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Restoring a dissolved company

By November 12, 2019February 18th, 2021Corporate/Commercial, Employment for Business

The striking of a company’s name off the register of companies is the last act on the company’s life, following which the company is deemed dissolved and no longer has a legal personality. There are several ways that a company can be dissolved, for example by voluntarily applying for its name to be struck off the register, by the Registrar striking off its name because it is believed that the company is no longer in operation or carrying on its business, or by putting the company into liquidation, following which the company is dissolved.

When a company is dissolved it loses its legal personality and no longer exists. Any assets that are left in the company before its dissolution will automatically transfer to the Crown as “bona vacantia” (ownerless property).

There are many reasons why it may be desirable to restore a dissolved company. For example, the company was involuntarily struck off for not filing its annual accounts, however, the business is still trading. In this situation, it would be imperative to restore the company as quickly as possible. Or the company had assets that have now transferred to the Crown following its dissolution but which are of value or third parties have an interest in them. Or maybe, a third party has a claim against the company and has no other redress but to seek its restoration in order to proceed with the claim.

Whatever the reason, there are two ways that a dissolved company may be restored, either through an administration restoration or restoration by a court order. The administration restoration is only available in limited circumstances but is less expensive than going to the court. However, if the criteria for an administration restoration are not met, restoration by a court order is the only option. Both options need to be used within 6 years from the company being struck off the register, although if the administration restoration is used and the Registrar refuses to restore the company, an application can be made to the Court within 28 days from the Registrar’s decision even if the 6 years’ time limit has expired.

Only former directors or members of the dissolved company can use the administration restoration. On the other hand, a larger pool of people, for example its creditors, any person who has a potential legal claim against the company or an interest in land in which the company had a superior or derivative interest, can apply for a court order.

If a company is restored, either using the administration restoration or by a court order, the general effect according to Companies Act 2006 (“CA 2006”) is that “the company is deemed to have continued in existence as if it had not been dissolved or struck off the register” (sections 1028(1) and 1032(1) of CA 2006). This usually means that the parties will be put in the same position they were in before the company’s dissolution, although sometimes a further application to the Court may be required for specific directions or conditions to be put in place for this to happen. Any assets that have transferred to the Crown as bona vacantia will not automatically transfer back to the restored company and an application will need to be made to the Crown.

Whatever the reason may be that a dissolved company needs to be restored back to the register, seeking legal advice to make sure the correct procedure is used will help save costs and time.

If you are not sure whether your particular situation meets the criteria set out by CA 2006, or which procedure to use, our corporate solicitors can help.

Niki Polymeridou

Author Niki Polymeridou

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