any amendments made will likely impact the requirements for rule books to satisfy. As at July 2020, a draft report of the CATSI Act review has been released. The recommendations from this report are highly relevant to consider for any PBCs amending or creating their rule book, as the recommendations are based on what has or hasn’t worked for PBCs in the past.

Recommendations from the draft report which are relevant to rule books include:

  • Introducing a replaceable rule that restricts the number of immediate family members who can be directors at one time.
  • Simplifying rules as much as possible.
  • Updating rule books so corporations comply with both the CATSI Act and the Native Title Act 1993 (Cth).
  • Mandating a rule for the transparency of officers of the corporation.
  • Ensuring specific traditional customs, practices and circumstances of the PBC’s people are evident in their rules (e.g. including a rule allowing rule books and meetings to be in non-English languages).
  • Ensure there is a process to filter out irrelevant replaceable rules. This is a result of the common problem for corporations that are stuck with rules they did not modify or replace.
  • Mandating a provision in rule books or in the CATSI Act to enable the Registrar to cancel a meeting after being called. Presently, if there is no rule in a rule book providing for this, a meeting called can only be cancelled by application to a court. This stems to a wider recommendation to enhance Registrar’s powers to maximise flexibility regarding meetings (e.g. allowing voting via texts where persons cannot attend a meeting).

Further resources

Tags
CATSI Act
ORIC
PBCs (Prescribed Body / Bodies Corporate)
Rule book