Part 11Financial management

Part 11—Financial management Division 1—General 113—Statement of expenditure etc (1) A statement setting out the following information must be presented by a community corporation to each annual general meeting of the corporation— (aa) proposed expenditure (other than recurrent expenditure) for the period prescribed by the regulations for the purposes of this paragraph (which must not exceed 5 years); and (a) the estimated expenditure of a recurrent nature and the estimated expenditure of a non-recurrent nature to be made by the corporation in the current financial year; and (b) the estimated expenditure in future years for which funds should be raised now and held in reserve; and (c) the amount to be raised by way of contributions from the owners of community lots to cover the expenditure referred to in paragraphs (a) and (b). (1a) New information must be prepared for the purposes of subsection (1)(aa) at the times prescribed by regulation. (2) The developer must present a statement in accordance with subsection (1) to the first statutory general meeting of the community corporation. (3) A statement presented to a meeting in accordance with this section forms part of the minutes of the meeting. (4) The regulations may exclude a community corporation of a specified class from the operation of subsections (1)(aa) and (1a). 114—Contributions by owners of lots (1) A community corporation must, in general meeting, fix the amount it requires by way of contributions from the owners of community lots. (2) The amount must be fixed by an ordinary resolution of the corporation and not by the management committee. (3) Subject to this Act, the share of an amount fixed under subsection (1) to be contributed by the owner of each lot is proportional to the lot entitlement of the lot unless otherwise provided by a unanimous resolution of the corporation. (4) A corporation may, by ordinary resolution— (a) permit contributions to be paid in instalments specified in the resolution; (b) fix (in accordance with the regulations) interest payable in respect of a contribution, or an instalment of a contribution, that is in arrears. (5) A contribution, or an instalment of a contribution, is payable on the day specified for payment in a notice served by the corporation on the owner of the lot. (6) The notice must— (a) include information required by regulation; and (b) be served on the owner at least 14 days before the date for payment. (7) Payment of a contribution, instalment or interest is enforceable jointly and severally against the owner or owners of the lot and the subsequent owner or owners of the lot. (8) A contribution, instalment or interest may be recovered as a debt. (9) Where a leaseback arrangement is in force, the lessee and not the owners of the lots that are subject to the leases comprising the leaseback arrangement must pay the amount of the contribution. (10) If the community corporation carries out work at the request, or with the consent, of the owner of a lot and the work wholly or substantially benefits that lot to the exclusion of the other lots, the corporation may, subject to any agreement to the contrary, recover the cost of that work as a debt from the owner of the lot. (11) Where a debt referred to in subsection (10) is recoverable from the owners of two or more lots, they are liable jointly and severally for the debt and are entitled to contribution amongst each other in proportion to their respective lot entitlements. (12) An amount paid by a person under this section is not recoverable by the person from the corporation when he or she ceases to be the owner of the lot. 115—Cases where owner not liable to contribute (1) The owner of a community lot to whom the community corporation is under a financial or other obligation cannot be required to contribute to the satisfaction of that obligation by the corporation. (2) Where a primary corporation is under a financial or other obligation to the owner of a secondary or tertiary lot comprising part of the primary scheme or a secondary corporation is under a financial or other obligation to the owner of a tertiary lot comprising part of the secondary scheme, the owner of the lot cannot be required to contribute to the contribution to be made by the secondary or tertiary corporation to the satisfaction of that obligation. (3) Where the owner of a community lot and the community corporation were parties to proceedings before a court or other tribunal and the corporation has been ordered to pay the owner's costs or the corporation and the owner are to bear their own costs, the owner of the lot cannot be required to contribute to the payment by the corporation of the corporation's costs in those proceedings. (4) Where a primary corporation and the owner of a secondary or tertiary lot comprising part of the primary scheme or a secondary corporation and the owner of a tertiary lot comprising part of the secondary scheme were parties to proceedings before a court or other tribunal and the corporation has been ordered to pay the owners costs or the corporation and the owner are to bear their own costs, the owner of the lot cannot be required to contribute to any contribution to be made by the secondary or tertiary corporation to the payment of the corporation's costs. 116—Administrative and sinking funds (1) A community corporation must establish an administrative fund and a sinking fund. (2) Subject to subsection (3), non-recurrent expenditure1 must be made from the sinking fund and all other expenditure of the corporation must be made from the administrative fund. (3) Expenditure must not be made from a fund to satisfy a financial or other obligation to the owner of a lot who cannot be required to contribute to that expenditure2 or to pay legal costs that the owner of the lot cannot be required to contribute to3, if the expenditure, or part of the expenditure can be traced to a contribution made by the owner of the lot directly or, where he or she is the owner of a secondary or tertiary lot, by way of a contribution made by the secondary or tertiary corporation. (4) Subject to this section, contributions of owners of lots and other money4 received by a corporation must be credited to the administrative or sinking fund according to the purpose for which the money will be used. (5) Money received on sale of assets of a corporation must be credited to the sinking fund. (6) All money to be credited to a fund must— (a) be paid into an account in the corporation's name at an ADI or at any other financial institution prescribed by regulation; or (b) if the corporation has delegated its power to receive and hold money to another person, be paid into a trust account held by that person at an ADI or at any other financial institution prescribed by regulation. Explanatory Notes— 1 Non-recurrent expenditure is expenditure for a particular purpose that is normally made less frequently than once a year. See the definitions of recurrent and non-recurrent in section 3. 2 See section 115(1). 3 See section 115(3). 4 For example, an insurance claim or income received from investment of the fund. 117—Disposal of excess money in funds If, in the opinion of a community corporation, more money than is required by the corporation is held in the administrative fund or the sinking fund, the excess may, by special resolution of the corporation, be— (a) transferred to the other fund; or (b) distributed between the owners of the community lots in proportion to the lot entitlements of their respective lots. 118—Power to borrow A community corporation may borrow money or obtain other forms of financial accommodation and may, subject to this Act or to the regulations, give such security for that purpose as it thinks fit. 119—Limitation on expenditure Expenditure of an amount exceeding the amount prescribed for that purpose by regulation must not be made by a corporation unless the expenditure has been specifically authorised by an ordinary, special or unanimous resolution of the corporation depending upon the amount involved. Division 2—Agent's trust accounts 120—Application of Division This Division applies where a community corporation has delegated to a person (the agent) (not being an ADI or other financial institution) power to receive and hold money on its behalf. 121—Interpretation In this Division, unless the contrary intention appears— agent means a person to whom a community corporation has delegated power to receive and hold money on its behalf; auditor means a registered company auditor within the meaning of the Corporations Act 2001 of the Commonwealth; trust account means an account in which trust money is required to be deposited by an agent; trust money means money received by an agent on behalf of a community corporation. 122—Trust money to be deposited in trust account (1) An agent must, as soon as practicable after receiving trust money, deposit the money in an account authorised by this Division in the name of the agent. (2) An agent must not pay any money except trust money into the agent's trust account. (3) An agent must not withdraw, or permit another person to withdraw, money from a trust account except in accordance with this Part. (4) An agent must, when applying to open a trust account, inform the ADI or other financial institution that the account is to be a trust account for the purposes of this Division. 123—Withdrawal of money from trust account An agent may withdraw money from a trust account— (a) in exercise of powers delegated to the agent by the community corporation; or (b) in satisfaction of a claim for fees, costs or disbursements (that are authorised by the regulations) that the agent has against the corporation; or (c) to satisfy an order of a court against the corporation; or (d) for making any other payment authorised by law. 124—Authorised trust accounts An account at an ADI or at any other financial institution prescribed by regulation that provides for the payment of interest on money held in the account in accordance with the regulations is authorised for the purposes of this Division. 125—Application of interest If an agent receives money on behalf of two or more community corporations and holds the money in one trust account, interest credited to the trust account must be credited by the agent proportionately to the community corporations on whose behalf the money is held. 126—Keeping of records (1) An agent must keep detailed records of all trust money received by the agent and of any disbursement of, or other dealing with, that money and must compile detailed accounts of those receipts and disbursements that— (a) accurately disclose the state of the trust account maintained by the agent; and (b) enable the receipt and disposition of trust money to be conveniently and properly audited; and (c) comply with all other requirements specified by regulation. (2) In particular, the agent must, in respect of the receipt of trust money— (a) make available to the person making payment a receipt that sets out the information specified by regulation in the form specified by regulation; and (b) make and retain a copy of the receipt as part of the agent's records. (3) An agent must, at the request of a community corporation, provide the corporation, within 5 business days after the making of the request, with a statement setting out details of dealings by the agent with the corporation's money. (4) An agent must keep the accounts and records referred to in this section (including copies of receipts under subsection (2)(b)) in a legible written form, or so as to be readily convertible into such a form, for at least five years. 127—Audit of trust accounts (1) An agent who maintains a trust account must— (a) have the accounts and records kept under this Division audited by an auditor in respect of each audit period specified by regulation; and (b) forward to the secretary of the community corporation a statement relating to the audit that sets out the information specified by regulation. (2) An agent who— (a) fails to have accounts and records audited as required; or (b) fails to forward the audit statement to the secretary of the community corporation within the time allowed by or under the regulations, is guilty of an offence. 128—Obtaining information for purposes of audit (1) An auditor employed by an agent to make an audit of the trust accounts of the agent, may require the agent or any other person in a position to do so— (a) to produce all the accounts (including accounts that are not trust accounts) relating to the business of the agent and all documents and records relating to those accounts, including written records that reproduce in a readily understandable form information kept by computer, microfilm or other process; and (b) to provide any relevant information relating to the operation of the accounts. (2) The manager or other principal officer of an ADI or other financial institution with which an agent has deposited money, whether in his or her own account or in a general or separate trust account, must, on being required to do so by an auditor employed or appointed to make an audit under this Division, disclose every such account (including all deposit slips, cancelled cheques and other documents relating to the operation of the account) to the auditor. (3) A person who is required by this section to produce documents to an auditor must permit the auditor to make a copy of the whole, or any part, of those documents. account includes a record required to be kept under this Division in relation to the receipt and disposition of trust money; agent includes a former agent. 129—ADIs etc to report deficiencies in trust accounts An ADI or other financial institution with which a trust account has been established must, as soon as practicable, and in any event within 14 days, after becoming aware of a deficiency in that account, report the deficiency to the Minister. 130—Confidentiality An auditor must not divulge information that has come to his or her knowledge in the course of performing functions under this Act except— (a) to the agent; or (b) to the Minister; or (c) as otherwise required by law. 131—ADIs etc not affected by notice of trust (1) Subject to subsection (2), an ADI or other financial institution is not affected by notice of a specific trust to which money deposited in a trust account is subject, and is not bound to satisfy itself of the due application of that money. (2) This section does not relieve an ADI or other financial institution of liability for negligence.