Lanyon Bowdler’s corporate & commercial team are highly experienced in assisting directors, members and shareholders with striking off, dissolution and restoration of limited companies and Limited Liability Partnerships (LLP’s).
Companies and LLP’s may be removed from and restored to the Register of Companies in a variety of circumstances.
Directors and members may wish to terminate the existence of companies or LLP’s for a variety of reasons. For example, the directors or members may wish to retire, there being no one to take over from them, or the company or LLP may be non-trading, its directors or members desiring removal from the Register in order to avoid ongoing compliance with costly filing requirements and officer’s duties under the Companies Act 2006.
Where it is desirable and appropriate to remove a company or LLP from the Register we can assist with advising on the conclusion of affairs and the making of an application for striking off or dissolution.
When managed incorrectly, the removal of a company or LLP from the Register can be hindered by unnecessary delays, costs and administrative burdens. Further, the application process places strict compliance duties and notification requirements on directors and members, breaches of which can expose those individuals to personal liabilities, including fines and criminal sanctions. For these reasons, it is always recommended that those seeking to remove a company or LLP from the Register, seek legal advice from a specialist solicitor.
It should be clearly understood however that voluntarily striking off a company or LLP is not a replacement for formal insolvency proceedings where debts cannot be paid as they fall due and is not a mechanism by which third-party claims may be avoided.
The Registrar of Companies can strike-off and dissolve a company or LLP without the consent of its directors or members where it considers that the company or LLP is not carrying on business or is no longer in operation. The Registrar might reach this conclusion in the following circumstances:
Where documents which should have been filed with the Registrar (such as accounts or annual returns) have not been received on time and in the correct format;
Post sent by the Registrar to the registered office of the company or LLP is returned undelivered;
The company has no registered directors, or the LLP has no registered members.
There are times when the Registrar may have reached the conclusion that the company or LLP is no longer trading as a result of administrative error on the part of the company or LLP. It is common for busy businesses to miss notices or to overlook filing requirements.
Where companies or LLP’s are still trading and are removed from the Register involuntarily, this can result in serious and inconvenient consequences for directors, members and shareholders such as the following:-
The company or LLP ceases to exist as a legal entity from the date of its dissolution;
Company/LLP bank accounts will be frozen and may be closed by the bank;
The assets and property of the company/LLP, (including any cash held in bank accounts) are vested in the ownership of the Treasury and if unclaimed are transferred to the Exchequer to be dealt with in the same manner as the proceeds of general taxation;
Directors or members of companies and LLP’s that are involuntary struck off may be disqualified from acting as officers or in the management of any company or LLP where a regulatory investigation concludes that they have been involved in corporate abuse;
Where the company/LLP continues to trade, shareholders and members are without the protection of limited liability and may be held personally liable for the debts of the company or LLP.
Where an involuntary strike off has occurred or notice of intention to strike off has been received, it is imperative that directors and members act swiftly in obtaining legal advice as delay may affect the remedies available.
Where a company or LLP which held assets has been dissolved and it is not economical or appropriate to make an application to restore the company or LLP to the Register, shareholders and members may suffer from hardship as a result of a loss of their investment.
In those circumstances, we may be able to assist those who have been disadvantaged with the making of an application to the Treasury for a discretionary payment.
The need to restore a company or LLP can arise in a variety of circumstances. Typically where:
A company/LLP has been struck off for failing to comply with filing requirements but continues to trade or is required to remain registered in order to protect branding, business information and other intellectual property rights.
A third party with an unresolved claim against the company or LLP wishes it to be restored in order to take action against it to obtain compensation or redress. This may include an action by a Liquidator.
The company held title to or had obligations in respect of assets or property. The directors or members may wish to recover property or another interested party may wish to reinstate the company in order to enforce its obligations. Sometimes assets and property owned by one business are of value or importance to the operation of another connected party.
Where a company or LLP has been dissolved we will be pleased to advise on the restoration process, eligibility and the making of the necessary applications.
The type of restoration application that will need to be made will depend upon the circumstances in which the company or LLP was removed from the Register and on the identity of the party wishing to apply for the restoration.
The effect of successful restoration is that the company will be deemed to have continued in existence as if it had not been dissolved or struck off from the register. This will have the consequence, that any proceedings brought against the company whilst it was dissolved, will be retrospectively validated.
Former directors and members may apply for administrative restoration of a company or LLP which has been dissolved as a result of the Registrar reaching the conclusion that the company or LLP is no longer trading or in operation.
Such an application must be made within 6 years of dissolution. Various requirements will have to be met as part of the application process and consent to restoration will need to be formally obtained from the Treasury Solicitor. Companies House fees, including any late filing penalties and the fees of the Treasury Solicitor in dealing with the application and assets, will need to be paid.
Where the circumstances dictate that an administrative restoration is unavailable, a court order will need to be obtained before the Registrar is able to proceed with restoration.
An application for restoration by court order will need to be made within 6 years of dissolution (except in the circumstance where restoration arises due to the making of a personal injury claim by a third party).
Restoration by court order will involve the payment of additional costs, above those of administrative restoration as there will be a requirement to pay the fees of the court hearing the application.
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Give our Corporate Law Solicitors a call, to see how we can help. We have offices in Shrewsbury, Bromyard, Conwy, Hereford, Ludlow, Oswestry and Telford so are able to act for clients all over Shropshire, Herefordshire, Mid and North Wales and across the Midlands.