3.27. The OPGGS Act provides for NOPSEMA or the responsible Commonwealth Minister to issue remedial directions to a range of persons that are or were connected to a title on or after 1 January 2021, including:
- the current registered holder of the title
- a related body corporate of the current registered holder of the title
- a related person of the current registered holder of the title
- a former registered holder of the title
- a related body corporate of a former registered holder of the title at the time the title was in force
- a related person of a former registered holder of the title at the time the title was in force.
3.28. Where a trailing liability could apply to any of the persons listed above, this guideline will use the term ‘person’ or ‘persons’.
3.29. A direction may be issued to one or more persons, depending on the individual circumstances of the title and actions required.
Titleholders, former titleholders and related bodies corporate
3.30. The current registered holder of the title is any person (including a body corporate) that is a titleholder, either individually or with other titleholders.
3.31. A former registered holder of the title is any person (including a body corporate) that was a registered titleholder, either individually or with other titleholders, on or after 1 January 2021, but is no longer registered as a holder of that title.
3.32. ‘Related body corporate’ is defined in section 50 of the Corporations Act 2001 (Corporations Act). A body corporate will be related to another body corporate if it is a holding company of that body corporate, a subsidiary of that body corporate, or a subsidiary of a holding company of that body corporate.
3.33. ‘Subsidiary’ is defined in section 46 of the Corporations Act. It provides that a body corporate is a subsidiary of another body corporate if that other body:
- a. controls the composition of the first body’s board, or
- is in a position to cast or control the casting of more than one-half of the maximum number of votes that might be cast at a general meeting of the first body, or
- holds more than one-half of the issued share capital of the first body.
The definition of ‘subsidiary’ in the Corporations Act also provides that a subsidiary of a subsidiary of a body corporate is itself a subsidiary of that body corporate.
3.34. A direction can only be given to a person if they were related at the time the title is or was in force. This includes a person who is or was a related body corporate or is determined to be a related person of a current or former titleholder.
3.35. If a company has been dissolved and no longer exists, related entities to that company, such as related bodies corporate or related persons, may still be issued a direction.
3.36. Joint venture ownership and interest share percentages are not considered in relation to obligations of titleholders under the OPGGS Act. Where an obligation is imposed on the registered holder of a petroleum title and there are two or more registered holders, the obligation is imposed on each of the parties, but can be discharged by any of the registered holders. This is described in section 775D of the OPGGS Act.
- In practice, this means that all joint venture parties are titleholders, and as such are liable for obligations under the Act, including remedial directions.
3.37. If a remedial direction is issued, the titleholders would be required to coordinate and determine how they would meet the requirements of the direction.
- In the event that one or more of the titleholders has ceased to exist, the remaining titleholders are obligated to meet the full requirements of the remedial direction.
3.38. Depending on the individual circumstances of the joint venture, a decision-maker may issue a direction to:
- the entity nominated to receive notices or documents for the joint venture, or
- all titleholders.
However, as discussed above, the direction will apply to each of the titleholders regardless of how it is issued.
3.39. NOPSEMA or the responsible Commonwealth Minister may issue a remedial direction to a related person of the current or any former registered titleholder.
3.40. For the purposes of this guideline, ‘related persons’ are considered to be persons that have not directly been a titleholder but:
- is, or has been at any time, in a position to influence compliance with obligations under the OPGGS Act
- have or had the capacity to derive a significant financial benefit from operations
- act or have acted jointly with the current or former titleholder in relation to activities authorised by the title.
3.41. Related persons can include companies and individuals.
3.42. The responsible Commonwealth Minister must issue a related persons determination before a remedial direction can be issued to a related person.
Related persons determinations
3.43. Under the OPGGS Act, the responsible Commonwealth Minister may make a written determination that a person may be subject to a remedial direction. The Minister must be satisfied on reasonable grounds that it is appropriate to do so based on criteria set out under the OPGGS Act.
The matters that the responsible Commonwealth Minister will consider when making a related person determination are:
3.44. whether the person is capable of significantly benefiting financially, or has significantly benefited financially, from operations authorised by the title;
- whether the person is, or has been, in a position to influence compliance with obligations under the OPGGS Act
- whether the person acts, or acted, jointly with a current or former titleholder in relation to operations authorised by the title.
A person may meet one or more of the matters listed above.
3.45. In deciding whether to make a related person determination, the Minister may not have regard to matters that relate to circumstances or events that occurred before 1 January 2021.
3.46. Whether, and in relation to whom, a determination is made will depend on the individual circumstances of each case.
3.47. Persons who are paid market value for work undertaken or goods or services provided are not in the scope of the trailing liability provisions. This may include:
- employees, contractors, customers, advisers or suppliers
- banks and financial institutions entering into a lending or security agreements with a company on arm’s length commercial terms.
3.48. Persons such as major shareholders (including company directors) that have received a significant financial benefit from their shareholding would be within the scope for the responsible Commonwealth Minister to make a determination as a ‘related person’. As a related person they may be issued a remedial direction.
3.49. What is considered to be a ‘significant’ financial benefit is considered in the context of offshore petroleum operations, such as the large profits that may be made, as well as the costs expended to undertake operations.
3.50. Related persons that are individuals will generally only be issued remedial directions where there is not a former titleholder or a related body corporate of the current or former titleholder who is capable of undertaking the remedial works.
3.51. A related persons determination is not required for NOPSEMA or the responsible Commonwealth Minister to issue a remedial direction to a current or former titleholder or a related body corporate of a current or former titleholder.
3.52. Depending on corporate structures, some companies (bodies corporate) that are related to a current or former titleholder may not satisfy the criteria of ‘related body corporate’ using the definitions within the Corporations Act. In these cases, the responsible Commonwealth Minister may consider whether the company meets the criteria to be determined a related person. If a written determination is made, the company could be issued a remedial direction.