Company Title Conversion

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Information about Company Title Conversion

Published on February 26, 2014

Author: teyslawyers



All you want to know about company title conversion

Conversion of Company Title Schemes to Strata Title © Copyright 2012 Teys

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

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 © Copyright 2012 Teys

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

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. © Copyright 2012 Teys

Matters Affecting Conversion • Corporate Issues • Local Government Requirements • Survey Matters • Mortgagees of shares © Copyright 2012 Teys

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 © Copyright 2012 Teys

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) © Copyright 2012 Teys

Steps to Conversion continued… • Registration at Land Titles Office • Transfer of lots to shareholders in the company (Stamp duty payable on transfer) © Copyright 2012 Teys

Winding Up the Company • Once lots are transferred, shareholders must commence a voluntary winding up of company. © Copyright 2012 Teys

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* © Copyright 2012 Teys

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