Has your company been struck-off the register of companies because of failing to file accounts or your annual return?
Alternatively, have you applied to voluntarily dissolve your company and subsequently realised that the dissolved company still owns assets, for example cash in a bank account or a property or a right to bring a claim against the company’s bank?
If so, you may be aware that all the assets of the company at the date of its striking off are transferred to the Crown, bona vacantia. “Bona Vacantia” means vacant goods and is the name given to ownerless property, which by law passes to the Crown.
If you would like to recover any such assets you will need to restore the company to the Register of Companies and apply to the Crown’s representative to release such assets back to the company.
We can help you to restore the company, whether to continue trading it or simply to rescue assets.
Please click on the links below to find out more about company restorations:
- Learn more about Demergers
We have a wealth of experience in restoring companies to the register, for example, acting for:
- A consultant to restore his consultancy company in order to recover cash left in a bank account after the company had been liquidated and then dissolved.
- Directors of a company who were bringing a mis-selling claim against their bank where the right to bring the claim belonged to the struck-off company.
- A holding company which had failed to properly transfer a property from one of its subsidiary companies which was subsequently struck off and
- A large number of motor trade businesses to pursue VAT claims against HM Revenue & Customs for companies that had been struck off many years previously.
Types of Restoration
There are two ways to restore a company depending on why the company was struck-off:
You can only apply for an administrative restoration if the following conditions apply:
(a) The company was struck-off by the Registrar of Companies where the company:
- Failed to file accounts or an annual return or
- Has been wound up and the liquidator has ceased to act
(b) The application to restore is no more than 6 years from the date of dissolution; and
(c) All documents required to be filed such as accounts and annual returns are duly filed up to date together with any late filing penalties paid (see https://www.gov.uk/government/publications/late-filing-penalties for current penalty amounts).
If the above conditions apply, the application to restore can be made using a form available online from Companies House, accompanied with a statement of compliance and a fee of £100.
If any assets of the company have been vested in the Crown bona vacantia, the necessary consent from the Crown representative must also be obtained, which may also incur a fee.
Court Application to Restore
You must use the court procedure to restore the company if the following conditions apply:
- As per condition (a) above for an administrative restoration or (b) if a voluntary application to dissolve the company was made by the directors or (c) if the company has been dissolved following an administration or winding up; and
- The application to restore is no more than 6 years from the date of dissolution, unless the purpose of the restoration is to bring a personal injury claim against the company, in which case there is no time limit for the application.
If the above apply, we can make a court application on behalf of the company to restore it. In addition to the court application, any assets vested in the Crown bona vacantia must be waived by the Crown representative.
Which Procedure do I need?
As to which procedure applies to your company (an administrative restoration or a court application to restore) will depend on:
- The reason why the company was dissolved. If the company was voluntarily struck off by its directors, the company may only be restored by way of a court application and
- The purpose for which the company is to be restored. If the company needs to be restored purely to rescue assets which have transferred bona vacantia, a court application may in certain circumstances be more suitable. This is because a court application may state that the company does not need to continue trading following its restoration and therefore may avoid the expense of filing any outstanding accounts or paying any penalties.
Our team of specialist Corporate Solicitors provide advice to a broad range of clients including owner-managed businesses, management teams, private equity investors and serial entrepreneurs on all aspects of corporate law, including demergers.
A demerger is a separation of different business activities carried on by a company or group into separate companies or groups which are then (usually) owned by the same shareholders. Our Corporate Commercial team have substantial experience in advising on and carrying out demergers.
We provide practical, commercial and coherent advice and are able to deliver a complete service with support from our Commercial Property, Employment, Commercial, Dispute Resolution and Personal teams.
We have recently acted for a Newco registered care provider in relation to a demerger of a registered care home. This involved a detailed understanding of the tax implications/requirements of a demerger effected by a distribution in specie followed by a buy-back of shares.
Why Carry Out a Demerger?
Companies and groups demerge for various reasons but an increase in shareholder value will usually be the intended aim. Reasons to demerge include:
- Dividing a company or group between shareholders in dispute;
- Separating successful businesses from struggling businesses;
- Releasing the full value of underlying businesses;
- Separating businesses between different business sectors;
- Freeing one business from the regulatory or financial requirements imposed due to another business;
- Inability to sell a business (which can be demerged instead); and
- Dividing a jointly owned group.
Types of Demerger
There are several methods of effecting a demerger, each one having its own advantages and disadvantages. The method chosen will usually be influenced by tax considerations and by the availability of distributable profits in the company.
We can provide assistance in choosing the correct structure of the demerger. The main ways of structuring a demerger are set out below:
The parent company declares a dividend in specie (i.e. a distribution of assets rather than cash) of the shares of the subsidiary to be demerged, as a result of which ownership transfers from the parent company to its shareholders. This is not usually used to demerge a business as it constitutes an income distribution attracting income tax treatment.
Indirect or three cornered dividend
The parent company declares a dividend in specie of the shares of the subsidiary or a business to be demerged, which is satisfied by the distribution of those shares to a newco/third party and the newco/third party issuing shares directly to the parent company’s shareholders. If structured correctly a three cornered dividend can qualify as a scheme of reconstruction, which may offer substantial tax relief advantages over a direct dividend structure.
Indirect or three cornered reduction of capital
The parent company carries out a reduction of share capital which is satisfied by the transfer of the business to be demerged to either the parent’s shareholders or a newco which then issues shares to the parent’s shareholders. This can be used where a company does not have sufficient distributable profits to declare a dividend in specie or does not want to reduce its distributable reserves.
Scheme of arrangement
A court approved procedure under Part 26 of the Companies Act 2006 which is carried out with shareholder consent and (frequently) creditor approval to make a compromise or arrangement with the members or creditors of the parent company. This is often used in combination with the direct dividend, three cornered dividend, three cornered reduction of capital and/or a liquidation scheme.
The parent company is liquidated under section 110 of the Insolvency Act 1986 and its assets are transferred to two (or more) newcos. The liquidator accepts the shares in the newcos as consideration for the transfer of the assets to the newcos and then distributes the shares to the parent’s shareholders pursuant to the parent’s winding-up.
How We Can Help
A member of our specialist team will be happy to help.
To discuss Company Restorations & Demergers issues, please either use the contact form on the right, email us at email@example.com or call us today on +44(0)161 941 4000 to speak to a member of our team.