Is that co-prod right for you?
In this new column, media and entertainment lawyer and agent Gene Goodsell will look at the legal aspects of Australia’s screen Industry, starting with the useful yet complex co-productions.
The idea behind official co-productions is that they allow a film that is made by two countries to access benefits in both territories.
Australia’s co-production program has three official objectives: to facilitate cultural and creative exchange between countries; to allow these to share the risk and cost of productions; and to increase the output of high-quality productions.
The Screen Producers Association of Australia (SPAA) recommends the addition of a fourth objective: to prioritise co-production as a means to increase Australian production levels and to enable and promote trade with key international partner territories.
A treaty or Memorandum of Understanding (MoU) is, in essence, an agreement to treat companies from each other’s country the same way as they treat companies from their own country. Those countries who currently partake in the program via treaty are the UK, Canada, Ireland, Israel, Italy, Germany, Singapore and China. Australia also has MoUs with New Zealand and France. Additionally, a treaty is currently being negotiated with South Africa, and a MoU with Malaysia is in the works.
It is important for producers to note that each co-production must comply with every article and annex that appears in the relevant treaty or MOU.
The process begins with an application to Screen Australia for approval as an official co-production. Some of the basic requirements include the need to have a producer from each country, with a minimum creative and financial contribution from each of 20–30 percent.
The producing partners should not be linked by common management, ownership or control, and the Australian side must retain a share in the copyright. The co-producers must between them contribute 100 percent of the budget, and the actual sources of finance must be stated in the application form.
For some productions, a major hurdle to obtaining the Producer Offset is the requirement to satisfy the Significant Australian Content (SAC) test. Fortunately, a project automatically meets the SAC test when it is approved as an official co-production.
Co-productions are complex from a legal and regulatory standpoint. A lawyer’s advice should be sought at the commencement of the process. Legal advice should be obtained as to whether a project will fit on a creative and financial level within the relevant regulations.
A lawyer will also need to negotiate with all stakeholders as to the contents of any legal documents (such as co-production agreements). A co-production agreement sets out respective rights and obligations, as well as financial interests in the production. It is crucial that the provisions of this agreement be carefully worded in order for the producers to avoid adverse financial and creative consequences in the future. Short-form agreements are often the precursor to long-form co-production agreements.
All treaties provide that the co-production agreement must set out the financial liabilities to be borne by each co-producer, the division of receipts between co-producers and the dates by which each co-producer will complete their respective contributions to the project.
There are obviously numerous other legalities that must be satisfied in order for a co-production to proceed, such as copyright issues, financial definitions, termination issues, etc., all specific to each project, that require specialised legal attention.
