Bona Vacantia - Guidelines
Guidelines relating to the assets of dissolved companies that have vested in the crown as bona vacantia
The Bona Vacantia Division deals with the property and rights which were beneficially owned by dissolved companies. When a company is dissolved, its assets pass to the Crown under Section 654 of the Companies Act 1985.
It should be pointed out that the Treasury Solicitor is not responsible for the company's debts or any other liabilities the company may have had under Section 656 of the Companies Act 1985, the Treasury Solicitor has the power to disclaim assets that are vested in the Crown.
Bona vacantia is property which was owned either by a registered company which has been dissolved. in this situation, the property is transferred to the Crown as bona vacantia. In order to establish that the property in question is bona vacantia, it must be shown in accordance with normal practice and procedure that the property was either owned by the company at the time it was dissolved.
Companies are usually formed by a number of individuals who wish collectively to form a business association. Once formed, a company is in law regarded as being an artificial legal person with rights and obligations distinct and separate from those of the persons who formed the company. The majority of such companies are now created and formed under the Companies Act 1985, or under earlier legislation now superseded by that Act. During the period of its existence, a company can own in its own name any property, money, or other assets which a person can own. Unlike a person, a company cannot die, but its existence can be terminated by its name being struck off the Companies' Register or by being wound up by a liquidator. When a company ceases to exist in this way, it is usually referred to as having been dissolved.
Dissolved Companies' Assets
Before a company is dissolved, the members should ensure that any assets owned by the company are transferred out of the company's name. If this is not properly attended to, any assets which were owned by the company at the date of dissolution will then pass into the ownership of the Crown. Such assets are then known as bona vacantia, which is a Latin expression meaning ownerless goods.
It is only assets which pass to the Crown as bona vacantia. When a company is dissolved, any liabilities which the company had are extinguished. If therefore the company owed money to a creditor, that debt is extinguished by the dissolution of the company. The only remedy that the creditor has is to restore the company to the Register, and then bring legal proceedings against the restored company, to enforce the debt against any assets owned by the company.
Property Held on Trust
It is only assets that were beneficially owned by a company at the time it was dissolved which pass to the Crown as bona vacantia. If assets were held by the company upon trust for another person, those assets do not pass to the Crown as bona vacantia.
Flat Management Companies
If the dissolved company was your landlord, it probably owned either the freehold or the master lease for the building. If the company is dissolved you could find that you cannot sell your flat. In that situation the usual practice of the Treasury Solicitor is to offer to sell the freehold or the master lease to the tenants jointly, or to a new management company set up by them for that purpose upon which they are represented. In the case of leases with a period of at least 60 years to run, the price is ten times the total of the annual ground rents, subject to a minimum of £500 plus costs.
1. The Treasury Solicitor, liquidators and trustees in bankruptcy all have a statutory power of disclaimer.
- The provisions relating to disclaimers by the Treasury Solicitor, liquidators, and trustee's in bankruptcy are complex, and depend on:
- whether the interest disclaimed is freehold or leasehold
- where the land is situated
- where the last registered office of the company was situated, and
- who makes the disclaimer
3. If a liquidator or trustee in bankruptcy disclaims leasehold property, the lease vests in the Crown as bona vacantia.
4. If the Treasury Solicitor disclaims leasehold property, the lease comes to an end, but without prejudice to any antecedent liability a former tenant or surety may owe to the landlord for previous breaches of covenant.
5. In the case of freehold property the effect of any disclaimer is that the freehold title is extinguished.
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