There are many serious illnesses and medical conditions we have never heard of, until a doctor utters the dreaded words that elicit the nervous response, “but what does that mean, what happens now?”
In business, too, many unfamiliar and one-off events present themselves as an existential threat to an enterprise, even though the owner has neither experienced nor even heard of them before.
One of these is having a limited company that is trading successfully struck off by the Registrar of Companies. By any measure this is certainly a crisis but the wrong response can turn it into a disaster.
So what happens when a limited company is struck off? In short, it forfeits its assets and they pass ‘bona vacantia’ to either The Crown, The Duchy of Lancaster or Duchy of Cornwall, depending on the situation of the registered office of the struck-off company.
The business is no more – it has “ceased to be”, as the disgruntled man said of his dead parrot in the most famous ever Monty Python sketch.
If you trade with a struck-off company prior to being restored to the register at Companies House there can be serious legal repercussions
If you trade with a struck-off company prior to being restored to the register at Companies House there can be serious legal repercussions, including personal liability for company debts and a host of contractual and other legal issues.This is where the crisis can rapidly and unwittingly turn into a disaster.
Astonishingly, many people, including professionals who should know better, ask us to set up a new limited company in the name of the struck-off company in the hope that nobody will notice and the client will appreciate their efforts to save them the cost of the restoration process. Sometimes accountants or solicitors attempt this wheeze when the company was struck off due to their negligence, in the hope that the client will not notice.
Another serious issue is that the name of the struck-off or dissolved company becomes free for use in a new company incorporation. You may have to change the name of your struck-off company as part of the application to restore it to the register if somebody else has formed a new company using the name of the struck-off company prior to your company restoration application.
Formations Direct, one of the country’s leading company formation and restoration agents, advises that a new company is set up immediately with the same name and that all parties with existing contracts are made aware of the situation and change of circumstances so the business can continue with as little interruption as possible. It means that for a number of weeks until the company is restored, a new company with a different set of books will be undertaking the trading, which is quite a nuisance, but a lesser evil given the alternatives.
Fortunately for businesses, a legislative change from 1 October means that a live trading company which has been struck off due to a missed filing deadline can be restored more quickly and cheaply than previously, but due process must be followed. In the heat of the moment a shortcut may be expedient but it could become very costly just around the corner.
To find out more about company restoration visit our website at www.formationsdirect.com or call us on 0800 2800 328, where our team of specialists are ready to assist you
