Transfer of Incorporation (HBF and HIF) Act 2009

Deemed registration company. This concept is central. Under s 5H of the Corporations Act, a State or Territory law can provide that a specified body is a “deemed registration company” and is taken to be registered as a company under the Corporations Act. The Transfer of Incorporation (HBF and HIF) Act invokes that provision. The effect is that the entity does not need to apply for registration through ASIC’s normal process; instead, registration flows from the Ministerial order. The Act specifies the type of company - public company limited by guarantee - and the proposed company name: “HBF Health Limited” for HBF and “Health Insurance Fund of W.A. Limited” for HIF. This is a bespoke conversion mechanism unavailable to other associations.

Registration day. Defined as the day specified by the Minister in a registration order. The Act is careful to provide that things occur at the beginning of that day (s 3(3)), ensuring continuity without a gap. The Minister may publish the order in the Gazette. The registration day is the trigger for the automatic cancellation of the old incorporation and for the entity to be taken as registered under the Corporations Act.

Continuation of legal entity. This is perhaps the most important concept. Sections 6 and 10 (for HBF and HIF respectively) state that the new company is taken for all purposes to be a continuation of and the same legal entity as the old association. This legal fiction means there is no change of identity: assets do not need to be transferred, contracts do not need to be novated, and employment continues without interruption. The provision explicitly states that registration does not create a new legal entity, does not affect existing assets, rights or liabilities (except as against members in their capacity as members), does not render legal proceedings defective, and does not affect employment. This provides certainty for all counterparties, employees and regulators. However, it also means that the new company inherits all pre-existing liabilities, including those that might not have been fully disclosed.

Automatic cancellation of old incorporation. Upon registration, the incorporation under the Associations Incorporation Act 1987 is automatically cancelled (ss 7 and 11). This cancellation is not done by the Minister or by any application to the regulator; it is automatic by force of the Act. It applies despite anything to the contrary in the Associations Incorporation Act, which would otherwise require a dissolution process. This saves the entities from having to wind up under the associations regime, but it also means that any provisions in that Act that protect creditors on dissolution do not apply. The Act does not impose any requirement for a notice to creditors or a final accounting before cancellation.

Ministerial order. The order is a disallowable instrument? No, it is simply published in the Gazette. The Act imposes no disallowance or tabling requirement. The order is also shielded from judicial review: s 5(5) and s 9(5) provide that the order cannot be challenged, reviewed or called into question in any proceedings before any court or tribunal. This is a strong ouster clause. Additionally, the order is conclusive evidence that all requirements have been complied with (s 5(6)). This means that even if there were a procedural defect in the Minister’s satisfaction or approval, a court cannot entertain an argument about it. The only practical constraint is political accountability and the Minister’s own demands for compliance before making the order.

Corporations legislation displacement provisions. Sections 6(3) and 10(3) declare that the continuity provisions are “Corporations legislation displacement provisions” for the purposes of s 5G of the Corporations Act. This is a technical device to ensure that the State Act’s provisions on continuity override any inconsistent provisions in the Corporations legislation. Without this, there could be a conflict with provisions dealing with changes of company name, registration of a new company, or reporting obligations. The displacement ensures a seamless conversion.

Public company limited by guarantee. Both entities become public companies limited by guarantee. This corporate form is typical for not-for-profit entities and mutuals. Members do not hold shares; instead, they guarantee a small amount (usually nominal) if the company is wound up. The company is therefore not owned by shareholders but is controlled by its members under a constitution. This form is consistent with the mutual nature of health insurers. However, public company status brings additional compliance burdens under the Corporations Act compared to being an incorporated association: more onerous financial reporting, director duties (s 180-184), ASIC lodgements, and annual general meeting requirements.

HBF Health Funds Inc. and Health Insurance Fund of W.A. (Inc.). These are the two entities directly affected. The Act provides the legal mechanism for them to change their corporate form. Their boards and management must prepare the necessary documentation (constitution, compliance with s 5H(2) and (3)) and obtain ministerial approval. Post-conversion, they must comply with the Corporations Act as ongoing public companies limited by guarantee. Their names change slightly (adding “Limited”), but the Act does not require them to rebrand or change trading names.

Members of the associations. On the registration day, the members of each association become members of the new company. Their rights and liabilities as members are affected: previously, under the Associations Incorporation Act, members had certain rights regarding access to records, voting, and liability on winding up. Under the Corporations Act, the rights are similar but not identical, and are governed by the company’s constitution. Importantly, s 6(2)(b) (and similarly for HIF) states that the transfer does not affect assets, rights or liabilities “except as against the members of HBF Health Funds Inc. in their capacity as members.” This suggests that the internal contractual rights between the association and its members may be altered by the new constitution, but external rights (e.g. insurance policyholder rights) are unaffected. The exact nature of the change depends on the contents of the constitution approved by the Minister, which is not specified in the Act.

Employees. The Act expressly provides that employment is not affected. Staff members who were employees of the association immediately before registration day continue to be employed by the company on the same terms and with the same entitlements (s 6(2)(d), s 10(2)(d)). There is no change in employer for legal purposes because the company is the same entity. However, the employment will then be subject to the Corporations Act’s provisions regarding corporate governance and director liability, which could affect decisions about employee entitlements, superannuation, and redundancy.

Creditors, counterparties and contract parties. These parties are protected by the continuation provisions. All contracts, leases, licences and debts remain binding without any need for assignment or novation. The company is liable for all pre-existing debts, and conversely can enforce all pre-existing rights. The Act does not require any notice to creditors, though prudent management will likely provide it. There is no mechanism for a creditor to object or for the company to renegotiate terms. The automatic continuation means that any security interests or guarantees remain effective without re-execution. However, parties relying on the former legal structure of an incorporated association (e.g., with limited liability under the Associations Act) should note that the new company is a separate legal entity under the Corporations Act, but since the entity is the same, there is no practical change to liability. Members of the new company have limited liability under the guarantee structure, which is similar to the association’s structure.

ASIC. ASIC receives a copy of the Minister’s order (s 5(3), s 9(3)), but this is directory only and failure to provide a copy does not affect validity. ASIC presumably updates its register to reflect the deemed registration. ASIC’s regulatory role over the company begins on the registration day - it will oversee compliance with the Corporations Act. However, the Act does not require any payment of registration fees or lodgement of an application; ASIC’s role is passive.

The Minister for Health (WA). The Minister (presumably the Minister for Health, though the Act says only “the Minister”) has a gatekeeper role: must approve the constitution and be satisfied of compliance with the Corporations Act s 5H(2) and (3). The Minister publishes the order and provides a copy to ASIC. The Minister’s decision is effectively unreviewable. This gives the Minister significant power over the timing and terms of conversion. The Act does not prescribe criteria for approval of the constitution beyond the Minister’s subjective satisfaction. This creates a risk of regulatory capture or political influence, but also allows flexibility.

Duties of the associations before conversion. The core duties on the two associations arise from the requirement to comply with s 5H(2) and (3) of the Corporations Act and to have a constitution that the Minister approves. The Act does not itself impose a duty, but it conditions the Minister’s power to make the order on compliance. Section 5H(2) requires the body to lodge with ASIC certain documents (likely the constitution and prescribed information). Section 5H(3) requires the body to lodge its constitution with ASIC. So the associations must prepare and lodge these documents. They also must obtain the Minister’s approval of the constitution. There is no statutory right of appeal if the Minister refuses; the only recourse might be political or through a judicial review challenge (but s 5(5) ouster would apply to the order, not to the refusal to make an order? The ouster clause applies to the order itself. If the Minister decides not to make an order, there is no order to challenge, and the Act does not create a right to compel the Minister to make an order. So the associations are dependent on the Minister’s willingness.

Rights of the associations. The Act does not confer any right to be registered under the Corporations Act; it merely provides a mechanism that the Minister may activate. The associations have a right to have the Minister consider their compliance and constitution, but no right to demand approval. This asymmetry is important: the conversion is a privilege, not an entitlement.

Duties of the Minister. The Minister must be satisfied of two things before making an order: (a) approval of the constitution, and (b) compliance with s 5H(2) and (3). There is no duty to make the order; it is entirely discretionary. The Minister must also provide a copy of the order to ASIC (but this is not a condition of validity). The Act does not impose a time limit on the Minister’s decision.

Duties of the company post-conversion. Once the HBF company or HIF company exists, it is subject to all the duties, obligations and liabilities of a public company limited by guarantee under the Corporations Act. This includes the duty to: maintain a register of members, hold annual general meetings, lodge financial reports with ASIC (which must be audited unless exempt), have a constitution that meets legal requirements, comply with director duties (care and diligence, good faith, proper use of position and information), avoid insolvent trading, and comply with continuous disclosure if listed (though neither is listed). The company’s directors have a duty to act in the best interests of the company, which in a company limited by guarantee can be challenging when balancing member interests with policyholder obligations. The company also has a duty to ensure its name includes “Limited” (which the Act already provides for).

Rights of members post-conversion. Members have rights under the Corporations Act and the company’s constitution. These typically include the right to vote at general meetings, to appoint directors, to access company records, to inspect the register of members, and on winding up, to contribute up to their guarantee amount. The constitution is key. The Act does not require the constitution to be publicly available or to include specific provisions. However, since the company is a deemed registration company under s 5H, the constitution lodged with ASIC is on the public record. Members can enforce the constitution as a statutory contract under s 140 of the Corporations Act.

Rights of employees. Employees have a statutory right to continuity of employment under s 6(2)(d)/10(2)(d). This means no break in service for entitlements like long service leave, annual leave, and redundancy. The Act does not confer any additional rights beyond what the pre-existing employment contract provided. However, because the company is now a Corporations Act company, employees may have additional protections under the Fair Work Act or state industrial laws unaffected by the conversion.

Rights of creditors. Creditors have no specific rights under this Act. Their rights under existing contracts and agreements continue unaffected by operation of the continuation provisions. The Act does not require the company to notify creditors or to pay off debts before conversion. This is a potential risk for creditors who deal with the entity as a small incorporated association and might not be aware of the change, but the entity’s legal obligations are unchanged.

The Act itself creates no offence provisions and no penalties. It is purely a facilitative statute. Enforcement occurs through two mechanisms: (a) the ouster clause prevents any challenge to the Minister’s order, and (b) post-conversion, the Corporations Act’s enforcement regime applies.

Ouster clause and immunity from challenge. Section 5(5) and s 9(5) provide that an order cannot be challenged, reviewed or called into question in any proceedings before any court or tribunal. This is a privative clause that ostensibly removes the jurisdiction of courts to review the order. The High Court of Australia has held that similar clauses cannot exclude review for jurisdictional error, but that is a constitutional law question not addressed in the Act. For practical purposes, the clause creates a significant barrier to any person (including members or creditors) who might want to challenge the conversion on grounds such as procedural defect, lack of compliance, or unconscionability. The clause also makes the order conclusive evidence that all requirements have been complied with. This means that if the Minister made an order without actually being satisfied of the conditions, the order itself is still valid and cannot be set aside. The only check is the Minister’s own internal processes and political accountability. This is a strong incursion on the rule of law, but it ensures certainty for the entities.

Enforcement under the Corporations Act. Once the company is registered, it becomes subject to ASIC’s enforcement powers. ASIC can investigate breaches of the Corporations Act, impose administrative penalties, apply for civil penalties or injunctions, and refer matters for criminal prosecution. Directors face personal liability for insolvent trading, breach of duties, and false statements. Members can also enforce their rights under the constitution or under the Corporations Act (e.g., oppression remedy under s 232). The Act does not create any transitional exemptions from Corporations Act compliance, so from the registration day, the company must comply fully.

No civil or criminal penalties under the Act. There are no fines, infringement notices, or imprisonment terms in this Act. The highest penalty provision is the loss of the ability to challenge the order. The Act does not impose any monitoring or reporting requirements on the Minister or the entities after the order is made.

Potential consequences for non-compliance before conversion. If HBF Health Funds Inc. or Health Insurance Fund of W.A. (Inc.) failed to comply with the Corporations Act s 5H(2) and (3) before the order, that would not invalidate the order because the order is conclusive evidence. However, the Minister could refuse to make the order until compliance is demonstrated. There is no enforcement mechanism to compel compliance; the entities are incentivised to comply to achieve conversion.

Enforcement of continuity provisions. The Act declares that the continuity provisions (ss 6 and 10) are Corporations legislation displacement provisions. This means that if a court were to apply the Corporations Act in a way that conflicted with the continuity provisions, the State Act prevails. There is no penalty for breaching this displacement; it is a rule of interpretation.

Corporations Act 2001 (Cth). This is the primary interacting statute. The Act is explicitly designed to operate via s 5H of the Corporations Act. The continuity provisions are declared to be displacement provisions for the Corporations legislation generally (ss 6(3), 10(3)). This ensures that the States Act prevails over any inconsistent Commonwealth provisions regarding the change of legal entity, registration, name change, or reporting obligations. For example, normally changing from an association to a company would involve a winding up and transfer under Chapter 5 of the Corporations Act; here, the Continuation overrides that. Also, the Act provides for automatic cancellation of the old incorporation, which the Corporations Act does not address. The Corporations Act’s provisions regarding the registration of a company (Part 2A.2) are largely bypassed; instead s 5H is the sole authority.

Associations Incorporation Act 1987 (WA). This Act governs incorporated associations in Western Australia. Sections 7 and 11 of the Transfer Act automatically cancel the incorporation of each association under the 1987 Act on the registration day. This overrides the usual winding up and deregistration provisions of the 1987 Act. The continuation provisions (ss 6(2)(e) and 10(2)(e)) preserve any existing obligations, liabilities, penalties and proceedings under the 1987 Act. So if the association had committed an offence under the 1987 Act before conversion, that offence can still be prosecuted, and any penalty enforced, even though the association no longer exists in that form. The company is the same legal entity, so it can be held liable.

Australian Securities and Investments Commission Act 2001 (Cth). ASIC’s functions under that Act apply to the new company. The Transfer Act simply requires the Minister to provide a copy of the order to ASIC. The ASIC Act’s provisions on market integrity and consumer protection may also apply if the entity engages in financial services (which health insurers do, as they are insurers regulated by APRA). But the Transfer Act does not alter APRA regulation.

Health insurance legislation (Private Health Insurance Act 2007 (Cth) and related laws). Both HBF and HIF are private health insurers. The change of corporate form from an incorporated association to a public company limited by guarantee does not change their registration or obligations under the Private Health Insurance Act. The Act is silent on health regulation. However, the change might affect ownership structure (member-based mutual). This could interact with the Private Health Insurance Act’s requirements for the conduct of insurers. There is no conflict noted.

State revenue laws. The continuity provisions should mean that stamp duty or land tax does not apply on the conversion because there is no transfer of property. The same legal entity continues. However, the change of name and type might trigger updating of records with Landgate or the Office of State Revenue, but no duty event. The Act does not provide any express exemptions.

Employment law. The Fair Work Act 2009 (Cth) applies to the new company as a national system employer. The continuity provision (s 6(2)(d)) ensures employees are not made redundant and continuity of service is maintained for purposes of the National Employment Standards, enterprise agreements, and modern awards. There is no change to the applicable industrial instrument.

Competition and consumer law. The Competition and Consumer Act 2010 (Cth) applies to the company as before. The conversion does not affect market power or exemptions. Both HBF and HIF are significant players in the WA health insurance market; the Act does not affect competition or market structure.

The Act is compiled as at the date of compilation shown in the Notes (the compilation table indicates the Act is as at 29 June 2009, being the date of assent). The table lists only one entry: the original Act, number 11 of 2009, assented to 29 June 2009, commenced the same day under s 2. There are no amendments. The Act has remained unchanged since its enactment. This is notable given the time elapsed (over 15 years). It suggests either that the conversion process was completed swiftly and the Act is now spent (though it still operates as the basis for the companies’ existence), or that there were no subsequent changes to the legislative scheme. The compilation notes indicate that the Act is a “compilation” as of the date of the Act’s own assent, meaning no amending legislation has been incorporated. There is no indication of any reprint or incorporation of amendments. For all practical purposes, the Act is dormant since the registration days have passed. However, the Act still has legal force: it defines the continued existence of the companies. If any dispute arises about the continuity or the effect of the conversion, the Act’s original text is the relevant law.

The Act has no explicit litigation history provided in the source text. The legislation itself contains an ouster clause that prohibits proceedings challenging the registration order. This makes it extremely unlikely that any court has had occasion to interpret the Act in a contested proceeding. The ouster clause is designed to prevent litigation. However, the same clause might be challenged on constitutional grounds if a party sought judicial review for jurisdictional error. There is no record of such a challenge in the source. The Act also provides for continuation of legal proceedings: any proceedings by or against the old association could continue by or against the new company using the old name (s 6(2)(c)(i)). This creates a procedural framework that would be used in any litigation involving these entities. There is no indication of any reported case that has considered the Act. The practical effect is that the Act operates as a quiet backstop: it is not a source of litigation but a structural law that defines the companies’ legal status. If a dispute arose, say, about the validity of the Minister’s approval of the constitution, the ouster clause would likely be pleaded as a complete defence. It remains to be seen whether a court would give full effect to the ouster clause in light of the High Court’s approach to privative clauses (e.g. Plaintiff S157/2002 v Commonwealth (2003) 211 CLR 476). Since no case is reported, the Act remains judicially untested.

Ouster clause and no right of challenge. The most significant gotcha is that the Minister’s order is immune from challenge. This means that if the Minister made an order based on an incomplete or inaccurate assessment of compliance, no person can go to court to overturn it. The order is also conclusive evidence of compliance. This effectively gives the Minister a unlimited discretion, with no independent check. For members or creditors who might have objections to the constitution or the conversion, the only recourse is political - writing to the Minister or the Ombudsman. The ouster clause applies to “any proceedings before any court or tribunal”. This includes the State Administrative Tribunal and the Supreme Court of Western Australia. It would also arguably extend to proceedings under the Administrative Decisions (Judicial Review) Act (Cth) if applicable.

Automatic cancellation of old incorporation without a winding up. The automatic cancellation under ss 7 and 11 means the entities dissolve their old legal form without the protections of the Associations Incorporation Act for creditors. Under s 48 of the Associations Incorporation Act 1987, on a voluntary dissolution, the association must satisfy its debts and distribute surplus property. The Transfer Act overrides that. If the entity had undisclosed liabilities, those survive against the company, but there is no process for creditors to make claims before cancellation. This is a risk for creditors who might not be aware of the conversion. The company remains liable, but the lack of a notification requirement means creditors may only learn about the conversion when they try to enforce a right and find the entity’s name changed.

Change of internal governance. Members might assume that their rights remain identical. The Act preserves assets, rights and liabilities “except as against the members … in their capacity as members” (ss 6(2)(b), 10(2)(b)). This carve-out means that the rights members held under the association’s rules may be altered by the new company constitution. For example, voting rights, eligibility for membership, and the process for calling meetings could change. The approved constitution is not publicly specified in the Act. Members who object have no remedy if the constitution was approved by the Minister. The only way to challenge would be under the Corporations Act if the constitution is oppressive (s 232) or if there is a breach of statutory contract (s 140). But the constitution itself may contain restrictions that are lawful.

No notification to ASIC is required for validity. The Minister is to provide ASIC with a copy of the order, but failure to do so does not affect validity. This means the order could be made and published in the Gazette, but ASIC might not be aware. The company would be deemed registered under the Corporations Act even if ASIC has not updated its register. This could cause confusion for parties searching the ASIC register. The Act does not require the company to lodge any forms or pay any registration fees. This is an odd gap.

No transitional provisions for Corporations Act compliance. The Act does not provide a grace period for the company to adjust to Corporations Act requirements. From the registration day, the company must comply immediately. For example, it must have a constitution that meets the requirements of the Corporations Act (which the Minister will have approved), maintain financial records in accordance with accounting standards, and have its financial reports audited if required. The association might not have been subject to audit; now it is. The Act does not provide any transitional relief from ASIC lodgement deadlines.

Name change trap. The proposed name for HBF is “HBF Health Limited” (s 4(2)(c)). Note that the Act says “HBF Health Limited”, not “HBF Health Funds Limited”. Similarly, the HIF company’s proposed name is “Health Insurance Fund of W.A. Limited”. These are the names under which the companies are registered. Anyone dealing with the entity under its former name (e.g. HBF Health Funds Inc.) might not realise the change. The Act permits continued use of the former name in legal proceedings (s 6(2)(c)(i)) but only for existing proceedings.

Effect on guarantees and personal undertakings. If any person gave a personal guarantee to the old association, that guarantee continues in favour of the company. However, the guarantee may have been drafted with reference to the association’s status. The continuation provision ensures it remains valid. There is no need for a new guarantee. Similarly, if a director or officer had given an indemnity, it remains binding.

This Act imposes no ongoing compliance obligations on anyone. Compliance is a one-off event before the Minister makes the order. However, for the two entities that have already converted (assuming they have; the Act is over 15 years old), the compliance focus is on the post-conversion obligations under the Corporations Act. For a practitioner considering a similar conversion for another entity (though this Act is specific to HBF and HIF), the steps would be:

Step 1: Confirm eligibility. Ensure the entity is a deemed registration company as provided by a State Act. This Act is specific; you cannot use it for other associations. However, the principles are illustrative.

Step 2: Prepare the constitution. Draft a constitution that complies with the Corporations Act and is appropriate for a public company limited by guarantee. It must include the company’s name, objects (if any), provisions for membership, directors, meetings, and distribution of surplus on winding up (which must be consistent with limited by guarantee). The Minister must approve the constitution. There are no prescribed criteria in the Act, but the Minister will likely require a constitution that is consistent with the entity’s mutual nature and with health insurance regulation. The constitution should also address the transition from the old rules.

Step 3: Comply with Corporations Act s 5H(2) and (3). Section 5H(2) requires the body to lodge with ASIC certain documents - essentially, information about the body and its members, and the constitution. Section 5H(3) requires the constitution to be lodged. The details are in the Corporations Act, not in this State Act. Practically, the entity must engage with ASIC to lodge the necessary forms and pay any applicable fee (though s 5H may have fee exemptions). The Minister must be satisfied that these steps have been taken.

Step 4: Seek Minister’s approval. Submit the draft constitution and evidence of compliance with s 5H to the Minister (likely the WA Minister for Health). The Act does not specify a formal process; a letter with supporting documents would suffice. The Minister approves the constitution and, if satisfied, makes an order published in the Gazette specifying a registration day.

Step 5: Order and registration. The order is made. The entity is deemed registered on that day. The old incorporation is automatically cancelled. The entity must immediately begin operating as a Corporations Act company.

Step 6: Post-conversion obligations. The company must:

• Ensure all stationary, contracts and signage reflect the new name (including “Limited”).
• Update its records with ASIC as a registered company (though ASIC should have the deemed registration).
• Hold a first meeting of members and board, adopt the constitution.
• Notify all counterparties, banks, suppliers, and regulators of the change.
• Apply for any necessary business registrations (ABN, GST, etc.) in the new name, though continuity means the same ABN likely continues.
• Review its insurance policies to ensure they cover directors and officers under the Corporations Act.
• Comply with the Corporations Act’s reporting and record-keeping obligations, including financial reporting, audit requirements, and director’s duties.

For a member or creditor seeking to verify compliance: Review the Gazette for the registration order. The order is conclusive evidence. If dissatisfied, the only avenue is political or, theoretically, a constitutional challenge to the ouster clause. Practically, the conversion has likely already occurred and is irreversible.

The Act itself no longer has ongoing compliance steps; it is a static law. The real compliance is under the Corporations Act, which is beyond the scope of this Act. The Transfer Act serves as the foundational authorisation for that compliance framework to apply.