In 2016, the Local Government Act 1995 was amended to allow two or more local governments to establish a statutory corporation known as a regional subsidiary.
A regional subsidiary is:
- managed by a board
- governed by a charter and
- a separate legal entity from the local governments who formed it.
The formation of a regional subsidiary is an exception to the general rule that local governments cannot acquire or form a corporation.
However, a regional subsidiary can only be formed for non-commercial goals, such as providing services to the community or increasing the efficiency of existing local government operations.
Why form a subsidiary?
A regional subsidiary is designed to be a convenient way for local governments to pool their resources and cooperate more closely with neighbouring districts.
In addition to increasing the efficiency of existing services, a regional subsidiary may increase the viability of new services which local governments want to provide. It may also form a mechanism for groups of local governments to come together to deal with region-specific issues.
A regional subsidiary is:
- Similar to a Voluntary Regional Association of Councils (VROC), but is more binding on the participants.
- Similar to a Regional Council, but has more flexibility and less reporting requirements.
The regional subsidiary is predominantly governed by its charter, which can be individually tailored to suit the subsidiary's activities and role in the community.
What can a subsidiary do?
The following table lists some examples of what a regional subsidiary can potentially be formed to accomplish. This list is not exhaustive.
|Service provision ||Community support |
|Facility management||Shared office services|
|Standardised procurement and tender processes||Local road management|
|Regional advocacy||Tourism |
|Local implementation of State or Federal initiatives ||Community events and engagement|
How can they be formed?
The process for establishing a regional subsidiary is set out in the Local Government (Regional Subsidiary) Regulations 2017.
This process involves:
- Preparing and advertising a business plan in each affected district.
- Drafting a charter for the subsidiary.
- Submitting the charter and business plan to the Minister for approval.
Once the Minister's approval is obtained, the subsidiary will exist as a legal entity from the day specified in the approval.
More information on the establishment process can be found in the documents below.
How long does a subsidiary exist?
Once a subsidiary is established, it will continue to operate as a separate legal entity until:
- it is wound up in accordance with the charter or
- the Minister revokes the subsidiary's approval.
The actual lifespan of a subsidiary will be specified in the subsidiary's charter, which in turn will depend on the role that the subsidiary is intended to perform.
For example, the charter may provide that the subsidiary exists for as long as the member councils wish it to. Alternatively, the charter may specify that the subsidiary is to be wound up after a specified amount of time, or after achieving a specific objective.
Making proposals to the Minister
The formation of a subsidiary is a complex matter, since each subsidiary will be formed in unique circumstances and every charter will be individually drafted.
For this reason, it is advisable to contact the department prior to the preparation of any business plans or charter documents, so that appropriate support and advice can be provided at every step of the establishment process.
While the approval of a proposal is never guaranteed, the department is committed to ensuring that viable proposals are given a chance to deliver positive outcomes for local communities.
Department of Local Government, Sport and Cultural Industries
GPO Box R1250, PERTH WA 6844