Amalgamations of bodies corporate

We are seeing an increasing number of bodies corporate which are considering amalgamating with an adjacent body corporate which was part of the same development.

The setting up

The interest in amalgamations is derived from a wish to reduce:

  1. administration expenses (two or more AGM’s, two sets of committee minutes etc);
  2. the rules and regulations governing the use of one body corporate’s assets by another Body Corporate; and
  3. the amount of time owners need to spend on committees. Why have two committees when one could do the job?

In order to amalgamate the bodies corporate need to agree on a range of things, including:

  1. the by-laws governing the new entity;
  2. the entitlements of all the owners; and
  3. the treatment of the administration and sinking funds.
  4. Any easements or other similar style agreements also need to be considered.

The management rights agreements for each scheme (if any) continue as they were after any amalgamation. Usually we suggest that the consolidation of any management rights agreements occur after the amalgamation has taken place and after consideration by the new consolidated committee.

The bodies corporate each need to pass a resolution without dissent. Unfortunately, a layered scheme, which involves a principal body corporate cannot ever be entirely amalgamated. Only subsidiary bodies corporate can be amalgamated.

Sometimes one or two owners will have their own agendas and will vote against the amalgamation. In order to proceed with the amalgamation an application needs to be made to the District Court and it will permit the amalgamation to occur if the dissent was unreasonable.