Further good news under the new Companies Act 2006 regime is that it is now easier for companies struck off in certain circumstances to be restored to the register. There is a new administrative restoration procedure. This does not require a court order and as a result is less time-consuming and expensive. The application must be made within 6 years of the date of strike off and will only apply to specific situations.
This procedure is available to companies struck off under the relevant sections of the new Act and it is also available to companies struck off under the relevant provisions of the 1985 Act (s652) provided the application is made within the 6 year time period.
Help – I want my company back!
“This is great news for clients. Under the previous legislation any company that was struck off the register had to apply to court to be restored. For those cases where a company had been struck off relatively recently for failing to keep up to date with its filings this was seen as particularly onerous” says Kathleen O’Reilly, our Head of Internal Legal Services.
She adds “A surprisingly high number of companies do get struck off for this very reason. We have seen one client that set up their company to own a valuable property in London. After setting the company up the client was so busy on the property side that they failed to keep an eye on the requirements to keep the company on the register. Annual accounts and returns were not filed. It wasn’t until they were looking to sell the property that they realised their error. Technically, that property was now the property of the Crown. We were able to help them get their company restored but the court process was complicated.”
The intention behind the change appears to be to assist those companies that have been struck off through failure to file the appropriate records at Companies House although they are carrying on in business or in operation.
It should be noted that it is not available to companies that applied to be struck off and in certain other situations.
So what’s new?
The new procedure is available only in limited circumstances. It allows the Registrar to restore where the company was struck off under:
- section 1000 – where the Registrar has reasonable cause to believe that the company is not carrying on business or in operation; and
- section 1001 – under the duty of Registrar to act where company is being wound up, and where the Registrar has reasonable cause to believe
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that no liquidator is acting, or
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that the affairs of the company are fully wound up, and
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the returns required to be made by the liquidator have not been made for a period of six consecutive months.
What other conditions are there?
- The application may only be made by a former director or former member of the company.
- The application may not be made after the end of the period of six years from the date of dissolution of the company.
- The Crown’s representative (the Treasury Solicitor) must signify consent in writing to the restoration. The applicant must pay the costs of the Treasury Solicitor.
- All documents relating to the company that are needed to bring its records up to date must be filed (annual accounts and returns etc).
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The application can be made whether or not the company in question has actually been dissolved. Dissolution can take a matter of time.
As well as ensuring all the above conditions are met and filing the appropriate Companies House form, a statement of compliance will also be required.
What happens next?
If the decision is taken by the Registrar to restore the company then the restoration takes effect on the date that the notice is sent by the Registrar.
The effect of this is that the company is deemed to have continued in existence as if it had not been dissolved or struck off the register.
What if I don’t fall within the conditions?
A court procedure is still available. For companies that do not meet the above conditions this procedure will be used instead. This procedure remains very similar to the process used under the 1985 Act. It is also open to a wider class of applicants than the administrative restoration procedure.
Impact
We have already had a great deal of interest in the new procedure. Now that fewer companies incorporate with a company secretary the risk of failing to keep up with filings and other administrative obligations is increasing. Companies that do find themselves in this position should find this new procedure most useful.
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