Recent headlines have highlighted how even the most high-profile individuals can face challenges when it comes to keeping company information up to date.
Pink Floyd legend, David Gilmour, has been unable to sell his £10m seafront mansion because of an administrative error which means that he is not actually the owner of it. It transpires that it is owned by the Crown.
This articles explores the power that Companies House has to strike off a company from the register and what this means in terms of assets being transferred to the Crown, advises how businesses can prevent compulsory strike offs and highlights the routes to restore a company and recover its assets.
David Gilmour purchased the property through his former company, Hoveco Limited, of which he was the sole director. The company was dissolved in 2014, not by choice, but because Companies House had reasonable cause to believe that it was not carrying on business or in operation.
Unless assets of a business are transferred before a company is dissolved, its assets automatically become 'bona vacantia', meaning vacant goods, and belong to the Crown.
Beyond the headlines, there is an important message - failing to maintain accurate and up to date company information can have serious consequences.
If a company is struck off, the resulting complications can be significant including loss of assets, business interruption and reputational damage. Regular reviews of company information are therefore essential to safeguard ownership and to minimise these risks.
Companies House has the power to strike a company off the register if it has reasonable cause to believe that the company is not carrying on business or in operation, typically for reasons like:
If Companies House proceeds with a strike off, the company legally ceases to exist and its assets become bona vacantia and are automatically transferred to the Crown.
Administrative errors leading to compulsory strike off are often preventable.
Companies should adopt proactive administrative practices. For example:
Depending on the circumstances of the dissolution, it may be possible to restore a company and recover its assets. There are two primary routes to do this:
Upon restoration, the company is deemed to have continued in existence as if it had never been struck off in the first place. Any assets of the company that had become bona vacantia will automatically belong to the company again, except if the Crown has sold the assets to a third party.
Subject to some limited exceptions, an application for restoration must be made no more than six years from the date of dissolution of the company. It is therefore important that if a company has been struck off, or is facing strike off, action is taken sooner rather than later.
Companies are encouraged to prioritise regular reviews of their information with Companies House and to establish proactive administrative practices. In doing so, it can help to prevent the complications that come with strike off and safeguard both its assets and business continuity.
Whether you wish to establish compliance and support systems to help prevent future issues relating to strike off, or you are seeking restoration, our commercial disputes team can provide expert assistance to guide you through the process. For more information, please contact Cara White.
