CORPORATE GOVERNANCE LAWYERS
All farming enterprises must comply with a vast and complex array of regulations in both how they are run (corporate governance) and what they do (business operations). Carrying on a business in trade or commerce requires compliance with rules applying to all factors of production, such as land and water, labour and financial capital.
Hundreds of Acts, regulations and codes impact agribusiness in Australia from land acquisition to transport and ultimately export of our produce. Australian farmers face a cumulative effect of many decisions at various levels of government, all overlapping to create a confusing business compliance environment. Of those laws, the Corporations Act 2001 is the principal legislation governing business entities at a Federal and State level.
Cutting Red Tape Confusion
Kingfisher Law can help navigate the overwhelming regulatory environment which is present at all points in the supply chain and at all levels of government. We have vast experience in working with Australian regulatory bodies at a Federal and State level. We understand how they work and the most effective approach to adopt in dealing with them.
Corporate governance rules and principles apply to all incorporated bodies including not only companies but also cooperatives and mutuals and associations. Corporate governance rules also regulate not-for-profit bodies. In addition to directors’ duties for corporate governance, companies and cooperatives must also comply with licensing and regulatory requirements.
Co-operatives are regulated by State registries under State Co-operatives Acts. With the exception of Queensland and Western Australia, the State Acts bring into force the common rules established by the Co-operatives National Law (CNL). The CNL, in turn, refers to the National Corporations Act for significant financial reporting and accountability rules.
Water law in Australia is regulated on a state and territory basis. Since 2008, the National Water Initiative has provided substantial guidance to allow for an integrated national water scheme, however there remains unique approaches to water governance across Australia’s states and territories.
One common approach to water, is the requirement of a licence for take or interference with a water source for commercial purposes. Ground and surface water is largely unbundled from land in Australia and can therefore be traded independently from land ownership. Water is a valuable commodity in a specific trading area. The capacity to trade licences is determined by the state or territory.
Water licences underpin larger water sharing plans designed by Governments that regulate catchment water use and licences will be issued in compliance with these broad policies. Water licences are not necessarily perpetual and renewal often requires examination of user’s compliance with licence restrictions as well as changing demands in the catchment area.
State-based planning law requires that use of water should not degrade the quality of the resource, and any use should maintain the current condition of the resource or improve it. Potential licensees should also be aware that developments that impact water resources, marine parks, wetlands, or other matters of international significance will also require Federal Government approval along-side state-based planning approval.
Agriculture is a fundamental industry to the Australian economy. Aside from providing food security domestically, agricultural products are valuable exports for Australia. This market is increasingly relevant by the growing rates of trade between Australia and our northern neighbours in Asia.
The Federal Government has recognised the increasing need to develop Northern Australia in order to meet demand in Asia. Since the release of the Northern Australia White Paper in 2015, both the Federal Government and state and territory governments have worked to support agricultural investment by reducing compliance barriers to investors in the North. However, there remain complex legal compliance and regulation measures that must be met in order to invest in agriculture.
Land tenure in the Australia is a web of native title, pastoral leases, crown ownership and private ownership. These distinctions in land tenure attract different compliance requirements. For example in land under native title requires greater levels of legal compliance, including community negotiation and land use agreements, than the purchase of property for private ownership. Further, foreign investment in Australian land and corporations is heavily scrutinised by the Foreign Investment Review Board.
Labour in Australia is strongly protected. Domestic workers are given priority over international workers however there are concessions for businesses that genuinely cannot recruit Australian workers to fulfil business needs. Changes to Australia’s visa rules for migrants are currently underway and will increase regulations for businesses seeking to sponsor skilled workers from abroad as well as limit the number of years that migrants can legally work in Australia.
Animal welfare is increasingly important for agriculturalists. Whilst the exportation of animals impacts the social licence of agriculture businesses, it remains an important component of Australia’s export industry. The Australian Government therefore imposes significant regulatory burdens of the industry to balance these competing interests. Rigid standards regulating the transportation and post-arrival welfare of animals is imposed on exporters.
Horticulturalists should be aware of state-based biosecurity laws. Australia has a unique environment that biosecurity laws intend to protect from harmful diseases. Whilst there are national law restricting the importation of products, state and territory based biosecurity laws have increasingly restricted the ease of inter-state trade. The nature of biosecurity laws means that such regulations can change rapidly in the face of an emerging threat.
Organic certification in Australia is growing as a reflection of market demand in Australia. There are stringent regulations on what produce may qualify as organic, and primary producers should be aware that surrounding non-organic farms can jeopardise their organic certification. Genetically-modified crops must adhere to food standards codes for pre-market approval and market labelling requirements. Broader food standards and labelling laws are an additional regulatory hurdle for primary producers. There are both state and federal compliance measure in this area depending on whether the product is for domestic consumption or international export.
Australia’s Constitution vests residual power in the States reflected by state-based water and agriculture laws. However, the Commonwealth is responsible for regulating inter-state trade under the Constitution s 92. This section permits free trade between states but may be regulated by the Commonwealth. National Land Transport Framework regulates standards for logistical movement of agricultural and horticultural products.
Compliance with rules applicable to particular industries and sectors is necessary
- Property and land law
- Licenses, development leases
- Environmental law
- Aboriginal heritage law
- Activities under registered Indigenous Land Use Agreements
- Taxation including goods and services tax, stamp duty on land and legal documents, import duty
- Insurance issues including utmost good faith duty, employer insurance and workers compensation, product liability, personal injury and death, contract works insurance, professional indemnity insurance, crop insurance, multi-peril insurance
- Environmental law
- Development approvals
- Labour and employment law
- Infrastructure management
- Local and state government planning and development laws
- Occupational health and safety on farms and across the food and fibre supply chain
- Water law including water treatment, potable and non-potable water, surface water, groundwater, waste water and water recycling, irrigation equipment, standards and practices
Two main government bodies monitor regulatory compliance with the law – the Australian Securities and Investment Commission (ASIC) and the Australian Consumer and Competition Commission (ACCC).
The Australian Securities and Investment Commission (ASIC) is a Federal agency that is responsible for the governance and regulation of the country’s corporations, markets and financial services. It was established under the Australian Securities and Investments Commission Act 2001, and carries out most its business under the Corporations Act 2001.
Responsibilities of ASIC Include:
- Promotion of confident and informed participation in the financial system by investors and consumers.
- Effective administration of the law with minimal procedural requirements.
- Enforcement of the law.
- Receipt, process and storage of information.
- Dissemination of company information.
- Maintenance and improvement of the financial system and its entities.
- Ensuring fair, orderly and transparent markets.
- Provision of efficient and accessible registration.
In addition to the above regulations, companies and other incorporated entities are subject to compliance with prevailing State laws. For example, co-operatives are regulated by State registries under State Co-operatives Acts. With the exception of Queensland and Western Australia, the State Acts bring into force the common rules established by the Co-operatives National Law (CNL). The CNL, in turn, refers to the National Corporations Act for significant financial reporting and accountability rules.
The Hallmark of Good Corporate Governance
Selecting the right board members is the benchmark for a high standard of corporate governance. The promotion of transparency, honesty and disclosure are key. Records must be full, complete and accessible. Company finances should be managed efficiently and debts paid when due.
Directors must actively maintain familiarity with the business and circumstances of their company or co-operative. External professional advice should be sought, where necessary, regarding the operations of the entity. Directors should make up their own minds about the best approach to company business, in their board deliberations and decision-making. They are also required to actively participate in meetings regarding corporate governance where possible.
In retaining Kingfisher Law, you can be confident that all these requirements are fully met. Our lawyers pride themselves on their vigilance and commitment to administrative tasks.
Conflicts of Interest
In addition to State and Federal regulatory and licensing compliance, directors must ensure that the best interests of a company or co-operative are advanced in commercial and private dealings with third parties. These include land and property holdings of the company and other parties, intellectual property rights, tenders and procurement, contractual arrangements and (where deemed necessary in the collective opinion of the board) commencing legal claims and litigation against other parties, and defending and settling legal proceedings in the best interests of the company.
Eligibility of Directors and Company Secretaries
Not everyone can be a company board member and there is strict Federal regulation of director eligibility to protect both the company and any company shareholders from risk and wrongdoing.
- Those under 18 years of age.
- Undischarged bankrupts.
- Banned directors or holders of office.
- Those convicted of various offences, including fraud or offences under company law, such as breach of duties as a director or insolvent trading. Those convicted cannot manage a company within 5 years.
Penalties also apply where ineligible persons seek to manage companies through influence over the affairs of an entity, including via others with formal directorial or office holder appointments. A person who is ineligible under the law for appointment as a company director or secretary is also prohibited from any role in managing a company. It is a serious offence for a person to set up dummy directors while actually managing the company themselves.