Bona Vacantia – It now belongs to the King

When a company is struck off for failing to comply with its statutory obligations or it is voluntarily dissolved, great care must be taken to ensure that at the point of dissolution the company has no assets. Otherwise, these assets, whatever they may be, will pass to the Crown. When ‘passed’ to the Crown, these assets are known as “bona vacantia”.

Consequently, if great care is not taken, material assets could be lost to the Crown and to regain ownership of these assets is not a straightforward matter.

Recovering these assets is a complex task, as it requires the restoration of the company struck off or dissolved. This requires a detailed and rather complex application having to be made to the Court and served on the Company Registrar at Companies House. In addition, notice of the application has to be given to the Treasury Solicitor. This application can become expensive and time consuming especially where the Treasury Solicitor refuses to grant its consent to the restoration of the company.

In a ‘straightforward’ case the Treasury solicitor will grant its consent and settle a consent order and undertakings required to be given to the court to allow the restoration. In complex matters, the Treasury solicitor could refuse to give its consent which could then result in protracted proceedings and hearings before the Court.

Until such time as the company is restored, the assets that it owned at the time of dissolution or strike off remain the property of the Crown. Examples of assets being lost to the Crown are a life insurance policy valued at approximately £290,000. Another example was a sum in excess of £60,000 that was in the company’s bank account at the point of dissolution.

In both these examples, if an application had not been made to the court to restore the companies, both assets would have remained ‘bona vacantia’ and in the ownership of the Crown.

Another crucially important factor is that the restoration of companies is now limited in time. An application to restore a company is now limited to six years from the date of dissolution. If six years have passed from the date of the dissolution of the company, whatever asset the company had at that time will be lost forever, this could include premises of substantial value.

Very often directors forget that limited companies are independent legal entities and assets that belong to it do not belong to the directors and/or shareholders.

The loss of company assets (whatever they may be) to bona vacantia is a regular occurrence. Before a limited company is voluntarily dissolved or struck off, it is essential that the directors and/or shareholders make sure that it does not own any material asset, otherwise complex applications will need to be made to the court in good time to regain ownership.

Simple letters of consent or agreements cannot transfer assets after the dissolution. In addition, the strict time frame within which to lodge an application, (six years) cannot be extended under any circumstances.

In summary, do not allow a company to be struck off by the Company Registrar or to be dissolved voluntarily without making sure that the company has divested itself of all its assets, failing which they will simply add to the Crown’s already abundant wealth.