Company restoration explained…
14 October 2019 by Andreea Brindas
If you are or have been involved in the ‘business world’ you may be familiar with the terms of company dissolution and company restoration. Company dissolution is usually the ‘final event’ in a company’s life and upon dissolution, the company’s name is struck off the register of companies, ceases trading and losses its separate legal personality. Company restoration by contrast, is the process of reinstating a company on the register of companies after dissolution.
This blog will briefly explain the circumstances in which you may wish to restore a company, and, how this may be achieved.
Why restore a company
The common circumstances under which someone may seek to restore a company are where:
- a company has been struck off by Companies House for failing to file annual returns and accounts (i.e. compulsory dissolution), but its business continues to trade and therefore, restoration is required so that it can continue to trade;
- a party has an unresolved claim against a company that has been dissolved and wants to take some action against it to obtain compensation or redress (including where a company has been dissolved to actively avoid such a claim; or
- the company had (and continues to have) title to an asset when it was dissolved that is of value or importance and this assets need to be obtained.
Depending on the reason for dissolution, coupled with the reason for restoration, a company restoration may be achieved by pursuing either administrative restoration or restoration to the register by court order.
As suggested by the name, this procedure does not involved a court application, but it is only available in certain circumstances. For example, it was intended for the companies that have failed to keep up to date with their filings (such as annual returns or accounts) and, as a result, they have been struck off the register by way of compulsory dissolution by Companies House. This procedure is therefore unlikely to be available in the circumstances set out at points (ii) and (iii) above and restoration by the Court order should be sought.
The application and process itself is much simpler than restoration by Court Order. This application can be made at the Registrar of Companies directly by a former director or former member of the dissolved company, subject to further conditions and limitations, which include, but are not limited to:
- the application is made no more than six years from the date of the dissolution of the company;
- the applicant pays any penalties for failure to deliver all accounts that were outstanding at the date of the company’s dissolution; and
- the applicant delivers to the Registrar all of the documents that are required to bring the company’s records kept with the Registrar up to date.
It is the Registrar of Companies who will decide whether the company shall be restored and if the application is successful, the company is deemed to have continued in existence as though it had not been dissolved – hence the need for the interim period filings as set out above.
Restoration by the Court
Using this process, a wider group of people are able to bring an application to the Court to restore a company – i.e. former company directors and/or members, creditors, any person having an interest in land or any potential claim against the company.
The Court may restore a company to the register if one of the following are met:
- the company has been dissolved after winding up (dissolved under Chapter 9 of Part 4 of the Insolvency Act 1986);
- the company is deemed to have been dissolved following administration (dissolved under paragraph 84(6) of Schedule B1 of the Insolvency Act 1986); or
- the company has been struck off the register by the Registrar (section 1000 or 1001) or it has been voluntary struck off by its members (section 1003).
The time limitation to bring a restoration application to the Court is six years, unless one of the two exceptions apply where there is no time limit.
This procedure is more complex when compared to administrative restoration – whilst most of the applications are resolved by consent (whereby the applicant and the defendant (being the Registrar of Companies) agree to restore the company), there are circumstances where due to the lack of evidence or other reasons, the Registrar of Companies may not consent to restore the dissolved company or may wish to leave matters for the Court to decide, taking into account all relevant factors.
The application process is that a Part 8 claim must be made in the High Court, which once issued, is served on the Registrar of Companies as well as the Government Legal Department. Thereafter, the aforementioned parties set out their requirements to consent to the restoration (if applicable) which need to be fulfilled by the applicant so that the company can be restored.
Again if the application is successful, the company is deemed to have continued in existence as if it had not been dissolved.
The Corporate and Commercial Department here at Fisher Jones Greenwood LLP can guide you through the process of restoring a company and advise you on your options; as well as assist you with the preparation of any documentation that may be required.
Should you require any information or assistance do not hesitate to get in touch. Please call 01206 700113 or email [email protected].