The body corporate’s financial year is different to the financial year most people are familiar with – it does not commence 1 July each year, but rather, it is based on when the scheme is registered. For example, if a scheme was registered on 4 November, its financial year defaults to 1 November to 30 October.
The dates for a scheme’s financial year are significant because it determines things like:
- the relevant accounting periods for the scheme;
- when the annual general meeting (AGM) must be held by each year;
- the deadline for when owner must nominate for committee; and
- the deadline for an owner to submit a motion for the AGM.
Even though bodies corporate have the ability to largely regulate their own affairs, it does not have the power (yet) to change its financial year, even if it passes a resolution without dissent.
The only way to change the body corporate’s financial year is by making an application to the Office of the Commissioner for Body Corporate and Community Management.
In making any application, the body corporate simply needs to provide its consent – which is achieved by passing a resolution.
A body corporate may be motivated to change its end of financial year for a number of reasons, including:
- convenience; so that it does not fall during a particular busy time such as Christmas;
- avoiding peak season so that owners can attend, and stay at, the scheme for the meeting; or
- an adjustment so that schemes in a layered arrangement can be better managed. In this regard best practice is to have:
- the principal scheme meeting called first with an extended notice period;
- the subsidiaries to then call their meetings based off the principal scheme agenda which will determine the budgets required and consideration of any representative directions to be made;
- the subsidiaries to then hold their meetings; and
- the principal scheme to then hold its meeting.
There has been discussion of legislative reform to allow bodies corporate to pass a resolution to self-govern and change its own financial year. However, until that change of legislation is put into place, the only way is through an adjudicator’s order.
Mahoneys have assisted a number of bodies corporate in changing its end of financial year. If this is something you would like to explore, please let us know.