Issues with the ALA and Recommendations

When each Trust was created, Parliament gave residents ownership of Trust land by giving them shares in the Trust. The ALA provides that each share is capable of having a dollar value, set by an auditor, that is based on the value of the reserve land. Many shareholders have a deep historical attachment to their shares, which symbolise their family history at Lake Tyers or Framlingham, and a recognition of their connection and ownership of the land.

Ownership of shares is recorded in a register, which is managed by the Committee of Management. The Options Paper makes a number of recommendations in relation to the manner in which the share system operates under the ALA.

Issue

The original share register was lost and reconstituted when the Lake Tyers Trust was in administration. That has caused concern that the share register at Lake Tyers accurately reflects the true shareholding.

The ALA is not written in plain English. This makes it difficult to understand how it operates and deters people from engaging with the consultation process.

Transfer of Shares

It is important for shareholders to know when shares have been transferred. This is because who holds shares, and the number of shares they hold, impacts on how many people are needed to make quorum at meetings, and, for a poll vote, on how many votes each person gets.

There is no clear statement in the ALA whether the Committee of Management can refuse a transfer of shares.

The ALA requires a “proper instrument of transfer” to transfer shares, but doesn’t set out what that form should look like, which can lead to disputes.

It is unclear how shareholders can inspect the share registry or find out if shares have been transferred.

Sale of Shares

The ALA is not clear about whether shares can be sold to anyone other than members of the, the Crown or an immediate family member (sibling, spouse, child or grandchild) of the member selling their shares.

The ALA requires that shares be sold at a price fixed by the auditor. This is designed to stop shares being sold for less or more than their worth. However, shareholders often sell shares to family for less than the price fixed by the auditor which is an illegitimate transfer.

Transfer of Shares to Non-Aboriginal People/The Crown

There is no requirement in the ALA that shares are held by Aboriginal people.

Transfer of Shares after People die

Where there is no will: Many Aboriginal people do not have wills. Without a will, families have to go through complicated legal procedures to transfer shares. As a result, many deceased estates of shareholders haven’t been administered and approximately 40% of shares at Lake Tyers haven’t been distributed. This means that a significant portion of people who were meant to benefit under the ALA and participate in the Trust aren’t able to.

Where there is a will: The ALA is not clear about whether the Committee of Management must approve transfers of shares in accordance with the Will of a person who has died.

The ALA outlines that a “personal representative” can write to the Trust to have their name entered on the register of shares, but it is unclear what “personal representative” means.

The ALA only has a few rules about how the Trust should conduct its affairs. These rules are not very clear. This increases the risk of disputes between shareholders and makes it more difficult for the Trust to be effective. Having clearer rules about how the Trust should operate will help the Trust govern itself and provide more fairness, transparency and certainty for shareholders. The Report makes a number of recommendations which will assist in improving the governance of the Trusts.

General meetings

Currently, there is no requirement to have general meetings other than the Annual General Meeting. General meetings are important to:
• provide shareholders with the opportunity to ask questions to the Committee of Management, increasing transparency and accountability;
• improve the flow of information from the Committee of Management to shareholders;
• make shareholders feel involved in the business of the Trust.

It can be difficult to meet quorum for general meetings. At least half of the shareholders who live at the former reserve are needed to meet quorum, and there is no way to force members attend.

Shareholders can be more prepared if they know beforehand what will be discussed at general meetings.

There is no requirement to keep minutes of general meetings. Minutes are important for proper record-keeping and to provide transparency of decision making.

Elections to Committee of Management

Elections for the Committee of Management are staggered, which helps to retain corporate knowledge. However, the ALA doesn’t provide for the election schedule to be reconfigured where this requirement is not maintained.

Membership of Committee of Management

Community members are not eligible to be on the Committee of Management in limited circumstances, including being “of unsound mind”, bankrupt, or removed by a resolution.
Other land rights legislation has been updated to be more in line with general corporations law.

The ALA provides that decisions are to be made by majority vote, meaning that if only three people attend, important decisions can be made by two people. This is problematic because there is a risk that if not all directors are given notice of a meeting, separate groups of directors may be able to hold their own meetings with competing agendas.

There is no time limit to fill casual vacancies of the Committee of Management.

Rules for the Trust

The Trust will be more accountable if it has to follow a set of rules when operating (which address procedural and governance issues like the issues mentioned in the Report).

Members can vote on proposals even if they have a conflict of interest (for example, if they will receive a financial benefit if the vote goes through).

Sometimes it may be difficult for the Trust to comply with all the rules in the ALA due to circumstances beyond its control. Requiring strict compliance can be a big, unintended burden, and lead to breaches of the ALA.

Independent regulator

The Minister is responsible for ensuring compliance with the ALA.
Disputes can only be resolved through the Supreme Court, which is expensive and inaccessible.

The Trust must provide a Report on economic and social wellbeing of residents. The Report is not very helpful because:

• the Trust has no power to collect information from Trust residents
• the information included in the report is mostly census information, which is already available to the Minister.

There is no requirement for the Minister to be provided with a copy of the share register for each Trust. A copy of the share register is helpful for the Minister to be able to identify if who they are communicating with is a shareholder.

Appointment of administrator

The Minister can issue a notice, or even appoint an administrator, if the Trust is not complying with the ALA. However, the Minister has no power to investigate whether the Trust is complying with the ALA in the first place.

Many Trust members today have moved away from the reserve land held by each Trust. About three-quarters of Lake Tyers shareholders live away from the Trust. Also, there are many residents at each Trust who don’t own shares: at Lake Tyers, only one-third of residents are shareholders.

The Options Paper put forward a number of options for how the residents may be engaged in the operation of the Trusts. However, the Report concludes that it was not appropriate to make recommendations for amendments to the ALA to address this issue as there was no clear consensus from the communities or the Trusts regarding whether amendment was appropriate and, if so, what amendments should be made.

The Report does however recommend that there should be a clearer definition of who is a ‘resident’ for the purpose of identifying who is a resident shareholder. It recommends that a “resident” should be defined as someone who has been ordinarily living on the former reserve land for three months or more.

Definition of Residents

There is currently no definition of "resident" beyond the definition that was used to determine residency at the time of the passage of the ALA (which required a person to be ordinarily resident on the former reserve for three months to receive shares). However, this definition is no longer relevant as it only applied to establish residency at the time of the establishment of the Trusts.

The Options Paper noted that the ALA could be amended to include a general definition of “resident” in s 2. For consistency, this definition should be the same one used at the time of the passage of the ALA, namely that persons ordinarily resident on the former reserve for a period of three months or more. This would also clarify the meaning of “resident” in relation to the calculation of the quorum for a general meeting.

The ALA allows land to be sold if there is a unanimous resolution of the Trust. This protection is limited, as a unanimous resolution can be passed even if only a small number of people show up to a meeting (provided quorum is reached).

Lake Tyers has not sold any land. Framlingham has transferred some land to former shareholders in exchange for their shares. Allowing Framlingham to sell land may be appropriate, but the Lake Tyers community appeared to want to have greater protection against sale of its land at consultations.

In relation to the former Framlingham reserve land, the Report recommends that the ALA should be amended to provide that Framlingham Aboriginal Trust shall not sell, mortgage, use as a security, give in exchange or otherwise dispose of any land to any person, except in accordance with a unanimous resolution of the Trust.

The Report notes that a different arrangement should be available for land which has been purchased as an investment (i.e. is not reserve land) and recommends that such land can only be disposed of if 80% of members present and eligible to vote approve.

Restrictions of Sale of Former Reserve Land

The ALA allows land to be sold by unanimous resolution of shareholders in attendance at a general meeting. However, Lake Tyers have not sold any land and want greater protection against sale of its land.

Framlingham have previously sold an interest in part of the reserve land to former shareholders and may want to retain some additional flexibility regarding sale of former reserve land in the future.

Purchased Land

Both Trusts are able to own property other than the former reserve land. It should be easier to sell that land.

When the Government introduced the ALA, it intended that the Trusts would pursue business opportunities and earn money for shareholders. The Report recommends a number of amendments to make clear that a trust can acquire and operate separate business entities and carry on business on land other than that owned by the Trust.

Powers of Trust

It is unclear whether the Trusts can create other companies to pursue business opportunities and earn money for shareholders.

Power of Trust to Carry On

It is unclear whether Trusts can carry on any business on land other than the former research land, including land the Trust might purchase.

First Peoples State Relations pays for specific infrastructure projects and delivery of municipal and essential services at both Trusts and provides some administrative funding to Lake Tyers. In the past, both Trusts appear to have received some Commonwealth funding, which helped Framlingham buy several properties. Other than Framlingham’s income from these properties, neither Trust has an independent funding stream for investments, limiting their ability to pursue economic development (especially in the context of managing communities with socially, politically and culturally complex histories).

The Report recommends that in addition to core funding for administration, the Victorian Government should give consideration to providing some targeted funding for investments in the form of property or other investment to create income streams to finance the Trusts.

Financing the Trusts

It has been hard for the Trusts to become self-sufficient in terms of funding.

Unlike other land rights schemes, the ALA doesn’t require negotiation or consent to mine Aboriginal land or to offer ownership of particular minerals extracted from Aboriginal land. In line with other Commonwealth and State schemes, Lake Tyers and Framlingham Aboriginal Trusts should have the veto power to refuse permission for mining to occur on Trust land. The Report recommends that the ALA be amended to make the requirements in relation to mining on Trust land consistent with s 31 of the Aboriginal Land Rights (Lake Condah and Framlingham Forest) Act 1987 (Cth).

Mining

Currently, the Trusts do not have a veto power over mining on their land. This is inconsistent with other Victorian legislation.

Certain terms used in the ALA should be updated to reflect plain modern English. The report recommends that some of the terms in the ALA be changed.

Modernisation of Act

Certain terms used in the ALA should be updated to reflect plain modern English.

The ALA has rarely been reviewed since it came into force almost 50 years ago. This means that issues which have become large problems, such as the issues with deceased estates, could have been tackled before they became so big. During consultations, people voiced their concerns that previous reviews occurred without proper consultation. A mechanism for regular review should assists both Trusts and encourage greater community participation.

The Report recommends that the Trusts be invited to comment on the report before any amendments are made to the ALA and that a draft of the full amendments should be given to the Trusts for comment before a Bill is tabled in Parliament.

The Report also recommends that First Peoples State Relations should continue to engage with the Trusts about further reform of the ALA, including whether a periodic review mechanism should be introduced into the ALA.

Report and Bill to be Provided to the Trusts

The Trusts should have the opportunity to be consulted on these recommendations and on any draft legislation that is drafted to implement the recommendations.

Continuing Engagement with Trusts

There is no review mechanism in the ALA.