Dear Auntie
What’s the go with this Principal Body Corporate/Subsidiary Body Corporate mumbo jumbo? I own a lot in the SBC (I think that’s what it is – who knows with all these crazy abbreviations) and I find I have to go through this labyrinthine process of a ‘representative’ taking things to the ‘principal’. Are we back at school? Why does this have to happen? How can I figure out who does what?
Regards, Esteban
Dear Esteban
Auntie totally sympathises with your pain. While there may well be some commercial reasons for a ‘layered scheme’ to be developed the way it is, the end result is pretty much as you describe: a confusing mish mash of obligations, requirements and responsibilities spread out over the Principal and how ever many Subsidiaries there are.
At its most basic, think of the Principal (aka, PBC) as the Tom Cruise: the star, the headline act, the entity through which all else gets funnelled. Then, you can think of the Subsidiaries (aka, SBC) as the Simon Pegg (Auntie knows her Mission: Impossible): the supporting cast, each of which makes their own decisions and which, ultimately, go then to Tom (the PBC) for the big stunt (decision-making).
Ok, Auntie accepts that may be a clumsy analogy) yet you get the drift. Owners (and occupiers) in a SBC have, since 1 May 2024, some enhanced rights and obligations in this ‘Tom Cruise’ world, particularly in relation to by-laws and records access. Another good rule of thumb: each SBC is its own body corporate. So you have a SBC body corporate and then a PBC body corporate to manage – and make decisions – that impact on all the SBCs. Phew, that is doing Auntie’s head in as well.
Like most things in strata, layered scheme arrangements are something to be methodically worked through, step by (sometimes painstaking) step. Don’t be fooled by the complications though: it isn’t the hardest thing in the world, there is a way forward and anyway, there is no excuse for not doing things properly in a layered scheme . Auntie knows her good friends at Strata Solve have handled a lot of layered schemes issues for owners and committees in these situations – so maybe think about having a chat with them about how they can help.
Do you have a question for Strata Solve’s Agony Aunt? You can ask it here. While Auntie deeply cares about your strata queries, she regrets she cannot give legal advice or answer every single question, as she is a busy woman.