Strata communities are a hot trend, and the new thing in the market brings about so many terminologies that we would like to understand better. Thus, you might be wondering what is the difference between a company and a body of corporate management, and what else should I know? Don’t worry. We have you covered; we have tried to simplify the two and share the necessary information we feel will be of use.
A better understanding of a company
A company and body corporate have a few differences that we will get to understand better. Let us begin by understanding what a company is. A company has a board of directors and shareholders who help run and manage the company, where the company owns all the assets. In turn, the shareholders own a proportionate of the company’s assets. Therefore, if you are a shareholder of a company, you own a proportionate share, depending on the number of shares you bought, of the company’s asset. It is from coal, copper, buildings, or offices that the company could have acquired over time.
And what is a body corporate?
When we talk of a body corporate management like ebcm.com.au, it is a little similar to a company but a much smaller scale. A body corporate owns several individual lots and properties. The lots that the corporates have under them could be apartment units that actual owners own. And the owners could either be living in those units or rented them out. But for the body corporates, they own everything else that surrounds these units, which we tend to refer to as common property. It is from the pools, the roads surrounding the units, the beautiful garden, lifts, and any other amenities. The lot owners also own a proportionate share of the common property within their unit.
It does not stop here with the lot owners; since they own a proportionate of the common property, they are also members of the body corporates. If they would like to leave the corporate body, this can only happen if they sold their lot, just as you would if you are interested in leaving a company. You would need to sell your shares, and from there, you are no longer part of the said company.
The body corporates have been established as a separate legal entity; this means that it can enter into its own contracts and manage their own legal proceedings as a body. All this is done through the committee.
Some of the services a body corporate carries out
There is a list of services that a body corporate carries out; we have just listed a few to understand better what they offer.
- The body corporate handles any disputes that might arise within the community.
- They advise on statutory obligations.
- They handle the planning and environmental matters that would affect the community.
- They handle the by-laws, and building defects, defamation, any lot entitlement adjustments, litigation, to name a few.
They are the body that makes sure the strata community is run smoothly, making your stay within the lots much more comfortable.
Main Differences between Company and Corporate
In the further text, we will list some of the most important differences between the company and body corporate, so you can have a clear insight of what their features are and what each of these organizations represents.
The first difference is that a company is more suitable for the smaller form of businesses and corporates for larger business form. Also, they are different by the ownership type. In the company, members are owners, and in the corporate the owners are shareholders. Also, in the company, the number of owners is limited, while in the corporate organizations the number is of shareholders and funders is not limited. Despite this, companies have managements that are in charge of the organization processes, yet corporates have a board of directors. Companies do not have regular meetings while shareholders in companies meet regularly, and they are not allowed to miss the meeting.
One more difference is the fact that companies are known for different names in different countries. Despite that, companies have fewer legal requirements and paperwork than corporates which are full of paperwork and legal procedures.
When it comes to legal agreements, a company has less of them, while corporate has a lot of agreements and legal obligations. Another difference is the taxation status between these two institutions. In a company, pass-through taxation is allowed which means that both profits and losses are passed down to the owners, while there is no such an option in corporations. Besides those things, the company has less transparency because of the flexible requirements, while there is a big level of transparency in corporate’s case because there are rigorous regulatory requirements.
The last difference is surely the public trust. While companies do not enjoy public trust, corporates enjoy it on a big level. As you see, there are truly many things that will help you distinguish these two legal organization forms.
Key Similarities between Company and Corporate
After we mentioned some of the crucial differences between these two institutions, it is time to see whether they have some similarities. In the further text, you will see that despite so many differences, there are even some common things that companies and corporates share. Let’s see them.
The first similarity, that you probably already know, is that they are both business organization forms. In general, they have legal entity status, and their existence is based on legal work and legal procedures. Despite that, both institutions have physical assets and property in their name. Also, both of the organizations can exist even after demising or switching their original owners and founders. More precisely, even when people in those organizations are changing, the name and the essence of those two legal organizations can stay the same for a long period. One more similarity is the fact that they have the right to sue and be sued by other persons, companies, entities, and governments. As the last similarity, you should know that both companies and corporates have limited liability.
With the new terminologies, it can get a little confusing. But in a nutshell, a company is made of shareholders and a board of directors. While a body corporate management is an entity in itself, and unit owners are part of this body. Like any company you would like to opt-out of, as a shareholder, you would need to sell your shares in a body corporate as a lot owner; you just need to sell your lot.