Commercial law paralegal, Joshua Butcher, takes a look at how the budget may affect businesses, and when you may need to look for a company restoration solicitor.
The Labour Budget of October 2024 is set to impact businesses across the country. While many companies are likely to be able to absorb the increase in costs, already struggling companies may be further pushed to look into mechanisms to wind down their businesses.
As the new financial measures come into force and the economic landscape continues to evolve, it is critical that directors of struggling companies remain vigilant in dealing with company assets before voluntarily striking off their companies.
The Labour Budget has introduced a number of measures purporting to raise additional cash for public-sector spending, but the Budget has also highlighted the potential risk for increased insolvencies among SMEs. As businesses navigate the complexities of increased costs and smaller margins, some may find themselves facing financial difficulties. In such cases, the option of voluntary strike-off may be an appropriate or necessary means to dissolving their company which is no longer viable.
The decision to strike off a company should not be rushed, especially when it comes to distributing the company’s cash and assets. Failing to distribute the assets and cash prior to winding up will cause significant problems. The company will cease to have ownership over those assets and cash reserves – and any assets or cash left in the company on strike-off will become “bona vacantia” (ownerless goods) and automatically become the property of the Crown. This can result in significant financial loss for the shareholders and directors who may have intended to distribute these assets prior to dissolution.
It is imperative to conduct a thorough review of all company assets, including cash reserves, property, and intellectual property, before proceeding with a strike-off.
When a company is struck off the Companies Register, it ceases to exist as a legal entity. This process can be initiated voluntarily by the company or involuntarily by the Registrar of Companies due to non-compliance with statutory obligations. Once a company is dissolved, any remaining assets are treated as bona vacantia, effectively rendering them ownerless.
The implications of this are not trivial; not only do the assets become inaccessible to the former shareholders and directors, but they also become property of the Crown.
Fortunately, there is a remedy for those who find themselves in this predicament: company restoration.
If a company has been struck off and assets remain, it is possible to apply for restoration to the Companies Register either to Companies House directly (for an involuntary strike off) or to the Court (for voluntary strike off). This process allows the company to be revived, thereby enabling it to reacquire its assets, including any cash that may have been left in the company at the time of dissolution.
Once the company is restored, the directors can approve a distribution of the assets, allowing shareholders to benefit from what may have otherwise been lost. The restoration process can be complex, requiring adherence to specific legal procedures and timelines, but it is a viable option for those looking to reclaim their assets.
The specialist commercial solicitors at Holmes & Hills are able to assist with any issues around restoring a company to the register and any other commercial law issue.
If your company has been struck off and are concerned about assets that were left behind, the specialist commercial solicitors at Holmes & Hills can assist you with restoring a company to the register. We can guide you through the company restoration process, ensuring that you understand your rights and options.
The October 2024 Labour Budget has underscored the importance of prudent asset management for private companies. As the potential for insolvencies and voluntary strike-offs increases, it is essential for directors and shareholders to be proactive in addressing their company’s assets. Should you find yourself facing the consequences of a strike-off, remember that company restoration is an option, and Holmes & Hills business solicitors are specialists in this area.
Call us on 01206 593933 today to speak with one of our specialist company restoration solicitors. Or complete the form below.
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