Below is Chapter 9 of our ‘Company Title Essentials’ booklet. To read the other chapters of our booklet, click the links below:
- Chapter 1 – The basics
- Chapter 2 – Purchasing and selling shares in a company title building
- Chapter 3 – Governance and management
- Chapter 4 – The role of company managers and building managers
- Chapter 5 – Obligations, renovations and records
- Chapter 6 – Rights, duties and disputes
- Chapter 7 – Dispute resolution
- Chapter 8 – Levies
- Chapter 10 – Company title developments
Conversion to Strata Title
The process associated with the conversion of a company title building to a strata title building is complex and can be costly. It does, however, allow shareholders and directors to rely on the provisions of the strata title legislation for the purposes of managing the building and resolving disputes.
The key pre-requisite to conversion is the unanimous support of all shareholders. Without such unanimous support, it is unlikely that the process will be able to be carried out.
The conversion process generally runs as follows:
- The company must be satisfied that it has a power under the constitution that permits it to convert the building into strata title. If the company does not have such a power, it will be required to alter the constitution by way of a special resolution passed by 75% of all shareholders at an EGM;
- The board or the company must resolve to convert the building into strata title in accordance with the constitution;
- A licensed surveyor must be engaged to prepare a strata plan. The plan should be ratified by each of the Shareholders, and submitted to the relevant local council for approval. The local council may withhold its approval until such time as certain building works are carried out;
- The company must obtain approval from all mortgagees who hold security interests in company title shares. Consent is generally given as a matter of course;
- The approved strata plan must be lodged with Land & Property Information for registration;
- Title to the lots in the new strata plan must be transferred to each shareholder. Title in the lots are ordinarily transferred for nominal consideration;
- The transfers must each be assessed for stamp duty. Nominal stamp duty will be charged if the transfer is accompanied by a statutory declaration outlining the nature of the conversion arrangement and affirming that the transferee was the owner of shares in a company title company immediately before the registration of the strata plan;
- Each transferee must register his or her stamped transfer form at Land & Property Information. Upon doing so, they will obtain a duplicate certificate of title and become the registered proprietor of the relevant lot in the strata plan;
- The new Owners’ Corporation must hold its first AGM. There are a number of statutory requirements detailing what must be discussed at that meeting and what information must be provided to the residents; and
- The company should be wound up voluntarily.
Shareholders with mortgages should confer with their mortgagees to discuss the implications of the conversion for their loans.
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Booklet: Company Title Essentials
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The information contained in this post is current at the date of editing – 3 April 2024.