Kydon Segal Lawyers


Company Title Conversion of Duplex to Torrens Title

Company Title Schemes are characterised by the following features.

  • The ownership of the land and buildings is by a limited liability company.
  • The members of the scheme are the shareholders in the company.
  • The shareholders are given exclusive occupancy rights to their respective units by means of provisions in the company’s Articles of Association.
  • The Articles regulate the control and administration of common areas of the land and buildings and the powers and duties of all persons involved in the scheme (including the directors).

Company Titles Schemes can be converted to torrens title.

Power to Convert

Before taking a decision to convert to torrens or strata title, the company must have the power to convert.

It will be necessary to review the  company’s Constitution to ensure that this power is available. Some companies will not have this power and are therefore not covered by the “ultra vires policy” of the Corporations Law. If this is the case, the company’s Constitution will need to be changed to provide the necessary power.

Decision to Convert

Before converting to torrens title it is necessary to determine the wishes of shareholders on the matter by:

  • proposing a motion along the following lines to a general meeting of the company; or
    “THAT this meeting approves conversion of the company home unit scheme to a torrens title scheme and that it supports the directors in their proposed investigation of such a course of action.”.

Matters Affecting Conversion

A number of matters affecting conversion to torrens title require consideration. They include the following.

Corporate Issues

  • Whether the shareholders have separate contractual rights with the company for the occupation of the flat allocated to them by the Constitution notwithstanding a conversion to torrens title.
  • Whether the conversion to torrens title will amount to a modification of the rights of the group shareholders, thus requiring formal consent pursuant to the provision relating to the modification of provisions conferring rights.
  • Whether it is necessary to change the Constitution of the company by a “special resolution” to empower it to proceed with the conversion.

These matters can only be determined after consideration of the Constitution. We can advise on these matters as required.

Local Government Requirements

Although it is beyond the scope of this document to detail local government requirements, in summary it will be necessary to obtain an approval for a torrens subdivision from the local Council.

The recently announced Low Rise Medium Density Housing Code (State Environmental Planning Policy (Exempt and Complying Development Codes) Amendment (Low Rise Medium Density Housing) 2017 which takes effect on 6 July 2018 may also be relevant to this issue. More information about this code can be found here

Survey Matters

Problems may be encountered in surveying for conversion to strata title. In particular:

  • Any encroachment of the building onto adjoining land will necessitate a re-subdivision before conversion, and/or
  • existing easements and rights of way affecting the property may complicate, if not preclude, conversion;

Mortgagees of Shares

If any shareholder has mortgaged their shares, the mortgagees of those shares will need to approve the proposed conversion.
This consent is usually obtained as a matter of course because the mortgagee recognises the improvement in their loan security that will result from conversion.

However, most mortgagees will impose conditions on their consent (including payment of all of their costs).

The company should satisfy itself that it can satisfy those conditions.


Altering The Memorandum Of Association

The first step in the conversion process involves an alteration of the memorandum to empower the company to proceed (if required).

Formal Decision to Convert

So far there has only been an informal decision to proceed to a conversion as well as a change to the memorandum empowering the company to effect the conversion. There must now be a formal decision by the company to proceed with the conversion by a unanimous resolution of shareholders in general meeting.

Subdivision Plan 

A surveyor must prepare the subdivision plan in consultation with the directors to ensure that each shareholder’s lot is identical with the apartment and appurtenances that are exclusively occupied by that person. This is critical if shareholders are to take advantage of the nominal duty provisions in the Duties Act on the transfer of the newly created lot from the company name to the name of the relevant shareholder.

After the plan has been prepared it should be approved by the directors and a copy should be sent to all members for their approval. In this way any errors or omissions will usually be noticed and reported.


Mortgagees should be contacted as it will be necessary to ensure they approve the proposed conversion and the draft subdivision plan.

Local Council Approval

The subdivision plan is then lodged for approval with local council or with an accredited private certifier (as the case may be).
This may also require development consent in some cases.


After local government approval, the plan is lodged for registration in the office of the Registrar-General at the Land Titles Office.

Transfer of Lots

Title to the newly created lots must be transferred to the shareholders in the company.

The transfers are prepared on the basis of a nominal consideration of $50.00 and they must be stamped with New South Wales stamp duty before they can be lodged for registration. Provided the Commissioner for Stamp Duties is satisfied (usually by statutory declaration) as to the following matters only nominal duty will be payable in respect of each transfer.

  • That the transfer is part of an arrangement under which the transferee takes an interest in the lot similar in effect and in substitution for the interest the transferee had in the lot immediately before the registration of the subdivision plan in which the lot is contained.
  • That the transferee was, immediately before registration of the subdivision plan in which the lot is contained, entitled to exclusive occupation of the lot by reason of:
  • being the registered owner of certain shares in a company that had a memorandum of articles of association conferring that entitlement on the transferee;
  • being a lessee having the entitlement conferred upon him under a duly stamped lease for a term exceeding fifty years; or
  • rights under an agreement where those rights were dependent upon his being a co-owner of a parcel within the meaning of the Act.

Winding Up the Company

Once the company has been transferred the lots to shareholders its affairs should be put in order to enable its winding-up by a members’ voluntary winding-up.

The procedure is identical with that prescribed for all companies and is beyond the scope of this blog.

If you are fortunate enough to be in a position where you have approval (or scope to obtain approval) to subdivide a company title property, please feel free to contact the team here at Kydon Segal Lawyers and Click Conveyancing and we will be happy to be of assistance!