Company Restoration Factsheet
The Registrar of Companies has power under Section 1000 of the Companies Act 2006 to strike a company off the Companies Register if he has reasonable cause to believe that a company is not carrying on business or in operation.
The Registrar may consider a company to be defunct if accounts and annual returns are not filed on time. If this is the case, he may invoke the strike off procedure which consists of sending a series of warnings to the company's registered office. If no reply is received within a specified time limit a notice will be published in the London Gazette stating that at the expiration of two months, unless cause is shown to the contrary, the name of the company will be struck off the Companies Register and the company will be dissolved. Very often, companies do not notify the Registrar of a change of registered office resulting in companies being struck off without their knowledge.
Alternatively, a company may be struck off the Companies Register on an application for voluntary striking off by the directors.
Once a company is dissolved, its bank account will be frozen and its assets are deemed to be bona vacantia and will belong to the Crown, or the Duchy of Lancaster or the Duke of Cornwall depending on the location of the company's registered office. The Crown, or the Duchy of Lancaster or the Duke of Cornwall (as the case may be) may then dispose of the company's assets.
To recover its assets and/or continue trading, or to bring a claim against the company, the company must be restored to the Companies Register. Upon restoration, if the company's assets have been disposed of, the company is entitled to an amount equal to the value of the assets as at the date of the disposition. There may be deducted from the proceeds of sale the reasonable costs of the Crown representative in connection with the disposition.
There are two methods of restoring a company to the Companies Register. These are known as Court Restoration and Administrative Restoration. The appropriate method to adopt in any given case will depend on the circumstances of the strike-off and the reasons for restoration.
An application for a Court Restoration may be made irrespective of whether the company was struck off for failing to deliver accounts and annual returns on time or on an application for voluntary striking off by the directors.
It is an appropriate method of restoration where restoration is sought for a limited period to recover assets or pursue a claim as it is not necessary in those circumstances to file overdue accounts and annual returns and there will be no late filing penalties to pay in respect of any overdue accounts.
An application for a Court Restoration may be made by a former director or member of the company as at its date of dissolution, a person with a potential legal claim against the company, a creditor of the company at the time of its striking off or dissolution, persons entitled to notice of application for voluntary striking off or by any other person appearing to the court to have an interest in the matter.
An application to the court for restoration must be made within six years from the date of dissolution of the company.
An application to the court for restoration may be made at any time for the purpose of bringing proceedings against the company for damages for personal injury.
The court will require evidence explaining how the company came to be struck off the Companies Register. Subject to the court being satisfied with the evidence and a letter from the Government Legal Department or the solicitor to the relevant Duchy stating that no objection would be raised to the Order being made, the court will normally make an Order restoring the company to the Companies Register.
Upon delivery for registration of an office copy of the Order to the Registrar of Companies, the company will be deemed to have continued in existence as if its name had not been struck off and dissolved.
An application for Administrative Restoration may be made if the following conditions are met:-
- the company was carrying on business or in operation at the time of its striking off;
- if any property or right has vested as bona vacantia, the Crown representative has signified to the Registrar of Companies in writing consent to the company's restoration;
- the applicant has delivered to the Registrar of Companies any overdue accounts, annual returns and any other documents to bring up to date the records kept by the Registrar;
- the applicant has paid any penalties for failure to deliver accounts that were outstanding as at the date of dissolution or striking off; and
- the application is accompanied by a statement of compliance.
An application for Administrative Restoration may only be made by a former director or a former member of the company as at its date of dissolution and must be made within six years from the date of the dissolution of the company. It is an appropriate method of restoration only where the company intends to continue trading following restoration.
If the above conditions are met, the Registrar of Companies will decide whether or not the company should be restored. If the Registrar refuses an application for Administrative Restoration, an application may be made to the court to restore the company.
An application for Administrative Restoration cannot be made where the company was struck off the Companies Register on an application for voluntary striking off by the directors. In such circumstances, an application for restoration must be made to the court.
These notes are intended for general guidance only and individual advice should be sought as appropriate.