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Starr-Bowkett Societies Bill 1997
Explanatory note
This explanatory note relates to this Bill as introduced into Parliament.*
(a) to provide for the formation and incorporation of co-operative housing
societies, Starr-Bowkett societies and associations of those societies,
(b) to provide for the management, supervision and regulation of those
societies and associations,
(c)
to provide for the New South Wales Financial Institutions Commission
(FINCOM) to be the body that is to administer the new Act and
supervise and regulate the activities of those societies and associations,
(d) to provide for mergers and transfers of engagement involving those
societies and associations and other financial institutions,
(e)
to provide for the external administration of those societies and
associations,
* Amended in committee--see table at end of volume.
(f)
to provide savings and transitional arrangements for existing societies
and associations,
(g)
to repeal the Co-operation Act 1923 and to make consequential
amendments to various Acts.
Preliminary
Division 1
Introductory
The Division provides for the name of the Act and for its commencement on
a day or days to be appointed by proclamation.
Division 2
Interpretation
The Division contains definitions and other interpretative provisions.
Important definitions are co-operative housing body which means a
co-operative housing society, a Starr-Bowkett society and an association, and
society which means a co-operative housing society or a Starr-Bowkett
society.
Division 3
Operation of Act
The Division provides that the Act binds the Crown.
Division 4
Application and adoption of Corporations Law
The Division excludes the operation of the Corporations Law in relation to
co-operative housing bodies, except for certain specified provisions of that
Law. The regulations can also adopt with or without modification other
provisions of that Law.
Part 2
Functions and powers of FINCOM
Division 1
General
The Division provides for certain general functions and powers of FINCOM
and for the review of decisions of FINCOM.
Explanatory note page 2
Division 2
Specific powers
Subdivision 1
Enforcement powers
The Subdivision confers various powers on FINCOM to enable it to obtain
information and evidence with respect to compliance with the Act. The
appointment and powers of inspectors is provided for, including powers of
entry and search to monitor compliance and gather evidence of offences.
There is also provision for the issue of search warrants for monitoring
compliance with the Act and for finding evidence of an offence against the
Act.
Subdivision 2
Special meeting and inquiry
The Subdivision provides for the calling of a special meeting of a society, or
the conduct of an inquiry into the affairs of a society, on the application of
directors or members of the society or by FINCOM.
Subdivision 3
Special power of intervention
The Subdivision confers a special power on FINCOM to place a co-operative
housing body under direction in certain circumstances, such as when the
body is trading unprofitably or is being conducted in an improper or
financially unsound way. FINCOM then has power to do all things that it
considers necessary to remedy the situation.
Subdivision 4
Power to suspend operations of society
The Subdivision confers a special power on FINCOM to suspend certain
operations of a co-operative housing body in certain circumstances.
Subdivision 5
Administrators
The Subdivision confers power on FINCOM to appoint an administrator to
conduct the affairs of a co-operative housing body in certain circumstances.
FINCOM is also given additional powers to appoint and remove directors
and specify their terms and conditions of office and to change the rules of a
body for which an administrator has been appointed.
Subdivision 6
Levies
The Subdivision provides for the payment of a supervision levy to FINCOM
by co-operative housing bodies and for the payment of those levies into the
Supervision Fund under the Financial Institutions (NSW) Code. FINCOM's
expenses under the Act are to be paid from the Fund.
Explanatory note page 3
Subdivision 7
Advertising by co-operative housing bodies
The Subdivision gives FINCOM various powers to control advertising by
co-operative housing bodies.
Part 3
Societies
Division 1
Formation and registration
The Division provides for the requirements for and method of forming and
registering a society. Registration creates the society as a corporation with the
legal capacity of a natural person.
Division 2
Powers
The Division provides for the following:
(a)
the general powers of a society, including power to raise money on
loan, act as agent, acquire shares in certain corporations and hold a
subsidiary,
(b)
restrictions on a society's power to receive money on deposit or to
raise money by subscription of its members,
(c)
restrictions on the powers of societies to borrow money and the
protection of lenders to societies,
(d)
a Treasurer's indemnity or guarantee for loans to or by co-operative
housing societies.
Division 3
Rules
The Division makes provision for the minimum requirements for the rules of
a society and provides that the rules bind the members and the society.
The Division also provides for the following:
(a)
the adoption of model rules,
(b)
the entitlement of members to be provided with a copy of the rules,
(c)
the method of altering the rules of a society,
(d)
the power of FINCOM to require the alteration of the rules of a society
or to modify rules to facilitate a transfer of engagements between
societies.
Explanatory note page 4
Division 4
Membership
The Division provides for the membership of a society, including the
following:
(a) how a person becomes a member of a society,
(b) share capital,
(c) membership by minors,
(d) joint membership,
(e) corporate membership,
(f) cessation of membership and expulsion from membership,
(g) the liability of members,
(h) the fees and charges payable by members,
(i) the fining of members.
Division 5
Name and office
The Division provides for the registration of the name and the change of
name of a society, including the following:
(a)
requirements for and restrictions on names,
(b)
abbreviations of names,
(c)
the effect of a change of name,
(d)
prohibitions on the use of certain names that suggest registration under
the Act except by societies,
(e)
the appearance of a society's name on its stationery and at its office.
The Division also requires a society to have a registered office.
Division 6
Registration of charges
The Division applies Part 3.5 of the Corporations Law (which provides for
the registration of company charges) to co-operative housing bodies.
Explanatory note page 5
Part 4
Management
Division 1
Directors and officers
The Division provides for the business and operations of a society to be
managed and controlled by a board of directors.
The Division also provides for the following:
(a) meetings of a society's board,
(b) the number of directors that a society must have,
(c) the election or appointment of directors,
(d) employee directors,
(e) the appointment of alternate directors,
(f) the office of chairperson of the board,
(g) the qualifications to be a director,
(h) the circumstances in which a director vacates office,
the removal of directors from office,
(i)
(j) the declaration of a conflict of interest by a director,
(k) directors' duty of disclosure,
(l) prohibitions against directors, officers and associates of directors
obtaining financial accommodation from a society,
(m) directors' remuneration,
(n) management contracts,
(o) general duties of directors and officers,
(p) a prohibition against unlawfully acting as a director.
Division 2
Meetings
The Division provides for annual general meetings and special general
meetings of societies.
The Division also provides for the following:
(a)
the quorum for the conduct of business at meetings,
(b)
the giving of notice of meetings,
(c)
the voting entitlements of members,
(d)
voting by proxy,
(e)
requirements for the passing of special resolutions,
( f )
the keeping of minutes of meetings.
Explanatory note page 6
Division 3
Registers and inspection
The Division requires a society to keep various registers, including a register
of directors, principal executive officer and secretaries, a register of members
and such other registers as the regulations require.
The Division also provides for the following:
(a)
requiring a society to keep various documents at its registered office
for inspection by members,
(b)
keeping of records on computer,
(c)
the form and evidentiary value of records kept by societies.
Division 4
Accounts
The Division provides for the financial year of societies and associations and
imposes requirements for the keeping and inspection of financial records.
The Division also provides for the following:
(a)
the preparation of a profit and loss account and balance sheet,
(b)
the auditing of a society's accounts,
(c)
the obligations of directors of a society with regard to the writing off of
bad debts, the valuation of assets and compliance by the society's
accounts with prescribed requirements and accounting standards,
(d) directors' reports,
(e)
the laying of accounts and reports before annual general meetings,
(f)
the liabilities of directors.
Division 5
Audit
The Division provides for the qualifications, appointment and removal and
resignation of auditors.
The Division also deals with the following:
(a)
the effect of the winding-up of a society on the office of auditor,
(b)
the fees and expenses of auditors,
(c)
reports by auditors to members on the accounts of a society,
(d)
the powers and duties of auditors,
(e)
the final audit on a merger or transfer of engagements involving a
society,
(f)
offences concerning the obstruction of auditors,
(g)
protection of auditors against liability for defamation.
Explanatory note page 7
Division 6
Returns and relief
The Division imposes obligations on societies to lodge certain returns. The
Division also gives FINCOM power to excuse non-compliance with accounts
and audit requirements of the Act.
Part 5
Mergers and transfers of engagements
Division 1
Preliminary
The Division contains definitions and provides that the Part applies only to
co-operative housing societies and associations (and not to Starr-Bowkett
societies).
Division 2
Mergers and transfers of engagements between
societies of the same type
The Division provides a mechanism for the merger of societies of the same
type and the transfer of engagements between societies of the same type.
The Division deals with the following matters:
(a)
the requirements for an application for a merger or transfer of
engagements,
(b)
voluntary transfers of engagements and transfers directed by FINCOM,
(c)
the effect of a merger on the merged societies and their affairs.
Division 3
Transfers of engagements from co-operative
housing societies to financial institutions
The Division provides a mechanism for the transfer of engagements from a
co-operative housing society to a financial institution (a building society or
credit union under the Financial Institutions (NSW) Code).
The Division deals with the following matters:
(a)
the requirements for an application for a transfer of engagements,
(b)
voluntary transfers of engagements and transfers directed by FINCOM,
(c)
the effect of a transfer of engagements.
Explanatory note page 8
Part 6 External administration
Division 1 Arrangements and reconstructions
The Division provides for the application to societies of provisions of the
Corporations Law dealing with schemes of arrangement and reconstructions.
Division 2 Receivers and managers
The Division provides for the application to societies of provisions of the
Corporations Law dealing with receivers and managers.
Division 3 Winding-up
The Division deals with the winding-up of a society, either voluntarily, by the
Court or on a certificate of FINCOM, on certain grounds. The Division also
provides for the application of provisions of the Corporations Law to the
winding-up of a society.
Part 7
Associations
The Part provides for the formation of associations of societies and for their
objects.
The Part also includes provision for the following:
(a)
the making of an application for registration of an association,
(b)
the incorporation of an association on its registration,
(c)
the membership and share capital of an association,
(d)
meetings of members of an association,
(e)
the means of applying provisions of the Act to associations.
Part 8
Standards and model rules
The Part provides for the formation of a Standards Committee that is to have
power to make standards with respect to any aspect of the business and
affairs of a co-operative housing body, and model rules for adoption by
co-operative housing bodies.
The Part deals with the following matters:
(a)
the procedure for the making of standards and model rules,
(b)
the giving of notice of a proposed standard,
(c)
expedited procedures for urgent standards,
(d)
the matters for which standards can make provision,
(e)
the publication of standards.
Explanatory note page 9
Part 9
Evidence, offences and proceedings
Division 1
Evidence
The Division deals with the evidentiary aspects of certain matters arising
under the Act, including the following matters:
(a)
certificates of registration, certificates of incorporation and other
certificates issued by FINCOM,
(b)
the rules of a co-operative housing body,
(c)
the contents of registers kept under the Act,
(d)
entries in the minutes of meetings.
Division 2
Offences
The Division creates various offences dealing with the following matters:
(a) failure by a co-operative housing body to comply with a lawful
requirement under the Act to give information,
(b) contravention by a co-operative housing body of any restriction on its
powers under the Act,
(c) the duties of officers in relation to the property of a co-operative
housing body,
(d) incurring of debts not likely to be paid, including the powers of the
Court to order that an officer be personally liable,
(e) the offering of inducements to be appointed as liquidator or official
manager,
(f)
falsification of records,
(g) frauds by officers,
(h)
the providing of false or misleading information,
(i)
powers to examine defaulting officers,
(j) powers of the Court to assess damages against certain persons,
(k) providing false copies of the rules of a co-operative housing body,
(l) fraud and misappropriation,
(m) compliance with standards.
Explanatory note page 10
Division 3 Proceedings
The Division deals with the following aspects of legal proceedings under the
Act:
(a) who can take proceedings for an offence under the Act and the time
within which proceedings can be taken,
(b) the creation of a separate and further offence for continuing offences,
(c) the granting of injunctions to prevent contraventions of the Act.
Part 10 General
The Part provides for the following general matters:
(a) a general regulation making power,
(b) the repeal of the Co-operation Act 1923 and various other Acts and
instruments that will now be redundant,
(c) provisions to give effect to the Schedule of savings and transitional
provisions and the Schedule of consequential amendments to Acts,
(d)
a review of the Act in 5 years.
Schedules
Schedule 1 contains general interpretative provisions.
Schedule 2 provides for the matters to be provided for in the rules of
co-operative housing societies.
Schedule 3 provides for the matters to be provided for in the rules of
Starr-Bowkett societies.
Schedule 4 contains provisions relating to the constitution and procedure of
the Standards Committee.
Schedule 5 contains savings and transitional provisions.
Schedule 6 contains consequential amendments to various Acts.
Explanatory note page 11