--- title: "Special administrations" source: "https://www.oric.gov.au/about-us/registrars-functions-and-powers/special-administrations" collection: "oric-governance" guidance_commit: "db3111cd9d11643ac08b34b4d75b0d0d983ca388" --- # 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](https://www.oric.gov.au/node/8062). ## 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