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Approvals required for the establishment of a company

Purpose

This bulletin is to advise local governments of the circumstances where the Treasurer’s approval must be sought for the establishment of a company.

Background

There has been some confusion recently around the requirement for councils to seek the Treasurer’s approval prior to establishing a company. The simplification of the Local Government Act 2009 with regards to the beneficial enterprises provisions has made this position clearer. That is, councils have a specific power to establish a company for the purpose of conducting a beneficial enterprise. In these cases, the Treasurer’s approval is not required. However if a council wishes to establish a company for a purpose other than to conduct a beneficial enterprise, the Treasurer’s approval must be obtained.

Key points

Under section 60A of the Statutory Bodies Financial Arrangements Act 1982 (SBFA Act), a statutory body (which includes local governments) may, with the Treasurer’s approval, enter into a type 1 financial arrangement. The meaning of a type one financial arrangement includes (amongst other things):

Typically, section 60A requires the Treasurer’s approval before a statutory body enters into a type 1 financial arrangement. However, the SBFA Act provides that if a statutory body has an express power under its authorising act to enter into a proposed type 1 financial arrangement, no approval by the Treasurer is required.

The beneficial enterprises provisions (BEP) of the Local Government Act 2009 and City of Brisbane Act 2010 provide an express power to local governments to:

The BEP define ‘association’ as:

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