Jonathan Masucci takes a closer look at the circumstances that are likely to lead to a company’s removal from the Register of Companies, together with the legal status of any assets owned by a company following its removal and the key steps involved in restoring it to the Register of Companies.
Why restore a company to the register?
There are various situations where the need arises to restore a company, most commonly where:
- A company is struck off for failing to comply with necessary administrative regulations imposed by the Companies Act 2006, for example the filing of confirmation statements and accounts
- A party wants to take action against the company in order to obtain compensation or redress for an unresolved claim
- The company owned an asset of value or importance when it was dissolved, and wants to re-claim ownership.
What happens to a company's assets when it is struck off the register?
A company is a separate legal entity from its shareholders and has separate rights and liabilities as a separate legal person. It will own its assets and be responsible for its own liabilities. A key point to note, is that this separate legal personality exists for so long as it is registered. As a result, when a company is struck off or dissolved, it ceases to exist and as a result, any assets it owned become “bona vacantia” (the Latin phrase for “ownerless goods”) and pass to the Crown. The Crown does not have to deal with the assets in a particular way but once such assets have transferred to the Crown, they will be handled by the Treasury Solicitor, who will usually sell them for full market value on the open market. Such assets include property, land and interests in land, mortgages, shares, intellectual property, and any benefit of other assets or agreements that the company entered into.
If you are a former member or shareholder of a company that no longer exists and you want to reclaim an asset from the Crown, you will need to restore the company, or buy the assets back for the open market value. This can be avoided by the directors and shareholders ensuring that assets or property are dealt with quickly and efficiently before the company is removed from the Register of Companies. Where this is not possible, another solution is to apply to have the company restored to the Register of Companies.
What is company restoration?
When the Registrar of Companies publishes a notice in The Gazette that it has struck off a company from the register at Companies House, the company is no longer a legal entity in its own right, and is therefore deemed to be dissolved. However, there are two procedures by which a dissolved company can be restored to the register, Administrative restoration and Restoration by Court Order.
1. Administrative Restoration
Administrative restoration involves applying to Companies House to have the company restored. You can only apply in this way if the following criteria are satisfied:
- You were a director or shareholder at the time the company was dissolved
- The company was struck off the register and dissolved by the Registrar of Companies within the last six years
- The company was trading at the time it was dissolved.
If any of these three requirements cannot be met, you cannot apply to have the company administratively restored and instead, will have to apply via a court order to get the company restored (please see Restoration by Court Order below).
Where administrative restoration is available, the process will usually involve sending the following to Companies House:
- A completed application for administrative restoration
- A fee of £100 payable to ‘Companies House’
- Any outstanding documents such as accounts or confirmation statements that were outstanding at the time the company was removed from the Register of Companies, together with any late filing fees, interest or penalty payments due
- If the company had assets, a waiver letter will also be required from the Bona Vacantia Division of the Government Legal Department which is responsible for dealing with any ownerless assets on behalf of the Crown
- A Statement of Compliance confirming that the applicant has standing to apply and that the conditions for administration under the Companies Act 2006 have been met.
If the application is successful, the Registrar of Companies will confirm the company has been successfully restored and it will be deemed to have continued in existence, as though it had not been dissolved or struck off.
If the application for administrative restoration is unsuccessful, you may still be able to apply for a court order to have the company restored within 28 days of the Registrar’s decision, even where the period for applying to the court for restoration has expired. Alternatively, it might be possible to obtain a discretionary grant (if you are making the application, were a shareholder of the company and you need to claim some money back).
2. Restoration by Court Order
If a company was subject to insolvency proceedings before it was struck off the register or Administrative Restoration is not an option, restoration by the court will be the appropriate procedure to follow. Applicants must apply to the court within six years of the company being dissolved.
You may be able to apply for a court order to restore a company if:
- You did business with them
- You worked for them
- They owed you money when they were dissolved
- You’re responsible for their employee pension fund
- You have a shared or competing interest in land
- You were a shareholder or director at the time when the company was dissolved.
To apply for a court order, applicants must complete a claim form to restore the company by court order and send the completed form to the nearest court to the company’s registered office that deals with bankruptcy. A witness statement containing the information outlined in section 4 of the Treasury Solicitor’s guide to company restoration and the £280 court fee will also need to accompany the application.
If the claim is accepted, the court will issue an order to restore the company. Once received, this must be sent to the Registrar of Companies who will then action the restoration of the company at Companies House.
What is the effect of restoration where property has vested as bona vacantia?
If an application for either Administrative Restoration or Restoration by Court Order is successful, and the property has not been disposed of in the meantime by the Treasury Solicitor, it will belong to the company once again. However, if while the company has been dissolved the Crown has disposed of an asset, the company will not be entitled to have the asset returned to them. Instead, the Bona Vacantia Division will pay the amount they received from the sale of the asset, after deduction of any costs they incurred in dealing with the sale.
If you are look for assistance in applying to restore a company to the Register of Companies or for further advice on this topic, please contact Jonathan Masucci or a member of our Dispute Resolution team.
