It is well known that a Company is considered its own legal entity. This means that the Company itself is treated as its own ‘person’ in the eyes of the law. This is unlike a sole trader or partnership, where the person(s) in charge of the business is the legal entity. Therefore, when a Company is dissolved, it may look as if this irreversibly concludes matters with that entity.
But what happens if there is still unfinished business with the Company, for example, you recently discover that the dissolved Company still holds land registered with the Land Registry or other money in bank accounts, or you have a claim against it. Once a Company is dissolved, any assets it still holds are automatically the property of the Crown, by a process known as Bona Vacantia.
Can you restore a Company
Under the Companies Act 2006, a Company can be restored after dissolution in limited circumstances. The process allows the Company to be restored temporarily. This allows the Company, directors or creditors to deal with any assets still within the Company’s possession. In addition, this also allows for other parties to bring proceedings against the Company.
How can you restore a Company
Part 31 of the Companies Act sets out two procedures that can be undertaken in order to restore a Company. The correct procedure that should be followed will depend on the following factors; who is applying to restore the Company and what were the circumstances in which the Company was dissolved.
Procedure 1 – Administrative
The first procedure is known as the administrative procedure. This procedure is used when a Company is struck off the register for failing to provide Companies House with the required information. Administrative restoration is only available where:
1. It was not voluntarily dissolved;
2. The applicant was a director or shareholder of the Company;
3. It was struck off the Register in the last 6 years; and
4. It was still trading immediately before it was struck off.
Often Administrative restoration is not appropriate because, in many cases, the Company in question has ceased trading long before it was struck off the Register.
Once an application is made, it will be sent to the Registrar of Companies who will make a decision. In order for the registrar to restore a Company, certain conditions must be met. Such conditions include the filing of any required information to Companies House and the payment of fines for the original failure to file these documents.
If the registrar chooses not to restore the Company then the applicant can attempt the second procedure.
Procedure 2 – Court Order
The second procedure is the more commonly used procedure, because many companies are voluntarily restored, or were not trading immediately before dissolution. However, the process is more complicated and specific rules about the process apply and must be complied with.
This procedure involves making an application to the court, often the Companies Court in London, to restore the Company. The categories of persons who can issue an application to the court are of a much wider scope than that of administrative procedure. While directors and members can apply to the court, so can any individual who the courts believe have an interest in the Company. This includes individuals who have a legal claim against it.
It is necessary to prepare Claim Forms and witness statements which contain prescribed information as well as annexing details of the Company’s assets and accounts. Additionally, it is necessary to obtain certain information from either the Bona Vacantia Office or the Duchies of Cornwall or Lancaster depending on the particular circumstances of the case. Often the Court can deal with the application on paper but there may be a need for a hearing.
It is important to note that restoration by Court order is only temporary, in order to deal with the asset or claim in question and as soon as that issue is resolved, the Company must be dissolved again.
There is a time limit of 6 years from dissolution in which to apply to restore a company via a court order.
Conclusion
The above procedures show that you can restore a Company in certain circumstances, however, you will need to jump through some hoops with the court and/or Companies’ House to do it. These procedures, although complicated, provide a solution in many cases where a Company needs to be restored.
How Tozers can help you
Our team at Tozers have a wealth of experience dealing with these sorts of matters. If you need assistance in restoring a Company then contact one of our specialists today who will be more than happy to explain how we can assist.
