A company that is removed from the register ceases to exist, but its assets and liabilities do not simply disappear. Sections 373 to 377 of the Companies Act 1997 deal with what is left.
Section 373 — property vests in the Registrar
(1) Property of a company that, immediately before removal, had not been distributed or disclaimed, vests in the Registrar with effect from the removal.
(2) Property includes leasehold property and all other rights vested in or held on trust for the company, but does not include property held by the company on trust for another person, or money to which section 364 applies.
Property the company held on trust for someone else is excluded from subsection (2) — but where trust property nonetheless vests, subsection (3) allows the Registrar to continue to act as trustee or to apply to the Court for the appointment of a new trustee. Beneficiaries are not left without a trustee.
On proof that a beneficial estate or interest — not merely one held in trust — has vested, the Registrar may sell or otherwise dispose of or deal with it as he thinks fit, alone or with others, by public auction, public tender or private contract, on such terms as he thinks proper, with power to rescind and resell, and to execute the necessary documents. The Registrar is remunerated by such commission as may be prescribed.
The directors of the company immediately before removal shall keep the company books and records, including accounting records, for three years after the removal — except records a receiver or liquidator is required to keep under the Act.
Striking a company off does not end the directors’ record-keeping obligations, and those records may be needed if the company is restored.
Sections 373(8) to (11) — recovering property or compensation
A person who would have been entitled to receive all or part of the property, or payment from the proceeds of its realisation, had it been in the company’s hands immediately before removal — or anyone claiming through them — may, within six years of the removal, or such longer period as the Court allows, apply for an order —
(a) vesting all or part of the property in that person; or
(b) for payment by the Registrar of an amount for that person’s interest — not including interest or damages, and not greater than a proportional share of what the Registrar received, less commission and other expenses.
On such an application the Court may decide questions of value, entitlement and apportionment, consolidate applications, treat an application as made on behalf of all persons or a class, and make ancillary orders (s 373(9)).
Money that vests in the Registrar, or that is the proceeds of realisation, less costs and expenses and authorised payments, is paid into a dedicated account — and is forfeited to the Registrar 12 months after the date it was paid into the account.
So although the right to apply runs for six years, the fund may be gone in one. Compensation ordered under subsection (8) is paid out of that account without further appropriation (s 373(11)). Anyone who learns that a company holding their money or property has been struck off should move quickly.
Section 374 — the Registrar may disclaim
(1) The Registrar may disclaim title to property vested under section 373 where it is onerous property within the meaning of section 319, and (2) shall forthwith give public notice.
(3) Disclaimed property is deemed not to have vested in the Registrar.
(4) Sections 319(3), (5) and (6) apply as if the property had been disclaimed immediately before the company was removed — so a person suffering loss may claim, or apply for a vesting order.
(5) Subject to any order of the Court, the Registrar may disclaim only (a) within one year after the vesting first comes to the Registrar’s notice, or (b) where a person serves written notice requiring an election by a stated date not less than one month after receipt, before that date — whichever occurs first.
(6) A statement by the Registrar that the vesting first came to notice on a specified date is, in the absence of proof to the contrary, evidence of that fact.
The election notice in paragraph (b) mirrors section 320 for liquidators. A landlord whose lease has vested in the Registrar can force the question rather than wait a year.
Section 375 — liabilities follow the property
Property vested in the Registrar is liable and subject to all charges, claims and liabilities imposed on it or affecting it by any Act or rule of law as to rates, taxes, charges or any other matter to which it would have been subject in the company’s hands.
But no duty, obligation, claim or liability is imposed on the Registrar or the State to do or suffer any act required of an owner or occupier, other than satisfying such charges, claims or liabilities out of the assets of the company so far as they are, in the Registrar’s opinion, properly available and applicable.
The property carries its burdens; the Registrar does not personally assume the obligations of an owner or occupier, and pays only out of the company’s own assets.
Section 376 — liability of directors and others continues
(1) Removal does not affect the liability of any former director or shareholder, or any other person, in respect of any act or omission before removal; that liability continues and may be enforced as if the company had not been removed.
(2) A person may recover from the insurer of a removed company an amount payable to the company under the insurance contract where (a) the company had a liability to that person, and (b) the contract covered that liability.
Directors sometimes let a company be struck off for a late annual return in the belief that liabilities go with it. They do not. Personal exposure under sections 348 and 348A, under the directors’ duties, and under the offence provisions survives removal.
Subsection (2) is valuable to claimants: a person injured by a company that has since been struck off may claim directly against the insurer without restoring the company.
Section 377 — liquidating a removed company
(1) Notwithstanding that a company has been removed from the register, the Court may — without first restoring it — appoint a liquidator under section 291 as if the company continued in existence.
(2) Part XVIII then applies with necessary modifications, and section 381 applies to property vested in the Registrar under section 373 as if the company had been restored — so the property revests and the liquidator can deal with it.
This is the direct route for a creditor who suspects voidable transactions or insolvent trading in a company that has since been struck off: appoint a liquidator, rather than restore the company first.
Sources
- Companies Act 1997 — ss 291, 319, 320, 348, 364, 365–381
Before relying on anything here, read the current text of the Companies Act 1997 and check for later amendments. If a decision matters to you, get advice — start with the Office of the Public Solicitor, or find a firm in the law firms directory.