Loans in a Body Corporate – how does it work? Can the Body Corporate take out a loan and can the Body Corporate give a loan to one of the employees for instance?
Let’s look at the giving of a loan first. This is dealt with in Prescribed Management Rule (PMR) 21
Quote from the STSM Act:
PMR 21(2)The body corporate must not—
- make loans from body corporate funds without the authority of a unanimous resolution;
So in order to give a loan to an employee of the Body Corporate they will have to pass a unanimous resolution first.
When the Body Corporate needs to borrow money – for a certain project for instance – we look at the STSM Act itself for this:
Section 4. The body corporate may exercise the powers conferred upon it by or under this Act or the rules, and such powers include the power—
(e)upon special resolution, to borrow moneys required by it in the performance of its functions or the exercise of its powers;
So in order to take a loan the Body Corporate needs to get a special resolution passed first