Can a body corporate invest or borrow funds?

A body corporate in Queensland can invest funds, in the same way any individual can.

Normally these are lodged on term deposit with a financial institution, but in theory they could be invested in shares, managed funds or other similar asset classes. Most committees err on the side of caution and keep money only on term deposit.

It’s important for committees to understand what it is they raise monies for and to also understand their statutory obligations with respect to the spending of it.

A body corporate cannot run a business.

Similarly, a body corporate can borrow funds to finance particular projects.

Care must be taken to distinguish between a body corporate voting to seek a line of credit and voting to draw down on that line of credit.

A body corporate committee cannot decide on behalf of a body corporate to authorise borrowing; this decision must be authorised by a special resolution passed by members.

In any borrowing decision, owners should be made aware of the cost implications of undertaking or increasing body corporate debt.

Borrowing would also require two quotes to be sought and presented to owners to verify pricing is commercially competitive.

Further reading

• How should a body corporate’s finances be managed?
• Committees need to manage funds for the long-term
• What are body corporate levies?
• What spending limits exist for body corporate committees?
• What banking requirements must a body corporate meet?
• What financial records must a body corporate keep?