Efficient company restorations – company law specialist’s secrets revealed
When a company is dissolved or struck off the Companies Register, it no longer legally exists. This can cause untold problems particularly if the dissolution was done unintentionally and the company owns valuable assets. A company is struck off the Companies Register for two main reasons; voluntarily by the directors or by Companies House due to statutory documents missed or filled in incorrectly.
If the dissolution of the company was not planned this will cause major problems for shareholders. This is because once a company is struck off, any assets it owned passes to the Crown and depending on the circumstances the only way to retrieve these assets is to make a successful application for a company restoration. The most efficient way to do this depends on the purpose of restoring the company and how it was struck off. In reality there are only two ways to restore a limited company to the Company Register:
Court Order Company Restoration: the company must be restored via an application to court with the option, post restoration, to either continue trading with the company, or to recover assets. This method is used mainly in the following situations:
- When the directors have struck the company off voluntarily.
- If the DS01 form (application to strike off) has been filed
- If a claim has been issued which involves the dissolved company
Administrative Restoration: the company is restored by application to the treasury solicitors and Companies House. The benefits of this method are reduced time to complete and minimal costs. This method is used mainly when a company has been struck off due to non-compliance and is still continuing to trade. In this case the company will need to bring statutory documents up to date such as any annual returns and accounts and pay any fees associated with them.
So far, so good and relatively well known but as a company law specialist I can let you in on a few secrets you may not already know. This might just be the solution you need to solve a current issue which will put you in good stead with a client:
- If a dissolved company has a cash asset of less than £3000, held by the treasury solicitor you do not have to restore the company. You apply for a Discretionary Grant instead (currently the cost is £220.00 + 5% of the asset).
- If you are restoring to release an asset, there is no requirement to bring the company into good standing. So no accounts or annual returns need be filed as this is a court procedure.
- If the asset is a commercial lease and the landlord is willing to co-operate, the treasury solicitor may allow the transfer without the need to restore the company.
- Banks are required to freeze the accounts of dissolved companies and transfer the money to the crown. If you are voluntarily dissolving a company make sure the bank account is closed down and any assets like property are accounted for before dissolution.
- If the money is with the Crown the client does not lose it but has to complete additional procedures after the company has been restored to get the money back.
- The administrative procedure requires all outstanding accounts and annual returns to be presented to Companies House together with filing fees of £40.00 per annual return. This is can be accompanied by a fine of up to £1500 in any one year for any missing accounts. These fees and penalties do not include agent fees or vat.
- An administrative restoration can take up to three weeks where as a court procedure takes up to six months.
- Both court and administrative routes allow clients to restore up to a maximum of six years after dissolution. There is no time limit on restorations for insurance claims.
- The person signing on behalf of the company must have been a shareholder in the company at the time of dissolution. A creditor can also apply but not a director who is not a shareholder.
- If a company has had a liquidator or receiver appointed and been subsequently dissolved only the liquidator/ receiver can apply to have the company restored. This procedure is only available for up to two years from dissolution.
- If the company has a registered office in either Lancashire or Cornwall both are classed as duchy areas of responsibility and an additional fee of currently £180.00 will apply.
The best thing to do is not to have a company dissolved unintentionally by keeping all documents up to date. We can certainly help you and your clients achieve this. However, if this is a situation you are dealing with and need some advice get in touch.
Categorised in: Company Law
This post was written by Adrian Smart