Organisations formed by Royal Charter or by Special Act of Parliament are some of Australia’s oldest and largest non-profits. In the past, organisations formed by Royal Charter were administered by the Prime Minister’s Office, but it now “avoid[s] recommendation of such nonprofit forms.” New organisations adopting this structure are now rarely established. The status does, however, have historical significance.
An organisation formed by a Special Act of Parliament, on the other hand, is a designation bestowed on entities making a significant contribution in their field, such as universities. In Australia, an organisation formed by Royal Charter or by Special Act of parliament are two possible structures of a non-profit organisation. Read more about the other types of legal structures in our fact sheet.
What is a Royal Charter Organisation?
An organisation formed by Royal Charter uses two legal documents to govern its business. Both documents have historical value and are usually preserved in the National Library of Australia. The first is a Royal Charter, which specifies the objectives and purpose of the entity. The second is the By-laws. By-laws are rules that govern business activities and explain electoral procedures. Having a Charter designation means your by-laws can only be changed with the approval of the Governor General of Australia.
Royal Charter Corporations are incorporated private companies. The Charter and Bylaws are used together to guide how the organisation is run, including managing membership, holding general meetings, and selecting Board directors. BSI, a private Australian company, describes its Charter as follows: “The Royal Charter is essentially an enabling document that sets out the purpose of BSI and defines in broad terms its range of activities, including its functions as a standards body, as well as its ability to offer training, testing and certification services” (AAH, n.d.). Other organisations formed by Royal Charter include Scouts Australia, The University of Sydney, The University of Tasmania and Engineers Australia.
Royal Charters date back to the 13th century when they were sometimes granted by Britain’s monarchy on the recommendation of the Privy Council. Charters are granted by the British sovereign who gives his or her consent to petitions. Historically, their purpose was to create public and private corporations such as cities and universities and define their legal privileges. Charters were and are still reserved for organisations such as professional institutions and charities that work in the public interest, and demonstrate stability, permanence, and pre-eminence in their fields. For example, the Australian Academy of the Humanities, a private company incorporated by Royal Charter on June 25th, 1969, describes its purpose as advancing knowledge and the pursuit of excellence in academia.
What is an organisation formed by Special Act of Parliament?
Organisations formed by Special Act of Parliament are established when it is “demonstrated to the government of the day that the organisation is substantial and cannot be accommodated under other incorporating statuses”. Also called statutory corporations, these organisations are financed by the government and established by legislation. Essentially, this means the organisation received its own Act as part of the incorporation process. Many universities and religious bodies have been incorporated by a special Act of Parliament. The University of Melbourne, The University of Queensland, the National Library of Australia and the National Gallery of Victoria are a few examples.
Organisations formed by Special Act of Parliament are established under particular legislation due to their significant contribution to the sector. For example, public universities are often established by a Special Act of Parliament. The University of Canberra was established as a college in 1967 under the Canberra College of Advanced Education Act 1967 (Cth). In 1997, the university had grown significantly and its jurisdiction was passed to the federal government under the University of Canberra Act of 1989.
The University of Western Australia is another example of an organisation formed by Special Act of Parliament. It is run according to the University of Western Australia Act 1911 and was established through the University Colleges Act 1926, the University Medical School, Teaching Hospitals Act 1955, and the Queen Elizabeth II Medical Centre Act 1966, which allowed the University to open and run its facilities and teach medical students. The University also regulates its activities through the University of Western Australia Statute, which can more easily be amended and are regularly reviewed to ensure the organisation.
Statutes and Rules: Organisations formed by Special Act of Parliament
Organisations like the University of Canberra develop their own set of statutes and rules, which are then enforced through policies and procedures. The current law defines the powers of the university and establishes rules that carry out the Act, manage and discipline employees and students, and provide procedures for administration and governance. These statues and rules can be amended only by a Legislation Committee of Council. The Council is responsible for making inquiries about the legal agreement the organisation has entered into with the government.
Statutes are codes are written and enacted by a legislative branch of government and serve as guidance when developing rules are regulations for the organisation. Organisations formed by Special Act of Parliament also have the power to make orders, as outlined in their legislation. However, they rarely do so. The statutes must be approved by the University Senate and apply to all members of the academic community, including people and entities that enter into property leasing agreements or use the facilities.
Some of these organisations may also be subject to city by-laws and regulations. The statutes and policies of the organisation must align with the Special Act of Parliament and any other legislation governing its activities or the land it conducts its activities on. Organisational policies provide guidance and direction to Directors when it comes to conduct and decision-making.
Limitations of Royal Charters and Special Acts of Parliament
Historically, the limitation of the Royal Charter is that no other group or company can compete in the same industry and it is therefore difficult to obtain one once another organisation has received it. A Royal Charter also does not impose specific duties or responsibilities on the company, giving the organisation a lot of freedom to develop its own rules and regulations.
Today, the role of a monarch has been reduced to a formality and is largely ceremonial. Most governments prefer to use other means of registering and approving non-profit organisations.
In contrast, organisations formed by Special Act of Parliament are required to be laid before the House of Representatives and the Senate. They are therefore subject to significant parliamentary scrutiny and, in most cases, to the Parliament’s power. The government can vote not to approve an Act. Parliamentary law making can be slow since there are usually three readings to debate and vote on. The Acts run the risk of becoming politicized when the issues addressed are publicly debated.
Organisations conforming within either of these structures are complicated and expensive to establish. They must comply with the specific Act or Charter relating to their establishment, often called their “constituting documents”. It is also difficult to change the by-laws because they must align with existing rules. Charters and Special Acts can carry dated processes or contain ambiguous, unclear, or obscure language that is difficult to amend. This may make the legal statutes inaccessible to people, which requires legal experts to interpret them. In addition, the organisation must operate within the bounds of the Act that governs it, which limits its powers and activities.
What is an Act of Parliament?
The Federal Register of Legislation defines an Act as 'a statute or law passed by both Houses of Parliament that has received Royal Assent'. Each Act is given a year and number and can only be amended or repealed by another Act. Acts are known as primary legislation. Royal Assent is given after a bill is passed by the Australian Parliament. The Governor-General must accept and sign three copies of the bill, sign and forward copies to the Office of Parliamentary Counsel and the original House that has submitted the bill for assent.
How are organisations formed by Special Act of Parliament governed?
Organisations formed by Special Act of Parliament must establish a governing body, called the Council, Senate or Board of Trustees. Members of the Council have a responsibility to provide oversight and strategic planning when it comes to educational, financial, legal, and commercial matters. The governing body can vary in size from 10 to 21 members appointed by the government for their expertise and experience.
Can a Royal Charter be revoked?
Yes and No. The British monarchy has no legal precedent to revoke a Royal Charter. However, a Royal Charter can be dropped if the organisation is dissolved by an Act of Parliament. In 2007, The Royal Women’s Hospital of Melbourne chose to end its association with the Queen. The Hospital was opened in 1856 and formed by Royal Charter in 1954.
How do I get a Royal Charter or Special Act of Parliament for my organisation?
In theory, Royal Charters are granted by the King of Britain on the advice of Australia’s Privy Council. Most organisations formed by Special Charter were founded during the colonial era. It has become less and less common to seek out and obtain a Royal Charter to incorporate a non-profit organisation. In 2004, the government stopped recommending Charters as a viable structure. It has, however, continued to grant Special Acts of Parliament to organisations. Draft bills can be introduced by a House of Parliament representative.
Do Royal Charter companies have directors?
Organisations formed by Royal Charter are managed by a governing body such as a Council made up of a Board of directors or Executive Committee, as well as other special councillors and members who provide expert guidance. Councils have general voting members, several of whom may become Executive Committee members responsible for making decisions in various areas of operation. The Committee is structured in a similar way to a Board and comprises a President, Secretary, Treasurer, and a few other high-level positions depending on the scope of the activities conducted by the organisation. For example, the Australian Academy of Science is governed by a Council of 17 Fellows representing a range of disciplines and elected during their Annual General Meeting.
To conduct research about Royal Charter organisations in Australia, visit the National Library of Australia and search the catalogue.
This fact sheet is intended as a simple overview. Non-profit law is incredibly complex and there are many components, allowances, restrictions, exceptions and important qualifications that are not described above. Dedicated legal advice should be sought from a legal practitioner before taking action.