The Commonwealth’s 51 per cent Indigenous business test shows ownership share cannot establish control

The change to the Indigenous Procurement Policy

A holding of 51 per cent is a majority on a share register, but in a certification process it is only the point at which assessment begins, as a change to Australian supplier diversity rules this year shows.

From 1 July 2026, a business seeking to access the Commonwealth’s Indigenous Procurement Policy must be at least 51 per cent First Nations owned and controlled, or registered with the Office of the Registrar of Indigenous Corporations, with transition arrangements running through the current financial year. The previous threshold was 50 per cent, and the change of one percentage point has a substantive effect, because at 50 per cent both ownership and control are shared, whereas at 51 per cent one party decides. The higher threshold closes off a structure in which a non Indigenous partner holds an equal stake and an equal say while the business trades on a category established for Indigenous economic participation. The agency states that the stronger criteria are intended to ensure the benefits are genuinely flowing to First Nations people, and that it is addressing black cladding through other measures.

Why a share register cannot establish control

A business may have two shareholders, one of whom holds a majority interest, while its governance documents require both to agree on any significant decision. In that case the shareholding and the practice point in different directions, and it would be unsafe to infer the full decision making arrangement from the percentage alone. Supplier standards therefore treat the tests separately, and Supply Nation’s certification considers ownership, management and control as distinct elements, with a process that examines governance information and includes an interview or site visit, because a register cannot settle the issue of control on its own.

The same distinction appears in overseas LGBTIQA+ certification. The Canadian Queer Chamber of Commerce’s document guide for incorporated businesses asks for governance and ownership records, including information that would reveal any restrictions on the qualifying owners’ control. The purpose is to establish the role those owners actually play, which their presence on a register does not show. The documents are directed at practical issues, including who holds voting rights, how directors are appointed, who authorises transactions and what can change without the qualifying owner’s agreement, none of which can be read from a percentage.

Ongoing and tightening verification

A certificate describes a business at the time of assessment, and because businesses take on investors, change directors and restructure, an original certificate cannot establish that none of this has occurred since. Supply Nation describes ongoing ownership monitoring and audits, and from 2026 requires every Certified Supplier to complete an annual face to face interview with an Indigenous Business Officer.

The tightening follows a general pattern in certification systems, in which schemes tend to be gamed once they begin to deliver results, whatever the quality of their original design, since there is little incentive to misrepresent eligibility for a category that leads to no work. Any new scheme should therefore start at the standard it will eventually need, because a scheme that starts with permissive criteria and tightens them later must remove businesses that are already trading on the credential, which is costly and likely to be contested in public.

Proportionate verification for LGBTIQA+ owners

For LGBTIQA+ owners, verification carries additional weight because evidence about the business sits alongside evidence about a person’s identity. Proportionality therefore has to be built into the design from the outset. A scheme needs to consider how much evidence would satisfy a buyer, and also whether each request is proportionate to what is being accessed, whether an applicant has an alternative way to establish eligibility, what happens when an assessment is wrong, and whether a small supplier without an adviser can complete the process at all.

A common percentage provides a starting definition, and the remainder of the design consists of a clear account of control, a process that applicants can afford and complete, and safeguards for personal information, each a separate element that affects whether owners trust the scheme enough to use it. Once the threshold shows an owner that an application is possible, whether they proceed will depend on the demands of the process and the handling of the information it collects.

Sources

1. Supply Nation. Frequently asked questions for Indigenous businesses.
2. National Indigenous Australians Agency. The Indigenous Procurement Policy is changing: current transition arrangements.
3. Canadian Queer Chamber of Commerce. Document submission guidelines for incorporated businesses.
4. Supply Nation. How we verify Aboriginal and Torres Strait Islander businesses.

Source pages last checked 19 September 2026.