Indigenous joint ventures represent a growing area of collaboration between Indigenous and non-Indigenous businesses. Indigenous joint ventures support the capacity building and economic empowerment of Indigenous businesses and communities, while also providing opportunities for non-Indigenous business' - including by furthering objectives regarding Indigenous community engagement, enhancing cultural understanding, supporting sustainable business practices and improving a business' social licence to operate.
Participation in Indigenous joint ventures may also assist in meeting commitments under a non-Indigenous business' Reconciliation Action Plan, or meeting other ESG or CSR targets. Indigenous joint ventures also have the ability to generate positive flow-on effects by stimulating economic growth and job creation within Indigenous communities.
Indigenous joint ventures are increasingly arising, in part due to improved recognition of the value of traditional knowledge and potential for unique business opportunities resulting from the collaboration of the skillsets and experience of Indigenous and non-Indigenous businesses, coupled with the development of policies encouraging the inclusion of Indigenous businesses in procurement processes (specifically through Indigenous procurement policies of government and corporates).
The Commonwealth Government's Indigenous Procurement Policy (IPP) requires a joint venture to be registered with Supply Nation on Indigenous Business Direct to tender for work under the policy (see section 1.9 of the IPP). Supply Nation is a not-for-profit organisation that aims to grow the Indigenous business sector, including by registering and certifying Indigenous businesses and Indigenous joint ventures.
Supply Nation connects more than 4,500 verified Indigenous businesses on its Business Directory with corporates, governments and not-for-profits seeking to embed Indigenous businesses in their supply chain. Supply Nation is not the only organisation verifying Indigenous businesses in Australia, for example Indigenous Emerging Business Forum and Kinaway Chamber of Commerce also run Indigenous business directories. However, as the Commonwealth Government's IPP as it relates to Indigenous joint ventures is tied to Supply Nation registration, the criteria for Supply Nation registration as an Indigenous joint venture are explored below.
What is an Indigenous joint venture?
Supply Nation defines an Indigenous joint venture as being 'a commercially independent incorporated entity that is formed through the incorporation of an Indigenous business and a non-Indigenous business.'
Businesses that do not meet this definition can seek registration or certification with Supply Nation as an Indigenous business. Registration requires 50% or more Indigenous ownership, while certification has a higher threshold and requires 51% or more Indigenous ownership, control and management and also has minimum revenue requirements. Not-for-profits are only able to be registered.
The criteria for registering an Indigenous joint venture differs from the registration and certification criteria for an Indigenous business that is not classified as a joint venture, noting the specific criteria for registering an Indigenous joint venture is intended to ensure the joint venture is a genuine collaboration of both parties' resources, skills and assets and there are measures in place to support capacity building of the Indigenous joint venture party.
These reflect the commitment to preventing 'black-cladding', a term used to define illusory arrangements between an Indigenous and non-Indigenous business for the purpose of obtaining work under Indigenous procurement policies (which may also give rise to liability for misleading and deceptive conduct, akin to 'greenwashing' or 'social-washing').
What are the criteria for registering as an Indigenous joint venture?
To register an Indigenous joint venture with Supply Nation, the following criteria must be met:
- Structure – The joint venture must be structured as an independently incorporated company with either ASIC or ORIC.
- Ownership – The joint venture must be at least 50% owned by Aboriginal or Torres Strait Islander persons, either directly through individual shareholding or cumulatively through shareholding in a parent company. For example, Aboriginal or Torres Strait Islander persons must own 100% of an Indigenous joint venture party that owns at least 50% of the Indigenous joint venture alongside the non-Indigenous counterparty.
- Control – The joint venture must be able to demonstrate at least 50% Indigenous control of the joint venture (i.e. at least 50% of Board members being Aboriginal or Torres Strait Islander persons), and Indigenous involvement in the management of the joint venture. To satisfy this criteria Indigenous persons must be actively involved in operational, financial and strategic decisions related to the joint venture company.
- Practical control arrangements – The joint venture company cannot have practical arrangements in place that result in non-Indigenous persons controlling the Board, including as a result of any agreement among the shareholders relating to super majority or simple majority voting arrangements.
- For-profit – The company must be able to distribute equity to shareholders.
- Trade – The joint venture must be a trading business in its own right.
- Jurisdiction – The company must be registered in Australia.
- Commercial independence – The company must be able to demonstrate commercial independence as defined by Supply Nation (see below).
- Documentation and plans – The joint venture company must also have developed the documentation and plans required for the registration process (see below), including a Skills and Capability Transfer Plan and Indigenous Workforce Plan.
What is required for a joint venture to be commercially independent?
As set out above, one of the criteria for a joint venture to be registered with Supply Nation is demonstrating commercial independence.
Supply Nation applies the following definition in assessing commercial independence:
’To be commercially independent, an Indigenous joint venture must reflect a collaboration of the parties’ resources, skills and assets and not totally or fundamentally depend on non-commercial relationships and use of resources (e.g. equipment, personnel, facilities, financial or bonding support) with another non-Indigenous enterprise or enterprises to deliver its core service offering(s).'
To be considered commercially independent, a joint venture must:
- be a separate incorporated entity (meaning registration is not possible for unincorporated joint ventures);
- have Indigenous involvement at the executive and Board level with either:
a. a Board of directors where an equal or majority vote is exercised by Indigenous directors and an Indigenous chair; and
b. an Indigenous managing director, or a non-executive management structure that reports to a higher position held by an Indigenous person;
- have clear delegations of authority and power;
- have a constitution and Joint Venture Agreement or Shareholders Agreement that embed requirements for Indigenous control and management;
- commercially source and acquire the joint venture company's resources (i.e. independent procurement power);
- where certain resources are accessed from the non-Indigenous joint venture party, have a Shared Services Agreement in place setting out the terms on which the resources are provided;
- have internal cost centre allocations;
- have an independent brand identity and control over its branding;
- have independent billing and financial controls; and
- ensure that the Indigenous joint venture party is responsible for an agreed portion of the work to be performed with that party's own resources.
What is the process for registering an Indigenous joint venture?
A joint venture can seek registration with Supply Nation as an Indigenous joint venture by:
- Undertaking the registration process through the Supply Nation website - see Supplier Registration
- Answering the specific additional questions relevant to a joint venture structure
- Uploading the required documentation
- Submitting the application
- Participating in a verification interview and site visit
The documentation required to register an Indigenous joint venture includes:
- Application - A completed registration application.
- Confirmation - Confirmation of Aboriginality or Torres Strait Islander heritage documents for Indigenous owners, Board members and executive management.
- Constitution - A copy of the joint venture company constitution.
- Joint Venture Agreement - A copy of the Joint Venture Agreement or Shareholders Agreement, which must clearly outline profit distribution, delegations of authority and power, work portioning levels and procurement permissions or restrictions.
- Shared Services Agreement - A Shared Services Agreement between the Indigenous and non-Indigenous joint venture parties, setting out the contributions each party will make to the joint venture and terms on which the services are provided. The Shared Services Agreement should set out the monthly fee or schedule of hourly rates to be used to determine the fee payable for any services provided.
- Skills and Capability Transfer Plan - A Skills and Capability Transfer Plan which must identify what the Indigenous joint venture party is seeking to gain from the non-Indigenous joint venture party through the joint venture arrangement, including how the joint venture company will facilitate a transfer of capability to the Indigenous party (such as milestones, KPIs, annual reporting, monitoring and evaluation, reporting and record-keeping and so on).
- Indigenous Workforce Plan - An Indigenous Workforce Plan which should articulate the Indigenous employment goals, culturally appropriate recruitment practices and continued skills training of Indigenous employees associated with the joint venture. It should also include an agreed process for monitoring and evaluating compliance with the Indigenous Workforce Plan.
Supply Nation will assess the documentation provided when verifying an application for registration. Applications will generally be processed within four weeks of lodgement, depending on how robust the application is and availability for a site visit and interview.
Are there ongoing review requirements?
Supply Nation reviews all registered Indigenous joint ventures annually to ensure the joint venture is continuing to comply with Indigenous joint venture criteria, and is operating in accordance with plans submitted to Supply Nation as part of the application process (including the Skills and Capability Transfer Plan and Indigenous Workforce Plan). Supply Nation may also review Indigenous joint ventures on an ad hoc basis to ensure ongoing compliance.
The annual review may include a follow-up site visit or interview, and may require updated governance documents and plans to be submitted.
How MinterEllison can assist
We can assist with the full spectrum of legal needs related to an Indigenous joint venture, from inception to ongoing compliance. Our services include:
- Structuring advice: We provide tailored advice on the most appropriate legal structure for joint ventures.
- Setting up joint venture: We can assist with the entire set-up process for the joint venture company, including drafting and negotiating the constitution and Shareholders Agreement, and ensuring the governing documents reflect Supply Nation registration criteria.
- Supply Nation documents and plans: We can provide support with developing the documentation and plans required for the Supply Nation registration process, including a Shared Services Agreement, Skills and Capability Transfer Plan and Indigenous Workforce Plan.
- Registration process: Supporting the joint venture with navigating the Supply Nation registration process.
- Ongoing Support and Advice: Once established and registered, we can assist with ongoing compliance to maintain registration and adapt to evolving regulations and legal needs. We can also provide ongoing advice across the full spectrum of legal needs from governance, compliance, financing, contracting, risk management and restructuring support.
The Social Impact team at MinterEllison has extensive experience supporting purpose-driven organisations and government and corporates working with these organisations. The Social Impact practice supports more than 200 social enterprises, charities and Indigenous businesses with a diverse range of legal needs from establishment to ongoing compliance and support, building teams depending on identified legal needs and priorities to assist organisations to develop, scale and thrive.
MinterEllison also works alongside government and corporate clients to amplify social impact through shared values partnering and supports corporate clients looking to operate in the social impact space, including by entering into Indigenous joint ventures, establishing a charitable foundation or considering how to embed Indigenous businesses, social enterprises or other for-purpose organisations into supply chains to facilitate strong ESG performance.
Please reach out if you have any questions regarding Indigenous joint ventures or the Supply Nation registration criteria or process.