Booklet: Company Title Essentials (Chapter 5 – Obligations, renovations and records)

Company Title Essentials booklet

Below is Chapter 5 of our ‘Company Title Essentials’ booklet. To read the other chapters of our booklet, click the links below:

Obligations, renovations and records

Work health and safety obligations  

Until November 2016, company title companies were required to comply with the full range of obligations imposed on persons conducting a business under the Work Health and Safety Act 2011 (NSW) and Work Health and Safety Regulation 2011 (NSW).  Since November 2016, many company title companies have been exempted from most obligations.  

Company title companies may still be required to comply with work health and safety obligations if part of their building is used for commercial purposes, or if they are directing contractors to carry out works involving dangerous plant or chemicals.  

It is important to remember that company title companies may be liable for risks to visitors that do not arise under the work health and safety legislation.  For example, they may be liable in tort as occupiers of common property at general law.  This means that, while companies need not specifically comply with work health and safety legislation, they should seek to take reasonable steps to comply with its spirit to ensure that the common property is safe for all entrants.  

Fire safety obligations  

Part 9 of the Environmental Planning and Assessment Regulation 2010 (NSW) requires companies to provide Fire & Rescue New South Wales with an Annual Fire Safety Statement.  The Annual Fire Safety Statement is a certificate prepared by a qualified fire consultant confirming that each of the essential fire safety measures contained in the building’s approved Fire Safety Schedule function properly.

Fire safety cannot be treated merely as a routine matter of regulatory compliance.  As Deputy Coroner Dillon explained in his final report on the Inquest into the Death of Connie Zhang, all persons with responsibility for the management of residential buildings should seek to establish a ‘real safety culture’ that is built on a constant ‘mindfulness’ of potential fire safety risks.  

Directors should be mindful of their legal responsibilities for safe building and remember that to tradesman, fire inspectors and others, the building is a workplace, with all that that implies.  

Boards should engage an experienced fire consultant to make regular reports to the board on fire safety matters and review his or her performance and contract on an annual basis.  

Renovations by Shareholders  

The House Rules should specify what types of renovations a shareholder can carry out without the consent of the directors, and what renovations can only be carried out with consent. 

Companies should require any renovations involving common property, which change the external appearance of the building, or which have the capacity to cause significant noise or disruption, to be carried out with the consent of the directors.  Because the concept of ‘common property’ is often ill defined in company title constitutions, it is best for the House Rules to be quite detailed in outlining what sort of works require consent.  

Where work requires consent, a prudent board will require shareholders to submit plans for the work and licence details of the proposed contractors before granting consent, and will grant consent subject to certain conditions, including: 

  • Requiring the shareholders to carry out the renovations in accordance with the plans that they have submitted; 
  • Regulating the times of day during which the shareholder can carry out the works; 
  • Where the renovations involve wet areas such as bathrooms, a condition requiring waterproofing to be installed and to indemnify the company for any loss or damage caused by faulty waterproofing or a failure to install waterproofing;  
  • Condition requiring the shareholder to ensure that the tradesperson notes the company as an interested party on its insurance policy;  
  • For long renovations, a condition requiring the shareholders to update the directors at regular intervals as to how the renovations are proceeding; and  
  • A condition requiring the shareholder to confirm whether or not planning permission is necessary and, if so, to forward the application for development consent to the directors.  

Certain renovations by shareholders will require the shareholder to apply for development consent or a complying development application.  If this is the case, the directors of the company may be required to sign off on the application.

Renovations by the Company  

It is important that a company carries out a reasonably comprehensive due diligence process when it wishes to undertake a major renovation.  The company should:  

  • Make sure that a qualified architect, engineer or consultant has assisted with the preparation of plans;  
  • Obtain and compare quotes from a number of qualified and experienced tradespeople;  
  • Review the contract with the builder to ensure that it complies with the requirements set out in the Home Building Act 1989 (NSW);  
  • Ensure that the builder has an appropriate insurance policy; and  
  • Engage with the local council to ensure that development consent is not required.

Major renovations can affect the harmony of the building, particularly if certain shareholders disagree with them.  

It is important to make sure that all shareholders are provided with regular information about the progress of the works, any disruption or noise that could be caused by the works, and the due diligence that the company is carrying out.

Some renovations and developments will require planning consent.  Others will be ‘complying’ developments that are eligible for a fast-track approval process.  Others will require the company to lodge an application for development consent. We have discussed some of these concepts below.

A development or renovation being classified as an “exempt development” means that planning approval is not required.  Exempt developments are outlined in the State Environmental Planning Policy (Exempt and Complying Development Codes) 2008.  Developments must comply with the development standards within the Codes.  Exempt developments may include privacy screens, fences, balconies, shade structures and renovations to kitchens and bathrooms.  

Complying developments are straightforward developments that can go through a fast-tracked approval process.  To be fast-tracked, a development must meet the specific criteria also outlined in the Codes.  Complying developments may include works to improve fire safety, building a fence, earthworks or removing or pruning a tree.  A Complying Development Certificate (CDC) will need to be issued.  An application for a CDC can be lodged with council or a private certifier.  The CDC must be issued before work commences.  

Speaking to a certifier or council before plans are finalised will ensure that development requirements and standards are set.  

The NSW Government’s Planning Portal website has a useful tool called ‘Find a Property’.  It can be used to see what planning constraints and zoning rules may affect your building.  

It is a good idea to obtain advice from a development consultant, with respect to any proposed structural alteration to a unit or common property, to guide the board through the development application and approval process.

Maintaining Company Records  

It is important that companies retain important documents (in physical and electronic form) for a period of at least seven years. 

The following records should be kept:  

  • A copy of all financial statements, including balance sheets and profit and loss statements;  
  • A copy of all minutes of directors’ meetings and general meetings of shareholders;  
  • A copy of documents associated with all transactions entered into by the company, including building contracts and insurance contracts; 
  • A copy of all interactions with regulatory authorities, such as ASIC, Safe Work Australia, and the ATO; and  
  • An up-to-date register of members should be maintained at all times.

The company should also maintain a register of any charges or security interests registered over assets owned by the company.  Such security interests may arise if the company borrows money from a bank.  

If you need help ASIC Information Sheet 76 has a comprehensive list of the records a company should keep.  Section 9 of the Corporations Act 2001 (Cth) also contains a definition of ‘financial records’ outlining the records companies are required to keep.  

Consider uploading your physical documents to a cloud computing server.  It is important to have a digital backup that can be used if physical documents are damaged or destroyed.  

To download a PDF of our booklet, enter your email below.

 

The information contained in this post is current at the date of editing – 3 April 2024.