Restoration of Companies

This briefing note considers the basis upon which companies may be struck from the Register of Guernsey Companies (the Register), what happens to any property of companies that are struck, and the steps that can be taken to restore a company to the Register.

Voluntary Strike Off

An application for voluntary strike off is commonly used where a company has fallen dormant. Such an application must be made by the board of directors and must be accompanied by a declaration of compliance with all of the requirements of the Companies (Guernsey) Law, 2008 (the Companies Law) in respect of the application. The declaration of compliance must be signed by a director of the company.

A copy of the application must be given within 7 days of its making to every member, employee, creditor, director or manager or trustee of any pension fund established for the benefit of the company’s employees. If the company is or has been a supervised company at any time, then the application must also be copied to the Guernsey Financial Services Commission (GFSC) within 7 days.

A company cannot make an application to be struck from the Register if it has any outstanding liabilities other than an obligation to return share capital to members. It is also prevented from making an application if any of the following circumstances exist (and should withdraw an appropriately made application if any of the following subsequently arise):

• at any time within the 3 months preceding the application, the company has:
  • changed its name;
  • traded or otherwise carried on business;
  • made a disposal for value of property or rights that, immediately before ceasing to trade or carry on business, it held for the purpose of disposal or gain in the normal course of trading or carrying on business;
  • engaged in any other activity unless it was necessary or expedient for the purpose of the application to be struck from the Register or deciding whether to do so, concluding the company’s affairs or complying with any requirement of any enactment;
• it is party to any legal proceedings; or
• proceedings specified within the Companies Law have been commenced in connection with the solvency of the company but have not been concluded.

Unless cause is shown to the contrary, the company in question will be struck off the Register and thereafter dissolved at the expiration of 2 months from the date upon which the Registrar gives notice of the application.

Strike Off of Defunct or Defaulting Companies

The Companies Law provides that the Registrar of Companies (the Registrar) can strike from the Register companies that are defunct or defaulting.

A defunct company is one that the Registrar has reasonable cause to believe:

• Is not carrying on business or is not in operation; or
• In the case of a company which is being wound up, no liquidator is acting or the affairs of the company are fully wound up.

A defaulting company is a company:

• That fails to deliver its annual validation to the Registrar in accordance with the relevant requirements of the Companies Law before the end of January in any year;
• For which the Registrar receives a notice from a corporate services provider regarding an ineffective registered office;
• That in the opinion of the Registrar there have been persistent or gross contraventions of the Companies Law;
• That fails to comply with the Companies Law as regards the requirement for a resident agent; or
• Does not have the minimum number of directors stipulated by the Companies Law.

Unless cause is shown to the contrary, the company in question will be struck off the Register and thereafter dissolved at the expiration of 2 months from the date upon which the Registrar gives notice of the application.

Property of Struck Company

It is not uncommon (particularly in the context of applications made in respect of defaulting or defunct companies) for companies to have valuable assets at the time of being struck from the Register and dissolved.

The Companies Law provides that where a company is struck from the Register under the above-described provisions, all property and rights then vested in it or held on trust for it (save for property held on trust for another person) become bona vacantia belonging to the Crown unless H.M. Receiver-General directs otherwise.

If a company is restored within six years of it having been struck off, the company is entitled (subject to any order of the Court) to have returned to it:

• property vested in the Crown; or
• if any property has been disposed of, its value at the time of disposal.

The Court has the discretion to extend the above six year period if it regards it equitable to do so having regard to the degree of prejudice the company would suffer.

Application to Restore

A struck company may be restored to the Register by way of an application to the Royal Court. Such an application, which must be made within ten years of the company having been struck off or, as the case may be, dissolved and removed, may be made by:

• the company itself;
• any director, member or creditor of the Company;
• a liquidator, administrator, or, in the case of a protected cell company, a receiver of a cell;
• the GFSC in respect of a supervised company or company engaged in financial services business; or
• any other person appearing to the Court to have a sufficient interest in making the application.

Notice of an application to restore must be served on:

• the Registrar;
• H.M. Procureur;
• H.M. Receiver-General; and
• Any liquidator, administrator or, in respect of a protected cell company, receiver of a cell.

The above persons will then be given an opportunity to make representations to the Court before an order for restoration is made.

The Court may order the company to be restored to the Register if it is satisfied that the company was carrying on business at the time it was struck off or it would be just for the company to be so restored. In deciding whether or not to restore a company, the Court may have regard to inter alia:

• Unless the application is made by a creditor of the company, whether the company will meet the solvency test if restored;
• Whether the directors at the time the company was struck off or dissolved consent to being directors if the company is restored;
• Whether, in the case of a company that was voluntarily or compulsorily wound up, any person who was a liquidator prior to dissolution consents to be a liquidator if the company is restored;
• The circumstances in which the company was struck off or dissolved;
• Whether there were persistent or gross violations of the Companies Law or its predecessor;
• Whether the company was used for fraudulent purposes;
• Whether restoration would jeopardise the reputation of the Bailiwick of Guernsey as a financial centre; and
• Whether it would be just and equitable to restore the company to the Register.

Order to Restore

The restoration of a company is, unless the Court orders otherwise, conditional upon payment by the applicant to:

• the Registrar:
  • all sums that would have been payable by the company if it had not been struck off or dissolved and had delivered each year its annual validation in accordance with the Companies Law; and
  • such additional amount as may be prescribed by the Registrar; and
• To H.M. Procureur:
  • Any costs incurred by H.M. Receiver General in administering any property belonging got the company; and
  • Any costs incurred by H.M. Procureur in connection with the striking off or dissolution or application to restore.

Once restored, the company is deemed to have continued in existence.

An order to restore may be made on such terms and conditions and may contain such directions and provisions as the Court thinks fit to place the company and all other persons in the position as nearly as may be if the company had not been struck or dissolved.