Special administrations
What is special administration?
Special administration is unique to the CATSI Act.
The process allows the Registrar to provide early assistance when a CATSI corporation faces problems with finances or governance.
The Registrar can appoint an independent and suitably qualified person as a Special Administrator in a number of situations. There are a number of grounds under the CATSI Act where a special administrator may be appointed.
The aim of a special administration is to restore the corporation to financial and/or organisational health. Once this has been achieved, control of the corporation is ordinarily returned to the members.
Special administration was not designed to be an insolvency regime and as such, does not have a statutory framework to administer insolvency like other forms of external administration under the Corporations Act 2001. Where the directors of a corporation believe the corporation is insolvent, or likely to become insolvent, the directors should consider seeking independent accounting and/or legal advice to determine whether appointing a voluntary administrator (or other forms of external administration under the Corporations Act are appropriate in those circumstances.
Learn more about going through special administration.
When will the Registrar appoint a special administrator?
The Registrar may decide to appoint a special administrator to a corporation for a number of reasons. The grounds for special administration are broad. However, even if grounds exist for the appointment of a special administrator, there are a number of other factors the Registrar considers. These may include:
- cause/s of the corporation’s financial or governance problems – did the corporation lose its government funding and for what reason? If it has lost government funding, whether the corporation is viable in the long term or can restructure itself to be viable
- whether special administration can address underlying cause/s of the corporation’s financial or governance problems and provide adequate relief to the corporation, its members, employees, creditors and funding bodies and the wider community
- the profile of the corporation including its location, size, sector and membership size
- where there is a small membership base, there will be consideration as to whether a new board can be appointed who have the skills to lead the corporation after special administration
- core business of the corporation, and are there other service providers available where it provides an essential service
- whether the corporation is insolvent or likely to become insolvent, and if other forms of external administration under the Corporations Act 2001 with an insolvency statutory framework would be better suited for a corporation to deal with these issues
- whether the issues identified that may constitute grounds for special administration can be remedied through other regulatory action or the directors and members of the corporation exercising their rights under the corporation’s rule book
- whether the corporation is a registered native title body corporate under the Native Title Act 1983 with native title obligations and duties
- protection of public funding or corporation assets – does the corporation receive significant public funding? Has the corporation’s asset base been created through government grants? Has the corporation’s asset base been created through non government payments to the community (mining royalty equivalent payments or charitable donations)? Are the corporations assets or income at risk?
- if the corporation receives public funding, whether the funding agencies will continue to fund the corporation during and after a special administration
- the potential effect of a special administration on the corporation, its members, employees and the community
- the potential effect of a special administration on the corporation’s creditors and funding agencies – will creditors or funding agencies be prejudiced if the corporation is placed under special administration?
- whether the corporation can be successfully restructured
- the potential costs of a special administration and whether it presents value for money to remedy the issues required to be fixed.
The majority of directors and/or the required number of members can ask the Registrar to appoint a special administrator; however, the same considerations would be applied in these circumstances.
Difference between special administration (under the CATSI Act) and administration (under the Corporations Act)
The main difference is that the authority to appoint a special administrator or external administrator is under two separate pieces of legislation administered by two separate regulators. The objective of a special administration is to work in the best interests of the members of the corporation. Other forms of external administration are designed to work in the best interests of the creditors of the entity.
Feature | Special administration (CATSI Act) | Administration (Corporations Act 2001) |
|---|---|---|
| Applicable to | Indigenous corporations registered under the CATSI Act only. | External administration under the Corporations Act 2001 is also applicable to Indigenous Corporations. |
| Appointed by | Registrar of Indigenous Corporations | Depending on the form of external administration generally a majority of directors, secured creditor or the Court. |
| Purpose | Restore governance, financial health, and member confidence | Rescue company, assess viability, or prepare for liquidation |
| Control of corporation | Taken over by a special administrator | Taken over by an external administrator |
| Role of members/shareholders | Limited; members lose governance rights temporarily | Shareholders have limited influence during administration |
| Duration | Flexible, determined by Registrar | Typically, 25–30 business days (can be extended) |
| Outcome possibilities | The primary aim is to restore the corporation to good health and return it to member control. If warranted, the special administrator can instead recommend liquidation, or deregistration to the Registrar. | Return to directors, liquidation, or deed of company arrangement |
| Legal framework | CATSI Act | Corporations Act 2001 |
| Focus | Restoring the standard of corporate governance, implementing robust financial management frameworks and ensuring the corporation is returned in a financially viable position. | Financial recovery or orderly wind-up |
| Consultation with member | It is common practice that members are updated during a special administration via regular newsletters and information meetings run by the special administrator. | Not required, but creditors are consulted |
Common questions about special administrations
Yes. A special administrator cannot be appointed if the corporation is being wound-up or a liquidator has been appointed.
Unlike other forms of insolvency procedures, the special administrator does not have to be a liquidator.
Only the Registrar can appoint a special administrator.
Yes.
A majority of the corporation’s directors can make a request to the Registrar that a special administrator be appointed.
The CATSI Act also says a minimum number of members can make a request to the Registrar that a special administrator be appointed. The required number of members is:
| Number of corporation members | Required number of members |
| 2-10 | 1 |
| 11-20 | 3 |
| 21-50 | 5 |
| 51+ | 10% |
A request from members or directors to the Registrar seeking the appointment of a special administrator must be made in writing.
The Registrar is not required to appoint a special administrator if requested by members or directors.
In most cases the Registrar will send a letter to the corporation setting out the reasons why the Registrar thinks that a special administrator should be appointed. This is known as a 'show cause' notice.
The show cause notice will invite the corporation to tell the Registrar within a reasonable period why a special administrator should not be appointed.
The corporation may request an extension of time to respond to the show cause notice.
No. If the Registrar thinks that there are reasons that a special administrator should be appointed urgently, the Registrar does not need to send a show cause notice. The reasons that an appointment can be made urgently are to prevent:
- loss of property or public money
- conduct that would break the law, or
- the corporation from stopping or suspending the provision of services essential to, or significant for, a particular community or group.
If the corporation either does not respond, or responds but the Registrar considers there are grounds for a special administrator to be appointed, the Registrar will write to the corporation and provide a Notice of Determination and Appointment of a special administrator.
If the Registrar decides not to appoint a special administrator, the Registrar must write to the corporation as soon as possible to confirm. The Registrar may enforce other courses of regulatory action such as a compliance notice.
Yes. As soon as possible after the appointment the Registrar must publish a notice of the decision in:
- the gazette, and
- a national newspaper, or a daily newspaper for each State or Territory that the corporation has its registered office or carries on its business or operations.
The Notice of Determination and Appointment to place a corporation under special administration will also be on the public Register of Aboriginal and Torres Strait Islander Corporations maintained by the Registrar.
There are no prescribed qualifications in the CATSI Act for a special administrator.
The Registrar may appoint an individual/individuals with demonstrated skills, experience and qualifications as a special administrator. The skills, experience and qualifications include specialist knowledge and experience in corporate governance, business turnaround and communicating and working Aboriginal and Torres Strait Islander people.
A special administrator is responsible for the conduct of the affairs of the corporation and has comprehensive powers under the CATSI Act.
The special administrator’s powers include:
- carrying on the corporation’s business
- managing property
- terminating or disposing of all or part of the business or property of the corporation
- engage or discharge employees
- do anything that the corporation, directors or a member could do if the special administrator had not been appointed
- admit and remove members
- appoint or remove directors and secretary
- change the corporation’s constitution (rule book).
The special administrator will use the powers under the CATSI Act to address the governance and/or financial issues that were the cause of the corporation being placed under special administration.
No. The special administrator takes control of the corporation and is regarded as an officer of the corporation. The special administrator carries out the functions normally undertaken by the directors.
The directors and secretary are removed from office, unless the Registrar agrees it is in the best interests of the corporation that they remain.
Generally, the directors and secretary are unable to deal with the corporation’s property or exercise any powers.
The appointment of a special administrator does not automatically remove the contact person (small and medium corporations). The special administrator will consider whether a different contact person needs to be appointed for the period of the special administration.
The directors can write to the Registrar and ask that the decision be reviewed. The request must be made within 28 days of receiving the Notice of Determination and Appointment.
If following review, the special administration is still in place, the directors can apply to the administrative review tribunal to review the matter. The application must be made within 28 days of receipt of the original review.
Members' rights are affected but not removed entirely. While members lose direct control of the corporation during a special administration, they retain rights to information, membership, and oversight. The process is designed to be temporary and restorative, with the goal of returning control to members once the corporation is stable.
In most instances the special administrator will form an advisory group consisting of members of the corporation. In some cases the special administrator may include some independent people to assist with an advisory group. The special administrator will consult the advisory group during the special administration about reviewing membership records and new membership applications, reviewing and changing the corporation’s rule book and businesses, any other relevant matter.
Where the special administrator is appointed to a large corporation, the secretary is removed. The special administrator will appoint a replacement secretary for the corporation.
The appointment of a special administrator does not automatically vacate the office of the contact person (small and medium corporations). The special administrator will consider whether a different contact person needs to be appointed for the period of the special administration.
The special administrator must keep the Registrar, the corporation’s members and key stakeholders informed about the progress of the special administration.
It is expected that the following communications will occur during a special administration:
- information meeting with the corporation’s members – held 2 to 3 weeks of the start of the special administration
- regular consultation with the advisory group
- regular meetings with members and other key stakeholders
- a newsletter for members and other key stakeholders informing them about the progress of the special administration.
In most cases, the remuneration of a special administrator and their disbursements is paid for by ORIC.
The remuneration is determined when the special administrator is appointed.
The Registrar does have the power to determine how and by whom the special administrator’s remuneration, charges and expenses are to be paid by, however, this occurs on a case-by-case basis.
Special administrators are protected from certain types of liability. A special administrator is protected from civil legal liability for loss, damage or injury while exercising their functions, powers and duties, provided the administrator acts in good faith – CATSI Act, section 609-1.
A special administrator has a statutory qualified privilege under section 442E of the applied Corporations Act provisions regarding statements made in performing or exercising any of the administrator’s functions and powers. In certain circumstances a special administrator would also have the protection of common law qualified privilege.
Special administrators are required to carry public liability insurance, professional indemnity insurance and worker’s compensation insurance.
The Corporations Act provisions applied to a corporation under special administration include Division 9 of Part 5.3A. These provisions provide for the special administrator’s liability for certain debts incurred and other liabilities and the special administrator’s right of indemnity out of corporation property – Corporations Act, section 443D.
If you want to know whether you are protected from a certain type of liability as a special administrator, you should seek your own independent legal advice.
The Registrar is responsible for determining how long the special administration will be in force. This will be set out in the Notice of Determination and Appointment.
Yes. The Registrar also has the power to extend the appointment if it is considered necessary.
Notice of any extension must also be published in the gazette and a national or state or territory newspaper.
The decision to extend the appointment of a special administrator is a reviewable decision. The request must be made within 28 days of the decision to extend the appointment.
Yes. The Registrar can appoint a replacement special administrator.
Notice of the appointment of a replacement special administrator must also be published in the gazette and a national or state or territory newspaper.
If the Registrar considers it is no longer necessary for the corporation to be under special administration, the Registrar may terminate the appointment by giving written notice to the special administrator.
Notice of the termination of the appointment of the special administrator must also be published in the gazette and a national or state or territory newspaper.
Yes. Other grounds include:
- the period of appointment comes to an end
- the special administrator resigns or dies
- a liquidator is appointed to the corporation or the corporation is wound-up.
No. Members of a corporation cannot directly pass a resolution to end a special administration. Only the Registrar has the authority to end a special administration.
At the conclusion of a special administration, the corporation will be returned to member control and the special administrator will appoint a new board of directors who will be responsible for the conduct of the affairs of the corporation. In rare circumstances where a corporation cannot be returned to member control, generally as a result of a corporation being insolvent or is not financially viable, a liquidator may be appointed for the corporation to be wound up.
If you are not satisfied with what a special administrator either has done or is doing, you can contact ORIC or make a complaint.
Read our fact sheet on special administration.
