Rules about Directors
All PBCs are required to have a board of directors, a majority of which must also be PBC members. Although there are legal requirements in the CATSI Act that specify PBC director structures and processes, there are a number of replaceable and exemptible rules about PBC directors, such as director eligibility rules, payment and the use of independent and/or alternate directors.
Division 246 of the CATSI Act (ss 246.1 and 246.5), sets out a number of director requirements for Aboriginal and Torres Strait Islander corporations. These requirements are summarised as follows:
- Directors must be 18 years old or over;
- Directors must not be disqualified from managing corporations (unless given permission by the registrar);
- The majority of directors must live in Australia;
- The majority of directors must be Aboriginal or Torres Strait Islander;
- The majority of directors must not be employees of the corporation;
- The CEO can be a director but cannot chair meetings; and
- There must not be more than 12 directors.
Many PBCs have added to this list of director requirements in their constitutions. These additions include:
- Family/descent group requirements - A requirement that there are a certain number of directors from each subgroup
- Elder requirement - A requirement for a certain number of Elders to be on the board
- Youth requirement - A requirement for a number of younger directors
- Gender requirement - A requirement for an even gender split
- Training and skills requirement - A requirement for directors to have certain skills or be willing to undergo training to attain these skills
- Residence requirement - A requirement for directors to live in a certain area and/or have lived in that area for an extended period of time
Director length of appointment
Division 246 of the CATSI Act (s246-25) states that the term of a director of an Aboriginal or Torres Strait Islander corporation must not exceed a period of 2 years. This is an exemptible set law and PBCs can apply to ORIC for an exemption if they require longer terms for their directors.
Whilst most PBCs keep the length of term for directors at either one or two years, a few PBCs have longer terms of 3 or 4 years, with one constitution having a director term of five years.
Some PBCs have rotating director terms where only half the directors are re-elected at a time. This means that there are always some more experienced directors on the board.
Division 252 of the CATSI Act deals with director payment for Indigenous Corporations. Section 252.1 (1) of the CATSI Act states: ‘Unless the constitution of an Aboriginal and Torres Strait Islander corporation provides otherwise, the directors of the corporation are not to be paid remuneration.’ For a corporation to permit the payment of directors, they must pass a resolution in a general meeting.
Research conducted by AIATSIS revealed that majority of PBC constitutions had a rule stating that directors are not to be paid sitting fees or a salary However, this research also found that a proportion of PBC constitutions had a rule to state that they can allow director payment if a resolution is passed at a general meeting.
Some PBCs that allowed director payment in their constitution employed flexible wording so that payment of director fees could be dependent on available funds. For example one constitution stated, ‘The directors are entitled to be paid remuneration rate of up to $450 per day at meetings, provided they decide there are sufficient monies to pay these fees.’
Frequency of director meetings
The CATSI Act s.212.1 states that constitutions must specify how often directors’ meetings are to be held.
Most PBC constitutions state that directors meetings are to be held as often as necessary but at least every three months. A smaller number of constitutions have reduced the frequency of directors meetings with some PBCs holding directors meetings every four months, six months, yearly or simply stating ‘as often as necessary.’
The CATSI Act does not have a section that deals with Independent directors, however, a number of PBC constitutions include sections to allow for independent directors on the board.
A number of the constitutions that permit independent directors do not provide further information about the election processes or the terms of office for independent directors.
Independent Director rule - Tatampi Puranga Aboriginal Corporation RNTBC
The Tatampi Puranga constitution permits the board to have up to two independent directors. Their constitution provides a detailed list of selection criteria for independent directors. These are summarised below.
An individual is eligible for appointment as an Independent Director if they are an individual who has attributes:
- Board of directors experience;
- Financial literacy;
- Leadership experience;
- Expertise and experience in working with indigenous organisations and possesses an understanding of Indigenous culture;
- Absence of conflicting commitments;
- Reputation and integrity; and
- An individual is eligible for appointment as an Independent Director if they are an individual who is not (and a Member of the person’s immediate family is not):
- One of the Ewamian People;
- A lineal descendant of, or first cousin of, one of the Ewamian People;
- Married to or in a de facto relationship with one of the Ewamian People;
- A parent or sibling of a person who is married to or in a de facto relationship with one of the Ewamian People.
An alternate director fills in for a director if they are unable to be present at meetings or attend to corporation business. The CATSI Act s.246.30 states that, ‘with the other directors' approval, a director may appoint an alternate to exercise some or all of the director's powers for a specified period.’
As a replaceable rule within the CATSI Act, PBCs can choose to include, change or remove the alternate director rule in their constitutions.