What Is a Company Share Title in New Zealand?
A company share title — sometimes called a company share flat or flat-owning company scheme — is one of the lesser-known property ownership structures in New Zealand. Unlike freehold, cross lease, or unit titles, a company share arrangement means you don't actually own the property itself. Instead, you own shares in a company that owns the building, and those shares come with a licence to occupy a specific flat or unit.
This ownership model was popular in New Zealand from the 1960s through to the 1980s, particularly for blocks of flats in Auckland and Wellington. While no new company share schemes are being created today, thousands of these properties still exist across the country, and they regularly appear on the market.
How Company Share Ownership Works
The structure is straightforward in concept but legally distinct from other property types:
- A company is formed that owns the freehold title to the entire building and land
- The company issues shares — typically divided into parcels corresponding to each flat
- Each shareholder receives a licence to occupy a specific unit within the building
- The shareholder has the right to live in (or rent out) their designated flat for as long as they hold the shares
Crucially, there is no individual Record of Title for your flat. The only title that exists at New Zealand's official land registry is the single freehold title in the company's name. Your ownership interest is evidenced by your shareholding and the occupation licence — not by a registered title.
Company Share vs Other Title Types
Understanding how company share differs from other ownership structures helps clarify its unique risks and limitations:
Company Share vs Unit Title
Both are used for multi-unit buildings, but the legal foundations are entirely different. With a unit title, you own your unit outright and it's registered as a separate title at the official land registry. With a company share, you own shares in a company — you have no direct ownership of the physical property. Unit titles are governed by the Unit Titles Act 2010, which provides specific protections for owners. Company shares are governed by the Companies Act 1993 and the company's own constitution.
Company Share vs Cross Lease
A cross lease gives you an undivided share of the freehold land plus a registered lease over your specific area. While cross leases have their own complications, they at least provide a registered interest in land. Company shares provide no registered land interest at all.
Company Share vs Freehold
Freehold (fee simple) gives you complete ownership of land and buildings. It's the strongest form of property ownership in New Zealand. Company share sits at the opposite end of the spectrum in terms of ownership strength.
The Title Search Challenge
Because there's no individual title for your flat, the standard title search process works differently for company share properties:
What You Can Search
- The company's freehold title: A Record of Title with Diagram ($42.90 NZD) for the parent property will show the land, its legal description, and any encumbrances registered against the company's title
- Registered instruments: Any mortgages, easements, or covenants on the company's title can be retrieved as Instrument copies ($39.90 NZD)
- Survey plans: The Survey Plan ($49.90 NZD) shows the boundaries and layout of the land the company owns
What You Cannot Search Through Title Records
- Your individual occupation licence (this is a private contract between you and the company)
- The company's share register (held by the company, not the land registry)
- The company's constitution or rules (filed with the Companies Office, not the land registry)
For a comprehensive view, you'll need to combine title searches with a Companies Office search and a review of the company's own records.
Risks of Buying a Company Share Property
Company share properties can represent good value — they're often priced lower than equivalent unit titles or freeholds. However, buyers must understand the specific risks involved:
1. Financing Difficulties
Many banks are reluctant to lend against company share properties, or will only offer lower loan-to-value ratios. Because you don't own land — only shares in a company — the security is weaker from a lender's perspective. Some banks won't lend at all. If you're relying on a mortgage, confirm your bank's policy before making an offer.
2. Insurance Complications
Building insurance is the company's responsibility, not yours individually. If the company fails to maintain adequate insurance — or if there are disputes about insurance claims — individual shareholders can be left exposed. You should review the company's insurance arrangements carefully before purchasing.
3. Company Governance Risks
As a shareholder, you're subject to the decisions of the company and its directors. If the company is poorly managed, or if shareholders disagree about maintenance, levies, or major decisions, resolving disputes can be complex and expensive. Unlike body corporates under the Unit Titles Act, company share schemes don't have the same statutory dispute resolution framework.
4. Maintenance Fund Concerns
The company is responsible for maintaining the building, funded by levies from shareholders. If previous shareholders haven't contributed adequately, you could face unexpected costs for deferred maintenance. Always request the company's financial statements and long-term maintenance plan.
5. Transfer Restrictions
Many company constitutions include pre-emptive rights or require board approval before shares can be transferred to a new buyer. This can complicate and delay the sale process. Some constitutions give existing shareholders the right to purchase your shares before they can be offered to outside buyers.
6. Limited Resale Market
The financing difficulties and general unfamiliarity with company share titles mean the pool of potential buyers is smaller than for other property types. This can affect both the price you achieve and how long it takes to sell.
Converting Company Share to Unit Title
One option that some company share buildings pursue is conversion to unit titles. This involves:
- All shareholders agreeing to the conversion (usually requires a special resolution)
- Engaging a surveyor to prepare a unit plan
- Establishing a body corporate under the Unit Titles Act 2010
- Registering individual unit titles at the official land registry
- Dissolving the company once titles are issued
Conversion gives each owner a proper registered title, dramatically improving financing options and resale potential. However, it requires collective agreement, professional fees (surveyor, lawyer, valuer), and can take considerable time. If you're considering buying into a company share building, it's worth asking whether conversion has been discussed among existing shareholders.
Due Diligence Checklist for Company Share Buyers
If you're considering purchasing a company share property, thorough investigation is essential:
- Search the company's freehold title — check for mortgages, caveats, and encumbrances that could affect all shareholders
- Review the company constitution — understand transfer restrictions, voting rights, levy obligations, and dispute procedures
- Request financial statements — look at the company's maintenance fund, outstanding debts, and planned expenditure
- Check the occupation licence — confirm exactly which unit you're entitled to occupy and any restrictions on use
- Verify insurance — ensure the building has adequate cover and understand your position if a claim arises
- Search the Companies Office — confirm the company is in good standing and review director details
- Confirm bank lending — get pre-approval before committing, as many lenders have specific policies on company shares
- Get a building inspection — the physical condition of the building is especially important given potential maintenance fund shortfalls
Start with the Title
Even though company share properties don't have individual titles, searching the company's underlying freehold title is still a critical first step. It reveals encumbrances, easements, and any registered interests that affect the entire building.
Our Pre-Purchase Due Diligence Package ($189.90 NZD) provides comprehensive documentation to support your investigation, while a Legal Owner Search ($65.90 NZD) confirms the registered ownership details of the company's property.
Company share properties can be a viable and affordable entry point into the New Zealand property market — but only if you go in with your eyes open and the right professional advice behind you.
