Dissolved Company Assets
Once a company is incorporated, 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. 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. The existence of a company 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’.
Bona vacantia is property which was owned 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 owned by the company at the time it was dissolved. These Guidelines only apply to property of companies registered under the Companies Acts 1929 to 1985.
If a company has any liabilities when it is dissolved they are extinguished. So any money owed to a creditor is extinguished by the dissolution of the company. The only remedy for the creditor is to contact the registry to have the company restored. Once the company is restored they can bring legal proceedings against the restored company.
If a Bank account is held in the name of a dissolved company, and the company is still trading, the members should restore the company to the Register if that is possible. If the company is not trading, it has been recognised that restoration is not always an economic proposition. The Treasury Solicitor has therefore been given a limited discretion to make payments to former members and liquidators of the dissolved company out of any money held in the company’s Bank account.
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.
Sale of Shares
In the situation where the dissolved company owned shares in another live company, the Treasury Solicitor will either disclaim the shares under the statutory power of disclaimer contained in Section 656 of the Companies Act 1985, or sell the shares if they have any value.
In the case of a sale, if the issuing company is quoted on the Stock Exchange, the shares will be sold through stockbrokers.
If the issuing company is a private unquoted company, the Treasury Solicitor’s normal practice would be to first offer the shares either to the former members of the dissolved company or back to the issuing company.
The purchaser will be required to make the necessary enquiries to locate the Share Certificates. If the Share Certificates cannot be traced, the purchaser will be responsible for making any necessary Statutory Declaration as to the enquiries which were made, and dealing with any enquiries or requisitions raised by the issuing company, and paying any fees demanded for the issue of duplicate Share Certificates.
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.
- Who makes the disclaimer.
If a liquidator or trustee in bankruptcy disclaims leasehold property, the lease vests in the Crown as bona vacantia. If the company’s last registered office was in England or Wales (excluding the Duchies) it is dealt with by the Treasury Solicitor. If the last registered office was in the Duchies, it is dealt with by Messrs Farrer & Co.
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.
In the case of freehold property, the effect of any disclaimer is that the freehold title is extinguished. In the case of property situated in the Duchies, it is then dealt with by Messrs Farrer & Co. If it is situated elsewhere in England or Wales it is dealt with by the Crown Estate. Any enquiries then need to be addressed to The Solicitor, The Crown Estate, 16 Carlton House Terrace, London SW1Y 5AH.
Please complete our company restoration form to enquire about restoring your company.