Board disputes

Disputes amongst board members can include disagreements about:

  • the appointment, removal or performance of the chief executive officer (CEO)
  • how cultural heritage work is allocated
  • who the elected directors of the board are and/or the conduct of an election
  • how conflicts of interest and related party benefits are managed
  • the conduct of corporation meetings
  • personal, family, cultural and community conflicts.

The Corporations (Aboriginal and Torres Strait Islander) Act 2006 (CATSI Act) sets out the duties of directors. One of these duties is for directors to exercise their powers and discharge their duties in good faith in the best interests of the corporation and for a proper purpose. 

A dispute among directors can have serious consequences for a corporation including:

  • disrupting the operations of the corporation 
  • undermining the corporation’s governance and board’s effective decision making
  • affecting the productivity and wellbeing of corporation staff
  • limiting director oversight and creating opportunities for fraud and other misbehaviour.

Sometimes there may be no power under the CATSI Act for the Registrar of Aboriginal and Torres Strait Islander Corporations to intervene, and the matters in dispute are those that only directors can resolve. 

Directors are appointed by members who have entrusted them with governance of their corporation. Many corporations also deliver important services and benefits to the community. It is for these reasons that boards should work to resolve disputes as quickly as they can.

Resolving board disputes

Directors need to remember that they are bound by the duties set out in the CATSI Act and they must act in the best interests of the corporation. 

The way to resolve your dispute may vary depending on the dispute’s nature. Here are some different ways to raise and resolve your dispute. 

Refer to the rules in your rule book

All Aboriginal and Torres Strait Islander corporations registered under the CATSI Act must have a rule book. The rules in the rule book govern the corporation. If a board is in dispute, it should check the corporation’s rule book to see if there are rules to govern how the board deals with the matter in dispute. As these were the rules agreed by the members, they are a contract between the board and members. These rules need to be applied.  

To help avoid disputes, corporations may be able to include rules in their rule books, such as:

  • eligibility for the appointment of, and continuation as, directors such as consideration of character:
    • police checks
    • working with vulnerable people checks
    • code of conduct expectations 
    • how to handle violent, threatening or bullying behaviour 
  • how family groups are to be represented on the board
  • how conflicts of interest are to be managed
  • how to fill a temporary vacancy on the board (casual vacancy rule)
  • the role and responsibilities of directors versus the role and responsibilities of the CEO
  • who has the casting vote at general and directors’ meetings.

ORIC cannot provide legal advice but we can provide information to clarify rules and to help directors understand and follow the rules.

Refer to the CATSI Act

The CATSI Act includes governance rules for corporations such as rules about:

  • meetings – how they can be called, who can call them, adjournment rules and how voting is to be undertaken at meetings 
  • members – when their membership can be cancelled and what their rights are
  • directors – the minimum number that must be in place, the maximum term of their appointment and whether they can be paid remuneration or be reimbursed for any expenses. 

If the matter of your dispute is covered by rules in the CATSI Act, these rules need to be applied. If the rule in the CATSI Act is a replaceable rule, the board should check the corporation’s rule book to see if the corporation has adopted a different rule to that set out in the CATSI Act. 

If the corporation has a condensed rule book or it is silent on a particular matter, the CATSI Act provision is always applied.

ORIC cannot provide legal advice but we can provide information to clarify provisions of the CATSI Act and their relationship with the rule book. ORIC can help directors to understand and follow the CATSI Act.

Refer to corporation policies and procedures

Often corporations will have policies and procedures in place to provide more detailed guidance on how a particular matter will be managed. 

For example, a corporation may have a rule in its rule book:

  • about the equal distribution of cultural heritage work among families and the corporation will have a policy that details what this means in practice
  • that a director will be removed if they demonstrate bullying, threatening or intimidating behaviour and the corporation will have a board code of conduct to describe acceptable and unacceptable director behaviour. 

Corporations may also use their complaints framework to address other matters raised with directors. 

Generally these policies and procedures will be drafted by corporation staff. 

If the matter of your dispute is covered by corporation policies and procedures, they need to be applied.

Take the matter to members

Aboriginal and Torres Strait Islander corporations are member owned and controlled. Directors are appointed by members to govern the corporation and act in its best interests. If the board is unable to agree on an important corporation matter (that is, a matter that does not require a resolution at a general meeting), it should consider consulting with members. 

Consultation should be unbiased and voluntary for people to participate. To help decide a decision or path, the board can consider:

  • calling for ideas from members via email, social media or another channel
  • discussing a matter at a general meeting and calling a poll to decide a path forward
  • consulting a membership consultation committee, Elders’ committee or another form of consultation committee. 

There are certain matters that members must decide on. The appointment, reappointment and removal of directors is one.

Members appoint directors with an expectation that they can govern the corporation and protect the interests of the corporation and its members. Where disputes between directors are such that the board cannot convene meetings, make decisions or hold quorum it may be necessary to take it to the members to consider the directors and board makeup.

Enacting the dispute resolution process in the corporation’s rule book

One or more directors may consider enacting the dispute resolution clause set out in the corporation’s rule book to help resolve a matter. 

Engaging a mediator

The board may consider engaging a professional mediator to help it resolve a dispute. This would be at the corporation’s cost unless it can access free mediation services. 

Obtaining independent legal advice

If the board cannot agree on a legal matter, then it can consider receiving independent legal advice. This would be at the corporation’s cost unless it can access free legal services. ORIC offers a support service called LawHelp where eligible corporations may be able to receive free legal services. 

For RNTBCs

Boards of RNTBCs may be able to access dispute resolution assistance from their representative bodies.

What do we do if we can’t resolve the dispute?

To resolve a dispute, all directors need to be committed to resolving it and accepting the outcome – even if it’s not the one they wanted. 

The purpose of a board of directors is for everyone to bring their unique experience, knowledge and expertise and to make decisions by consensus. 

Directors need to respect decisions made by the majority of the board and not undermine decisions if they did not get the outcome they wanted.  

If a board cannot function, (i.e. cannot make decisions or meet), the directors may need to consider more serious action, such as:

For individual directors who consistently disagree with other directors, it is also an option for them to resign as director.

How ORIC can help

ORIC can help with:

  • discussing the rules in the corporation’s rule book and the CATSI Act
  • explaining how the directors might be able to take matters to members
  • explaining the corporation’s dispute resolution process as set out in the corporation’s rule book
  • sending an advisory note to the corporation reminding it of its obligations under the CATSI Act or the corporation’s rule book
  • providing governance training.

ORIC cannot remove directors or deem a meeting as invalid. We also cannot mediate or get involved in disputes.

Directors and members have the power to remove directors if certain conditions are met. Only a court can deem a meeting as invalid.

The Registrar can consider more serious intervention when a corporation’s board isn’t functioning, such as:

  • calling a Registrar initiated meeting to elect directors when it is unclear who they are
  • making a Registrar initiated change to a corporation’s rule book when rules are unworkable for the corporation 
  • issuing a compliance notice or direction requiring compliance with the CATSI Act or corporation’s rule book
  • issuing a notice to produce specific information or documents
  • undertaking an examination to look at governance or financial issues
  • appointing a special administrator who will generally stand down the board
  • undertaking an investigation of serious breaches of the CATSI Act 
  • prosecuting directors for failing to meet their duties or other offences
  • disqualifying directors from being an officer of a corporation. 

Corporations should not expect that the Registrar will intervene, simply because they have made such a request. The Registrar does not make the decision to take this type of action lightly. 

The Registrar will consider a range of factors before making such a decision, including the compliance history of the corporation, if the corporation has a history of conflict and disputes, and the likelihood that intervention will help the corporation and extend its life. For corporations that are unlikely to benefit from the Registrar’s intervention, the Registrar may decide to instead deregister or wind up the corporation.

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