Company Title Conversion
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Transcript of Company Title Conversion
© Copyright 2012 Teys Lawyerswww.teyslawyers.com.au
Conversion of Company Title Schemes to Strata Title
© Copyright 2012 Teys Lawyerswww.teyslawyers.com.au
Why should we convert to strata title?
• Own a subdivision of airspace above the ground on separate title
• Can sell, mortgage, or lease the lot itself, without the cumbersome share/unit procedure
• Ready made dispute resolution procedure through legislation including mediation and the Tribunal
• Having strata title to land means a higher market value than company title
© Copyright 2012 Teys Lawyerswww.teyslawyers.com.au
What are some disadvantages of conversion?
• Can not decide who will be permitted as an occupant
• Land Tax and Stamp Duty may apply
• Higher rate liability (water, electricity)
• May be capital gains liability on conversion
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Power to Convert
• The company must have the power to convert
• If no power, the company must change the Constitution to provide the necessary power
© Copyright 2012 Teys Lawyerswww.teyslawyers.com.au
Decision to Convert
• Canvass the opinion of shareholders
• Put forward a proposed motion to investigate conversion option:
“THAT this meeting approves conversion of the company home unit scheme to strata title and that it supports the directors of the company in their proposed investigation of such a course of action.”
• Unanimous approval is commonly required. This is specified in the Articles of Association and requires an Annual or Special General Meeting.
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Matters Affecting Conversion
• Corporate Issues
• Local Government Requirements
• Survey Matters
• Mortgagees of shares
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Steps to Conversion
Company Consent Requirements
• Altering the Memorandum of Association to allow conversion (commonly requires special resolution and notification must be provided to ASIC within 21 days of passing the special resolution)
• Formal Decision to Convert
• Consent of all shareholders in writing
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Steps to Conversion continued…
Town Planning and Strata Plan Preparation
• Consult with a Town Planner at the pre-development application level
• Brief surveyor to prepare Strata Plan and measure the lots in compliance with Planning Instruments (LEP and DCP)
• Surveyor Plans and Report to be submitted to local council for Development Application (consent may be required for additional items as part of DA process)
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Steps to Conversion continued…
• Registration at Land Titles Office
• Transfer of lots to shareholders in the company (Stamp duty payable on transfer)
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Winding Up the Company
• Once lots are transferred, shareholders must commence a voluntary winding up of company.
© Copyright 2012 Teys Lawyerswww.teyslawyers.com.au
323 Beaconsfield Pde – Case Study
• 18 lots converted to Strata Title;
• 12 mortgagees; 2 caveators and 1 dead owner;
• Re-alignment of boundaries of car parking spaces;
• Increase in value of $80,000 per unit*