Dissolved Company Restoration
A limited company is a legal person and an entirely separate entity in law. A company can be sued and can sue (or can pursue claims) in the name of the company.
Companies House maintains a register of Companies registered in England and Wales — these are the companies that we typically deal with when instructed to assist with restoration.
Companies are owned by their shareholders. There can be a multitude of reasons why a company structure can be useful including legal and tax reasons/planning. Any company can come to the end of its life, and its usefulness for shareholder owners can change over time.
When it is dissolved, any company will be removed from the Register of Companies which is kept at Companies House. It will then not technically exist.
As a legal person, a company can (and usually will) own assets — money in a bank account, shares, property, other assets such as equipment or stock, the benefit (or burden) of contracts. Holding companies can be useful wrappers for keeping assets away from any personal liability.
There are lots of triggers for company dissolution and some of them can be as simple as the shareholders not needing the company any longer. Dissolution can then be arranged by the shareholder owners and directors by filing a DS01 form (application to strike off a company from the register at companies house). Alternatively companies are automatically struck off the register and cease to exist if the shareholders and directors fail to follow the correct administrative protocols regarding company records, filings with companies house, and accounts.
We are often instructed later to assist in the restoration of a company where either assets were overlooked (such as monies, property or shares), or where the company purposes still exists and it is needed, and the dissolution happened simply due to an oversight. At the point a company is dissolved the directors and shareholders lose their locus, or standing, to act on behalf of the company because the company no longer exists. That means bank accounts cannot be accessed or used, and property assets will also be transferred (eventually) to the crown estate. This is administered by the treasury solicitor on behalf of the crown.
For these reasons, dissolution can be disastrous for shareholders as company assets will revert to the crown via what is known as bona vacantia (similar to the more commonly known process where someone dies intestate)- company assets won’t be gifted or returned to shareholders who will simply be ignored. Therefore shareholders will want and need to deal with all assets (and liabilities) before any dissolution is allowed to proceed. Otherwise, assuming a discretionary grant is not available, it will be necessary to restore the company. Restoration then enables the directors and shareholders to recover and deal with assets held by the company, as they wish.
For all the above reasons it’s possible to restore a dissolved company to the Register in certain circumstances, but the process to achieve this will depend on why dissolution happened. The status (or standing/position) of the applicant looking for the company to be restored is also relevant in terms of whether restoration is possible, and the process which needs to be followed.
We have dealt with company restoration in the context where there is a shareholder dispute, and say one director/shareholder, perhaps in control of the company administration, deliberately causes or allows the company to be dissolved thinking (wrongly) this will improve their position. For this reason there can be overlap between this area of work, in having companies restored, and shareholder disputes and unfair prejudice.
How To Apply for Administrative Restoration of a Dissolved Company
The Companies Act 2006 created two protocols to restore a dissolved company to the Register, one involving a court order and the other which is called an administrative restoration which is handled by the Registrar of Companies without need for an application to the Court. Administrative restoration is only possible in certain defined and limited circumstances.
We handle both administrative restoration and also restoration via court claim where an administrative restoration is not possible or available.
We will initially take instructions and review and understand the background and evidence including understanding why dissolution took place, and what the best approach is now to resolve the issue. With our review and advice in hand next steps, including the most appropriate process, can then be considered.
Wherever possible we will try to approach restoration via the administrative process. That can be cheaper and quicker, but can also come unstuck on occasion.
Where an administrative restoration is not available, we will advise and assist in relation to issuing a claim.
Claim Form and Particulars of Claim
Part 8 of the Civil Procedure Rules requires the completion of a Claim Form with the detail of the claim called Particulars of Claim both of which are filed at the relevant Court plus payment of a fee. These papers are then served on the Respondents.
Registrar of Companies
With any company restoration it is necessary to approach both the registrar of companies, essentially the head of companies house, and the treasury solicitor, who has responsibility for these matters on behalf of the crown. We seek to establish their requirements to agree to an Order that the company be restored. We then work with directors and shareholders to put the necessary documents and processes (requirements) in place to facilitate an agreement. Typical examples of requirements can include ensuring any missed sets of accounts and filings are brought up to date, and that any annual fees that would have been due and payable had the company not been dissolved, are paid. We might work with an accountant to also assist in getting these aspects in hand.
Setting a Date
The court will then set a hearing date usually around three months after the claim has been issued in order to allow the company officer time to comply with the Registrar’s requirements.
As above, our preference in these circumstances is to try to reach an agreement with both the Treasury Solicitor and the registrar of companies. We can then often agree a consent order and avoid the need for (cost and time of) the hearing itself. We therefore use the three months to try to achieve this.
The Registrar of Companies via the Treasury Solicitor will set out their requirements for consent to an Order and undertakings are necessary from the Claimant to the court in line with these requirements.
Bona Vacantia Letter
Bona Vacantia is Latin for ‘ownerless goods’ or ‘empty good’ and refers in this context to any assets held by the company when it was dissolved; at this point the assets are technically ownerless as the legal body of the company has ceased to exist and so they pass to the Crown. It is this outcome that a restoration attempts to avoid.
Bona Vacantia property is dealt with on behalf of the Crown by the Bona Vacantia Division or BVD of the Government Legal Department. If a company is restored, then it can recover Bona Vacantia assets provided they have not been disclaimed by the Crown; this has to be done within six years of the company’s dissolution.
In any circumstance when a Claimant is applying for restoration of a dissolved company, the law says you must obtain the Crown representative’s written consent – this is called a Bona Vacantia waiver letter. At this point in the restoration process, a Bona Vacantia waiver letter must be obtained and added to the evidence for the Court.
Where instructed we immediately seek to obtain this.
Provided all the steps have been satisfactorily completed, the company restoration is dealt with via a Consent Order at a listed hearing.
The sealed order is served on the Registrar of Companies who restores the dissolved company to the Register with the effective date being the date that the Order is delivered to the Registrar.
The other type of company restoration is a different process whereby a company is restored to the Register without an application to the Court. A company can only use this method of restoration if it was struck off by the Registrar under sections 1000 or 1001 of the 2006 Companies Act or under section 652 of the 1985 Companies Act.
Who Can Apply to the Court to Restore a Dissolved Company?
Who can apply depends upon which type of restoration is being sought. We assess this with you, where we are instructed.
If a Court Order is being applied for to restore a company, then a former director or member (shareholder) of the company can apply, a party who was a creditor of the company at the point it was dissolved or struck off, and anyone with a potential legal claim against the company or who would have been in a contractual relationship with the company if the company had remained trading.
Further, any manager or trustee of a pension fund established for the employees is also allowed to apply.
In the case of an administrative restoration so without a Court Order, only a former director or member of the company can apply.
Restoring a Dissolved Company by Court Order — A Location Guide
When Solicitors refer to ‘the Court’, there is more than one court which can issue consent orders to restore a company to the Register. This is based purely on geography and where the registered offices of the company were located before it was dissolved.
As a rider to this, the Companies Court in London does have the jurisdiction to deal with an application regardless of where the company was located. We will most often use the Companies court for this reason.
Certain District Registries across England and Wales have what is called Chancery jurisdiction and so can deal with restoration applications regardless of the location of the company’s registered office. These are;
How Helix Law Can Help
We at Helix Law are a firm of specialist litigation solicitors. We are experienced in dealing with issues and in resolving problems involving companies, and their owners. We can provide specialist advice on all aspects of company restoration including reviewing and advising on the most appropriate process to save time and money.
Our dedicated team handles disputes in the courts and, where a claim is necessary, we are experienced in the broader landscape and all aspects of company and commercial disputes and issues.
Book A Call Back
People frequently tell us that we’re approachable and offer great advice.
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Frequently Asked Questions
To ascertain whether you have a case to sue a party for a breach of contract, it is advised that you consult an experienced contract lawyer. If you have broached the subject with the other parties to the contract and aren’t receiving a satisfactory response, legal advice may be your best bet.
If you think contractual obligations have been breached by another party, contact Helix Law’s contract solicitors today to find out how we can help.
Helix Law can read over your potential contracts to check for issues that could cause legal trouble down the line. Our contract lawyers can also help you create contracts from scratch to minimise risk.
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A breach of contract occurs when a party does not comply with the terms of a legally binding contract. Contracts exist to ensure mutual benefit between parties - if one doesn’t perform their obligation, another party loses out. The innocent party has the right to compensation for their losses, usually by seeking damages.
If you have been affected by a breach of contract, contact Helix Law’s contract lawyers today to start a claim.
There are six necessary components of a valid contract. They are:
For there to be a contract, there must be an offer. One party makes an offer to another to initiate the process of entering into a contract. The offer may be verbal or written.
Another party must accept the offer to create a valid contract. They should be clear on the terms and conditions of the offer and accept all of them. If you accept some but not all of the terms of the offer this is a counteroffer. Again, acceptance of an offer or the making of a counteroffer can be verbal or written. If a party makes a counteroffer then the original offer is cancelled and cannot later be accepted unless the party that made that original offer agrees to reinstate it.
“Consideration” in contractual terms means what the accepting party does in return for the offer. Contracts require an exchange of consideration. It can be payment or the promise to perform another obligation in return. It ensures that the initiating party gets something in return for delivering their offer.
- Intention to Create Legal Relations
Both parties are clear that the contract is legally binding and that if contractual terms are not performed by either party, legal action will ensue.
Terms and regulations must be made clear and understood by both parties to the contract. Without certainty, the contract would not be valid.
All parties to a contract must have the legal capacity to enter it. For instance, people under the age of 18 in the UK have no legal capacity to enter into contracts.
A person must be 18 years of age to legally enter into a valid contract. The age of contractual capacity in the UK has been set at 18 years since 1969 when a person is said to attain “majority”. However, there are limited circumstances where those under 18 can legally enter into contracts, such as a 16-year-old entering a valid employment contract.
“Consideration” means the obligations that the parties promise to perform in return for the agreement, such as pay for a service or perform a duty.
There are many conditions that can make a contract unenforceable, such as:
- Lack of capacity: for example, if a party to a contract is a minor, if they are deemed incompetent to enter a contract (e.g. if they are mentally disabled), or if they entered into the contract under the influence of drugs or alcohol.
- Duress or undue influence: if a person was forced or threatened into entering the contract.
- Fraud or misrepresentation: a contract can be unenforceable if it is proven that a party has deceived another about the terms of the contract by telling a lie or withholding the truth, leading to a loss to the other party.
- It is illegal: a contract that involves unlawful acts is unenforceable.
- It is unenforceable under laws that protect consumers
To avoid making a mistake or misrepresenting a term in a contract, it is best to have them drawn up or checked by a lawyer. Speak with Helix Law today to ensure a contract is valid.
Oral contracts are considered just as valid as written ones as long as they contain an offer, an acceptance, and consideration. However, it can be more difficult to prove an oral contract was made in court.
There are hundreds of ways in which contractual terms can be breached, which is why it’s best to have contracts created by a lawyer to ensure they are clearly and unambiguously written. However, some of the main ways you can avoid a breach of contract include:
- Ensure that contractual terms are put into writing
- Check that all terms are understood by the other party
- Always seek consent before changing the terms of a contract
- Consult with the other party before proposing changes and consider their views
- Put all agreed changes to the contract in writing
Contact Helix Law today regarding creating or checking a proposed contract. Our solicitors are experienced in business, employment, and property contract law. Speak with one of our lawyers today to find out how we can help.