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COMMONWEALTH GAMES ARRANGEMENTS (GOVERNANCE) BILL 2003

                                                             Commonwealth Games Arrangements
                                                                    (Governance) Bill
Victorian Legislation and Parliamentary Documents




                                                                             Circulation Print

                                                                  EXPLANATORY MEMORANDUM


                                                                          PART 1--PRELIMINARY
                                                    Clause 1   states the purposes of the Act. These are to establish the
                                                               Melbourne 2006 Commonwealth Games Corporation and to
                                                               provide for its powers and functions and to provide for various
                                                               matters relating to commercial arrangements and the use of logos
                                                               and insignia for the Commonwealth Games and events and
                                                               programs associated with the Commonwealth Games.

                                                    Clause 2   provides for the commencement of the Bill. It comes into
                                                               operation on a day or days to be proclaimed. If it is not
                                                               proclaimed earlier, it will come into operation on 1 July 2004.

                                                    Clause 3   provides that the Commonwealth Games Arrangements Act
                                                               2001 is called the Principal Act in this Bill.

                                                                          PART 2--GOVERNANCE
                                                    Clause 4   amends section 1 of the Principal Act to provide for additional
                                                               purposes of the Principal Act. These purposes are the same as
                                                               the purposes of this Bill.

                                                    Clause 5   inserts several new definitions in section 3(1) of the Principal
                                                               Act.
                                                               These new definitions relate to the establishment of the new
                                                               statutory corporation. The definitions identify particular
                                                               directors of the new Corporation as being ACGA directors, CGF
                                                               directors or State directors. These definitions reflect the fact that,
                                                               under proposed section 4J, the Australian Commonwealth Games
                                                               Association (ACGA) and The Commonwealth Games Federation
                                                               (CGF) have the right to nominate representatives to the Board of
                                                               the new Corporation.




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                                                    551070                                          BILL LA CIRCULATION 6/6/2003

 


 

Clause 6 inserts new section 4A in the Principal Act, which provides that the Principal Act is to have extraterritorial operation so far as the legislative power of the Victorian Parliament permits. Victorian Legislation and Parliamentary Documents This reflects the fact that the new Corporation will necessarily be involved in carrying out activities relating to the organisation and conduct of the Commonwealth Games outside Victoria, which may include entering into agreements and making other arrangements with respect to the Games. Clause 7 inserts new Part 1A in the Principal Act. The new Part 1A provides for the establishment of the Melbourne 2006 Commonwealth Games Corporation as a body corporate and sets out its functions and powers and governance arrangements. Proposed section 4B sets out the objective of the new Part 1A. This objective is to establish the Melbourne 2006 Commonwealth Games Corporation to plan, organise and deliver the Commonwealth Games, together with CGF and ACGA, in a manner which-- (a) delivers a high quality sporting program for high performance athletes of the Commonwealth of Nations; and (b) enhances the reputation of the Commonwealth Games as a major international sporting event; and (c) promotes Melbourne, Victoria and Australia; and (d) delivers social, economic and environment benefits to Victorians and Australians; and (e) raises the profile of the Commonwealth of Nations by celebrating its values and its diversity of cultures; and (f) demonstrates a high standard of safety; and (g) demonstrates a high standard of financial responsibility, probity and transparency. Proposed section 4C establishes the Melbourne 2006 Commonwealth Games Corporation as a body corporate with perpetual succession and the other attributes of a body corporate. It also provides for the use and recognition of the official seal of the Corporation. Proposed section 4D provides that the Corporation is a public authority but does not represent the Crown. This ensures that it is treated as a separate legal entity from the Crown and is not regarded as acting as an agent of the Crown. 2

 


 

Proposed section 4E sets out the functions of the Corporation. These include to undertake and facilitate the organisation, conduct, management and promotion of the Commonwealth Victorian Legislation and Parliamentary Documents Games and events and programs associated with the Games and to enter into contracts and do all other things necessary for those purposes. Proposed section 4F provides that in carrying out its functions, the Corporation must do so in accordance with any contractual arrangements or obligations of the Corporation under which the Corporation is authorised to organise, conduct and market the Commonwealth Games. The Corporation is also required to carry out its functions in an efficient manner. Proposed section 4G sets out the powers of the Corporation. The Corporation has the power to do anything necessary or convenient for or in connection with, or incidental to, the performance of its functions. The section includes an additional, non-exhaustive list of specific powers, such as the power to enter into contracts, agreements, leases and licenses and to acquire or dispose of real or personal property. The Corporation's power to form or participate in the formation of bodies corporate, associations, partnerships, trust and joint ventures is subject to the approval of the Minister, after consultation with the Treasurer. Proposed section 4H provides for the Corporation, by instrument under its official seal, to delegate to a director, the chief executive officer, an officer or an employee of the Corporation any power of the Corporation, other than the power of delegation. Proposed section 4I provides that the Corporation has the powers conferred on it by the Borrowing and Investment Powers Act 1987. The particular powers conferred on the Corporation are set out in clause 10 of the Bill, which contains an amendment to Schedule 1 to the Borrowing and Investment Powers Act 1987. These powers give the Corporation the legal capacity to borrow and invest. The actual exercise of these powers by the Corporation is subject to the approval of the Treasurer. Proposed section 4J provides for the membership of the Board of the Corporation. The Board is to consist of not less than 8 and not more than 12 directors appointed by the Governor in Council on the recommendation of the Minister. Two directors must be persons nominated to the Minister by CGF (CGF directors) and not more than 4 directors must be persons nominated to the Minister by ACGA (ACGA directors). The remaining directors 3

 


 

(up to 6 directors) are to be persons recommended by the Minister after consultation with ACGA (State directors). The number of State directors must be equal to the total number Victorian Legislation and Parliamentary Documents of ACGA directors and CGF directors. Proposed section 4K provides that the Board is responsible for the management of the affairs of the Corporation and may exercise the powers of the Corporation. Proposed section 4L provides that the Minister may require the Board to give the Minister such information as the Minister reasonably requires. A request for information by the Minister must be in writing. Proposed section 4M provides that the Minister, with the approval of the Treasurer, may give written directions to the Board and requires the Board to comply with any such written directions. However, an act or decision of the Board is not invalid merely because of a failure to comply with such a written direction. Proposed section 4N sets out the duties of directors of the Board. Directors are required to act honestly, to exercise a reasonable degree of care and diligence, not to make improper use of information acquired by virtue of their position as a director to gain an advantage for themselves or another person or to cause detriment to the Corporation, and not to make improper use of their position as a director to gain an advantage for themselves or anther person or to cause detriment to the Corporation. These duties apply in addition to the requirements of any other Act or law relating to the criminal or civil liability of directors. Proposed section 4O authorises the Corporation or the Minister to recover any profit made as a result of a contravention of the duties set out in proposed section 4N and to recover any loss or damage suffered by the Corporation as a result of such a contravention. This does not apply, however, if the requirements for a director to have the benefit of the immunity provided for in proposed section 4S (which essentially requires that the director has acted in good faith) are satisfied. This provision clarifies the relationship between the general duties imposed on the directors under section 4N and the immunity provided to directors in section 4S. The main area where these two provisions might conflict relates to section 4N(2). This requires that a director must at all times exercise a reasonable degree of care and diligence in the performance of his or her functions. It is possible that a director may make a decision or take an action which, with the benefit of hindsight, might be found to have been taken without a 4

 


 

reasonable degree of care and diligence. But nevertheless, it may be the director has acted in good faith in making that decision or taking that action in that the director genuinely considered it to be Victorian Legislation and Parliamentary Documents appropriate. By virtue of section 4S (the immunity provision) a director is not personally liable for a decision or action if the director has acted in good faith. If a director acts in good faith, neither the Corporation nor the Minister can bring proceedings against the director to recover damages for any detriment suffered by the Corporation as a result of a decision or action taken in good faith. Proposed section 4P provides that the powers of the Corporation do not include a power to make a loan, give a guarantee or provide security in connection with a loan to a director or a spouse or relative of the director. This provision does not apply if similar agreements or arrangements are entered into by the Corporation with members of the public on the same terms and conditions. Proposed section 4Q provides that the powers of the Corporation do not include a power to exempt a director from, or to indemnify a director against, any liability that would otherwise attach to the director in respect of a wilful breach of duty or wilful breach of trust in relation to the Corporation. It also provides that the Corporation's powers do not include a power to pay a premium in respect of a contract of insurance insuring a director against any liability (other than one for legal costs) that would otherwise attach to the director in respect of a wilful breach of duty or wilful breach of trust. New sub-section (2) reflects the current equivalent provision in the Corporations Act (section 199B) relating to the payment of insurance premiums. The provision does not permit the Corporation to pay for an insurance policy which covers the director's actual liability for a wilful breach of duty or wilful breach of trust; it only permits a policy which covers the director's legal costs in relation to such a claim. This is consistent with section 199B of the Corporations Act. Furthermore, it does not require the payment of such a premium, but only permits it. Proposed section 4R provides that the Board must establish a Finance Committee, a Risk Management and Audit Committee, a Sports and Technical Committee and a Senior Appointments and Remuneration Committee. The Board may establish any other committees it determines are necessary from time to time. The membership and functions of committees are to be determined by the Board and, except as the Board otherwise 5

 


 

determines, the procedures of the committees are to be determined by the committees themselves. Proposed section 4S provides that a director of the Board is not Victorian Legislation and Parliamentary Documents personally liable for anything necessarily or reasonably done or omitted to be done in good faith in the exercise of a power or the performance of a function or duty under the Act or the regulations, or in the reasonable belief that an act or omission was in the exercise of such a power or the performance of such a function or duty. Where, by virtue of this provision, a director is not personally liable in respect of a particular liability, that liability attaches instead to the Corporation. Proposed section 4T provides that the Corporation may employ a person as the chief executive officer of the Corporation. Subject to the Act, the chief executive officer holds office for the period and on the terms and conditions determined by the Corporation. Proposed section 4U provides that the Corporation may employ such officers and employees as are necessary for the performance of its functions, and that the terms and conditions of employment for such officers and employees are as determined by the Corporation. Proposed section 4V provides that, when the Corporation is established, all of the existing directors of M2006 (the current organising committee) will be deemed to have been appointed under the amended Principal Act as directors of the Corporation. The directors of M2006 appointed by CGF and ACGA will be CGF directors and ACGA directors of the Corporation, respectively, for the purposes of the Act. Similarly, the M2006 directors appointed by the State will be State directors for the purposes of the Act. This section also provides that the Chairperson and Deputy Chairperson of M2006 will be deemed to be the Chairperson and Deputy Chairperson, respectively, of the Corporation. Clause 8 inserts a new Part 1B in the Principal Act. The new Part 1B provides for the transfer of all of the property, rights, assets and liabilities of M2006 to the Corporation and also for the transfer of the chief executive officer and the other officers and employees of M2006 to the Corporation. Proposed section 4W defines a number of terms and expressions which are used in the new Part 1B. Proposed section 4X provides that on the relevant date, which is the date on which section 8 of the amending Act comes into operation, all property, rights and assets of M2006 are vested in 6

 


 

the Corporation and all liabilities of M2006 become liabilities of the Corporation and the Corporation can act in any capacity in which M2006 was acting and is substituted as a party to Victorian Legislation and Parliamentary Documents proceedings. Proposed section 4Y provides that on the dissolution date, which is the date of the final winding up of M2006 under the Corporations Act or the date of the deregistration of M2006 under the Corporations Act (whichever first occurs), the Corporation becomes the successor in law of M2006 and any outstanding or residual property, rights, assets or liabilities of M2006 existing at the dissolution date are vested in the Corporation. This provision reflects the fact that there will be a period of time between the establishment of the Corporation and the date on which M2006 is finally wound up or deregistered. It is not intended that M2006 will trade during this period, but it is possible it may incur liabilities or acquire rights in connection with the steps taken to wind it up under the Corporations Act. As a result, this provision provides for a final transfer of any residual or outstanding assets or liabilities at that time. Proposed section 4Z has the effect of substituting the Corporation as a party to any agreements to which M2006 is a party as at the relevant date. This provision does not apply to transfer agreements, which are agreements entered into by M2006 for the purpose of transferring, confirming or further assuring the transfer of property, rights, assets or liabilities of M2006 to the Corporation. Proposed section 4ZA provides that former M2006 instruments relating to property, rights or liabilities of M2006 vested in or transferred to the Corporation under the Bill continue to have affect on or after the relevant date as if any reference in them to M2006 was a reference to the Corporation. Proposed section 4ZB provides that, in relation to any interest in land under the Transfer of Land Act 1958 in respect of which M2006 is the registered proprietor, after the relevant date the Corporation is taken to be the registered proprietor of that interest in land and has the same rights and remedies in respect of that interest as M2006 had. Proposed section 4ZC requires the Registrar of Titles to make any amendments in the Register that may be necessary as a result of the transfer of any interest in land from M2006 to the Corporation under the Principal Act as amended. 7

 


 

Proposed section 4ZD provides for an exemption from stamp duty and other taxes in respect of anything effected by or done under the new Part 1B including a transaction entered into or an Victorian Legislation and Parliamentary Documents instrument made, executed, lodged or given, for the purpose of, or connected with, the transfer of property, rights or liabilities of M2006 to the Corporation. Proposed section 4ZE provides that documentary and other evidence relevant to property, rights or liabilities of M2006 transferred to the Corporation under the Bill will be admissible for or against the interests of the Corporation in the same way as it would have been admissible for or against the interests of M2006. The section also provides that Division 3A of Part III of the Evidence Act 1958 will continue to apply to the books of account of M2006 and to entries made in those books of account before the relevant date, whether or not they relate to former M2006 property. Proposed section 4ZF provides that nothing effected or to be effected by the new Part 1B or done or suffered under the new Part 1B is to be regarded as placing any person in breach of contract or confidence or as otherwise making any person guilty of a civil wrong, nor as having various other legal or contractual consequences. This provision supports the operation of the transfer provisions in the Act by ensuring that those transfer provisions do not trigger unintended consequences under other laws which apply to any of the parties involved in the transfers or under contracts to which M2006 is a party. This is designed principally to ensure that the transfer of agreements as provided in the Bill is not treated as breaching contractual restrictions on assignment or change in control. Proposed section 4ZG provides for the transfer of the chief executive officer and other officers and employees of M2006 to the Corporation on the same terms and conditions and provides for their employment with the Corporation to be treated as continuous with their employment with M2006 for the purpose of determining their entitlements. Proposed section 4ZH provides that, while the persons whose employment is transferred from M2006 to the Corporation takes effect by operation of the new Part and is expressed to be on the same terms and conditions, this does not prevent future changes to those terms and conditions of employment, nor does it prevent such a person from resigning or being dismissed in the future. 8

 


 

Clause 9 inserts a new Schedule 2 to the Principal Act. The new Schedule 2 sets out the detailed provisions relating to the membership and procedure of the Board of the Corporation. Victorian Legislation and Parliamentary Documents It deals with the terms of appointment of the directors of the Board, the appointment of the Chairperson and Deputy Chairperson, the appointment of alternate directors and the powers of those alternate directors, the resignation and removal of directors, vacancies in membership of the Board, the validity of decisions of the Board, the conduct of meetings of the Board including the person who is to preside at meetings, the quorum required for meetings, the procedure at meetings and the manner in which meetings may be held. The Schedule also sets out the requirements for directors to disclose their interests in matters to be considered by the Board and prevents directors from being involved in the discussion of, or voting on, matters in which they have a personal interest. For this purpose, an agreement or arrangement between the Corporation and ACGA or CGF is not treated as giving rise to a personal interest for a CGF director or an ACGA director by reason only of those directors having been appointed by CGF or ACGA. The Schedule also provides that a director may have regard to and may act in accordance with the interests of his or her appointor (ie CGF, ACGA or the State) provided that in doing so the director does not act in a manner contrary to the interests of the Corporation. Clause 10 amends Schedule 1 to the Borrowing and Investment Powers Act 1987 so as to specify the particular borrowing and investment powers which apply to the Corporation. PART 3--COMMONWEALTH GAMES COMMERCIAL ARRANGEMENTS Clause 11 inserts additional definitions into section 3(1) of the Principal Act. "Commonwealth Games reference" is defined to include any words, expressions or figures related to the Melbourne 2006 Commonwealth Games as well as any words, expressions or figures prescribed as Commonwealth Games references. It may be an offence under the Act to use these terms in the circumstances set out in proposed sections 56L, 56M, 56N and 56O. It is not the intention of the Act to limit the use of these Commonwealth Games references in "normal language". 9

 


 

"Games related indicia or images" defines the main Games logo and other Games indicia and images. ACGA indicia or images and CGF indicia or images are also defined for the purposes of Victorian Legislation and Parliamentary Documents the Principal Act as amended by this Bill. Clause 12 inserts new Part 5A into the Principal Act. Proposed section 56A provides that Part 5A does not derogate from any other rights available to any person under any other law or contract or agreement in relation to Games related indicia or images, ACGA indicia or images, CGF indicia or images or other indicia or images. This is to clarify that the Act is not seeking to override existing Commonwealth laws including the Copyright Act, Trade Marks Act, Design Act and Trade Practices Act or other existing entitlements to use indicia or images. Proposed section 56B further provides that Part 5A does not affect existing rights relating to the use of existing business and company names. Proposed section 56C provides that Part 5A does not affect existing rights in respect to preventing the passing off by a person of another person's indicia or images in relation to goods and services as the first mentioned person's own. Proposed section 56D provides the Corporation with the power to authorise in writing a person to use Games related indicia or images. Proposed section 56E provides AGCA with the power to authorise in writing the use of ACGA indicia or images. Proposed section 56F provides CGF with the power to authorise in writing the use of CGF indicia or images. Proposed section 56G(1) provides the Minister for the Commonwealth Games with the power to authorise in writing a person to use Commonwealth Games references for non- commercial purposes. Proposed section 56G(2) provides that, prior to making an authorisation, the Minister must consult with the Corporation and ACGA. Proposed section 56H provides that ACGA, CGF and the Minister must notify the Corporation of any authorisations made under new sections 56E, 56F and 56G as applicable. 10

 


 

Proposed section 56I provides that an authorisation under new section 56D, 56E, 56F or 56G is subject to terms and conditions which the Corporation, ACGA, CGF or the Minister (as the case Victorian Legislation and Parliamentary Documents requires) believes are reasonable to impose. It also provides the expiry terms of an authorisation. Proposed section 56J provides that the Corporation must maintain a register of authorisations, which must include the name of persons authorised and the date and duration of each authorisation. New sub-section (3) provides that the register may be made available on the internet and can be inspected by any person at any reasonable time without charge. This provision has been included to ensure the public can access, through a publicly accessible register, the list of authorised persons under this Act for the Commonwealth Games in Melbourne. Proposed section 56K provides that certain people can use Commonwealth Games references without seeking an authorisation from the Corporation or the Minister. Proposed section 56K(4) specifies that people authorised under this section cannot use Commonwealth Games references if the use of the reference is for promotional, marketing or commercial purposes, or suggests a sponsorship-like arrangement. Proposed section 56L makes it an offence to engage in conduct which would suggest to a reasonable person that goods, persons or services have a sponsorship, approval or affiliation with Commonwealth Games, the Corporation, the Australian Commonwealth Games Team, ACGA or CGF that they do not actually have. The penalty for this offence is 100 penalty units for natural persons and 600 penalty units for a body corporate. Proposed section 56M makes it an offence to use Games related indicia or images or any thing that is substantially identical to or deceptively similar to Games related indicia or images for commercial, promotional or advertising purposes or if the use would suggest a sponsorship-like arrangement to a reasonable person without authorisation. The penalty for this offence is 100 penalty units for natural persons and 600 penalty units for a body corporate. Proposed section 56N makes it an offence to use ACGA indicia or images or any thing that is substantially identical to or deceptively similar to ACGA indicia or images for commercial, promotional or advertising purposes or if the use would suggest to a reasonable person a sponsorship-like arrangement without authorisation. The penalty for this offence is 100 penalty units for natural persons and 600 penalty units for a body corporate. 11

 


 

Proposed section 56O makes it an offence to use CGF indicia or images or any thing that is substantially identical to or deceptively similar to CGF indicia or images for commercial, Victorian Legislation and Parliamentary Documents promotional or advertising purposes or if the use would suggest to a reasonable person a sponsorship-like arrangement without authorisation. The penalty for this offence is 100 penalty units for natural persons and 600 penalty units for a body corporate. Proposed section 56P(1) provides that authorised applicants may apply to the Magistrates' Court to grant an injunction restraining a person from engaging in conduct that contravenes section 56L, 56M, 56N or 56O. New sub-section (2) provides the circumstances under which the Magistrates' Court may grant an injunction restraining a person from undertaking activities that contravene this Part. New sub-section (3) provides the Magistrates' Court with the power to grant an interim injunction where the Court deems it desirable. New sub-section (4) provides that an application for an injunction can be made ex-parte. New sub-section (5) defines those "authorised applicants" who can seek an injunction to be the Corporation, any person authorised by this Act to use Games related indicia or images, the Director of Fair Trading and Fair Trading inspectors, ACGA, if the conduct relates to ACGA indicia or images and CGF, if the conduct relates to CGF indicia or images. Proposed section 56Q provides for the power to rescind or vary an interim injunction or injunctions granted under section 56P. Proposed section 56R provides that the court may require corrective advertising if the court is satisfied that on the balance of probabilities there has been a contravention of section 56L or 56M or 56N or 56O. This order may be regardless of whether an injunction has been granted under section 56P. Proposed section 56S provides for the Corporation or any person authorised to use Games related indicia or images, in relation to a contravention of the relevant offence sections or ACGA in relation to a contravention relating to ACGA indicia or images or CGF in relation to a contravention of the relevant offence sections relating to CGF indicia or images to recover the amount lost or recover damages against any person involved in the contravention. Proposed section 56T provides that the Corporation, ACGA, CGF or any person authorised to use Games related indicia or images, may apply for an account of profits in relation to a contravention of the applicable offence sections. 12

 


 

Proposed section 56U provides that the Corporation, ACGA, CGF or any person authorised to use Games related indicia or images is not entitled to bring proceedings for damages under Victorian Legislation and Parliamentary Documents section 56S as well as proceedings for an account of profits under section 56T. Proposed section 56V provides for a member of the police force to seize goods or advertising material which use or are marked with unauthorised indicia or images. The power of seizure is restricted to the goods seizure period as defined in the Bill (1 January 2006 to 31 March 2006) and to where the goods or advertising material are found in "Commonwealth Games venues" or a designated access area which are defined terms in the Principal Act. Proposed section 56W requires the police who seize goods or advertising material to give the goods or material to the Office of Commonwealth Games Coordination in the Department for Victorian Communities. The Office must retain them until they are forfeited to the Crown or returned to their owner. If, by 30 December 2006, seized goods or advertising material have not been forfeited or returned and if no proceedings are on foot, the goods or material will be forfeited to the Crown and may be disposed of as the Minister sees fit. Proposed section 56X provides persons from whom goods or advertising material were seized with the option of voluntarily forfeiting those goods or material to the Crown. Forfeited goods or material will be subject to Ministerial direction as to disposal and consultation with the Corporation, AGCA or CGF as the case requires will occur if goods or advertising material are to be sold. The forfeiture must be by written notice. Goods or advertising material forfeited to the Crown may be disposed in a manner that the Minister thinks fit. The requirement for consultation before sale has been included to ensure goods marked with Commonwealth Games indicia or images are not inadvertently sold back into the market. Proposed section 56Y provides for recovery of seized goods or advertising material and compensation where persons have not voluntarily forfeited the goods or advertising material and either a person has not been found guilty of an offence under section 56L, 56M, 56N or 56O, or proceedings have not been instituted against a person within 6 months of the seizure. Compensation may be payable by the Corporation, ACGA or CGF as appropriate if the Court so orders. 13

 


 

Proposed section 56Z defines the meaning of goods "marked with indicia and images" which includes goods, the wrapping the goods are provided in or anything attached to the goods. Victorian Legislation and Parliamentary Documents Proposed section 56ZA provides that persons found guilty under section 56L, 56M, 56N or 56O may be required to forfeit goods or advertising material to the Crown by Court order. Proposed section 56ZB provides for various procedural matters relating to when offences are committed by corporations and partnerships. Clause 13 substitutes section 57 of the Principal Act with a new section 57 providing further regulation-making powers. The new section gives power to prescribe, for the purposes of Part 5A, additional Games logos, insignia, mascots, pictograms or any other Commonwealth Games indicia or images that refer to or represent the Commonwealth Games and also provides more general powers for making regulations. Clause 14 amends section 58 of the Principal Act to fix an expiry date of 31 December 2006 for Parts 1A, 1B and 5A and Schedules 2, 3 and 4 of the Principal Act as amended by this Bill. Clause 15 inserts new Schedules 3 and 4 at the end of the Principal Act. The Schedules set out the various logos of the Corporation, ACGA and CGF. 14

 


 

 


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