Aa significant number of businesses get removed from the Companies register every year. Of that significant number quite a lot do not get removed based on formal liquidation, either via creditor or voluntary liquidation.
With many small businesses, they suffer a downturn and the directors get disappointed or lose interest and just move onto employment or new ventures. The company doesn’t file it’s necessary statutory returns and eventually, the Companies registrar strikes off the company from the Register.
Some time later, the directors or shareholders of the struck off company realise or remember that the company has an important or valuable contract or asset which they want or need. This is the most common company restoration scenario although there can be situations where there is an error causing strike off, such as where the business owner moves and doesn’t tell Companies House, therefore receives no reminders or warnings of the need to make a filing.
We offer a company restoration service which guides and deals with the formalities of applying to restore a company to the register. There are many other accountants and lawyers who also offer this service, so we thought we’d try and cover some other aspects we are commonly asked about. Please do contact us if you need further advice though.
Restoring a company to get an asset or money
The primary reason most applications are made to restore is that the business owners hadn’t realised or had forgotten about a valuable asset or money owed to the company.
It can follow that directors or shareholders believe they can simply remove or transfer that money or asset to a new limited company entity they have started. But what about any debts of the company or other complications? The matter is rarely straightforward if there are debts because you are restoring the company to it’s previous position and if it has liabilities, these must be considered.
It may be possible to transfer the benefit of a valuable contract which the struck off company had with a supplier or customer. However, many commercial contracts do not allow assignment (transfer) of the benefit of that contract to a 3rd party without the other partys consent. In addition, most commercial contracts have clauses enabling the parties to cancel the contract if the other party is liquidated. Consequently, restoring a company to transfer the benefit of valuable contracts is not necessarily going to work.
Ownership of intellectual property is an interesting area. It is common for there to be confusion or misunderstanding about ownership and you may have discovered that some IP you personally created is actually owned by your company which has been struck off or dissolved. This could be a design, invention, something you have written or created or websites or a customer database. Advice should be sought about who owns these assets before just assuming that you own them or in fact that the company you are considering restoring owns those assets.
Unused tax losses
Legal reasons for restoring a company
The company to be restored may in fact have few or even no assets but there can be other reasons for restoring it. There might be a dispute between shareholders with one claiming the other pillaged the company of it’s assets unlawfully but where the only entity that can start or pursue court proceedings is the company. There might be technical legal matters which need to be formalised and documented and signed off by directors with the company such as cancellation of director loans or similar.
From an accountancy perspective there could be reasons why accounts need to be prepared and formalised. If the company was struck off for failing to lodge abbreviated accounts, even if it is a micro entity, it will almost certainly be necessary to get up-to-date accounts prepared in order to successfully restore the company.
Let us help
Company restorations is a somewhat unusual area in that help and a service to seek restoration is commonly offered by both accountants and lawyers. There can certainly be legal work involved but in most cases we can handle this and offer an experienced and frankly, often more cost effective service for restoring a company. The added bonus is that you get a one stop shop in preparing any up-to-date accounts needed, analysing whether it’s worth applying to restore plus the legal paperwork. Get in touch to find out more.