Legal Procedures for the Company Administrative Restoration

The Myth of Company Restoration

Many have questioned about what would be the best and cost effective solution when
their company is being dissolved or struck off from the Companies House register. But
one question almost thought by every single individual in this case Why should I
restore my company when I can form a new company instead.
There are different options when a company is dissolved and to incorporate a new
company may seem to be the cheapest solution on the outset. However, there is a
number of factors should be taking into consideration before making a decision as to
incorporate a new company and abandon the existing dissolved company.
In general, if a company was struck off or dissolved by the Companies House against the
wishes of its members then usually the purpose of the company restoration is to
continue business trading. Other typical reasons to carry out the company restoration
could be to realize assets for the shareholders, pursue an injury claim against third
parties, pension funds or to complete property or business transaction when was agreed
before the dissolution.
Contrary to the popular myth of the incorporation of a new company with the same
name as the dissolved company is not considered to be an alternative to restoration of a
company and certainly not to be considered by the Companies House Registrar as the
same legal entity.
In the eyes of the law and other business organizations, the newly incorporated company
will be a different company which is exactly why there is a new company registration
process involved. Albeit the new company incorporation is faster and perhaps cheaper,
the assets owned by the dissolved company will still remain beyond reach as it is
confiscated by the Crown Bona Vacantia, unless the required company restoration
procedure is followed to reinstate the dissolved company on the Companies House
Register.
It is worthwhile to note that anyone trades with a dissolved company or a company
director who carries on trading when the company is dissolved prior to a completed
company restoration process to the Companies House Register there can lead to a
number of serious legal repercussions, namely personal liability for company debts and
other ancillary legal issues. A company director caught himself in the situation where

carried any business transaction is likely to be found liable for fraudulent trading and
subject to both civil and criminal sanctions.
The vast majority of company restorations are straightforward. The unlikely event where
the company restoration may encounter difficulties would be a third party may oppose
to the company restoration but the applicants will be duly informed of any adverse
events by the authority.

The Law and Legal Procedures for the Company Administrative

restoration
From 1st October 2006 the Companies Act 2006 introduce a new provision for the
company restoration of a dissolved company in certain circumstances. Section 1024 of
the CA 2006 allows for a company administrative restoration procedure, which serves as
a supplement to the existing Court power to restore companies. This is particularly
beneficial for company owners as it means that the company owners can avoid the high
legal cost to restoration and to restore the company at a lower cost. This section grants
the Companies House the legal authority to restore a dissolved company to its company
register. The Court power to restore a dissolved company will be reserved for limited
cases where the Companies House Registrar lacks of the legal authority to act.
To thrive, the key benefits of an administrative restoration would be that it is quicker
application process and hence lower cost as there is no need to resolve the issue via the
courts. If the purpose of a company restoration is purely to release funds (held bona
vacantia) amounting to less than 3,000 in cash it is not always necessary to issue
proceedings to restore a Company. Nonetheless, each company restoration case will be
decided on its own merit and is solely at the discretion of the Treasury Solicitor.
Further to note that a company director, shareholder and creditor of a dissolved
company may apply for a company restoration within 6 years of the company
dissolution. Any cases outside the 6 years period will need to apply for a company
restoration through the traditional court route. If the dissolution was made voluntary
then the person who submitted the original application to dissolve the company may
apply for an administrative restoration under the CA 2006.

The Company Administrative Restoration for a dissolved company

can be used where the company was struck off after 1st October 2009
and it should be under the following circumstances:
the company was carrying on business / or in operation at the time of dissolution
the company has been struck off under sections 1000 or 1001 (power of registrar to strike off a
company)
the application is made within a period of 6 years after the date of dissolution
the Crown has signified consent (bona vacantia issue)

the company has delivered all the necessary documents to bring the company up to date, i.e. all
outstanding documents at the time of dissolution and any that have fallen due during the
period of dissolution, and paid any relevant penalties under section 453 or corresponding
earlier provisions (civil penalty for failure to deliver accounts) that were outstanding at the date
of dissolution or striking off.
The general effect of a successful administrative restoration is that the company is
deemed to have continued in existence as if it had not been dissolved or struck off the
register and the Bona Vacantia will release the fund upon the Companies House
notification of completion.

To sum up the article on the company administrative restoration

procedure, there are 3 important questions to bear in mind before
proceed with the company restoration:
1. Is the purpose of the company restoration to continue trading?
2. Was the company struck off within the last 6 years?
3. Whether the company accounts are filed up-to-date, depending on late filing penalties and
other business consideration that you may have (such as to reclaimed the business funds which
was confiscated by the Bona Vacantia due to company dissolution),
restoration may be advisable.

Thank you.
Archers Corporate Services
www.archerscs.co.uk

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