As a business owner, you will understand that managing a company is not always plain sailing. Sometimes you will go through financial hardship or other issues that, in extreme circumstances, lead to the dissolution of the company. However, it is important to acknowledge that this is not a definite end to your business. In some cases, you, other company directors, and shareholders may be in the position to restore the company and give it a new lease of life, but beginning this process, especially after said hardship, can be daunting.
It isn’t easy to know where to start and who to turn to for advice on getting set up officially. So, as online company registration experts, we provide our expertise by offering support on restoring a dissolved company. We’re looking at what you can do to get your business back on its feet and give it the best chance at success a second time around.
What Is a Dissolved Company?
Dissolving a company means officially shutting down a business. Several instances may lead to the dissolution of your company, but it comes down to the company directors to make this decision. Once the decision has been made to dissolve, the process of removing the business from the Companies House register can begin.
After this has happened, the company can no longer trade as it is officially unregistered and no longer exists in the eyes of the law.
Although the word itself may suggest that this is the be-all and end-all of your company, this is not the case at all, and it is understandable there may be a change in circumstances that means you wish to start afresh.
When Would a Company Dissolve?
There are plenty of reasons why company directors would decide to dissolve their business, either voluntarily or involuntarily.
Voluntary dissolution refers to the conscious decision to terminate trading as a business. This may be due to the company no longer serving a purpose. Additionally, this could refer to the dissolution of a business due to company directors falling out over business decisions to a point they cannot carry on without damaging the company’s reputation. Finally, a voluntary dissolution could occur if directors are facing financial hardship and cannot afford to keep the business afloat.
Involuntary dissolution is when Companies House makes the official decision to dissolve the company. This would only be due to legal reasons, such as the business falling behind on tax returns or accounts.
Why Would a Dissolved Company Need to Be Restored?
Although ‘dissolved’ sounds final, if your company has gone through the dissolution process, it does not mean it cannot be restored using processes similar to our company formation services. However, you must officially restore the company, as you are no longer legally allowed to trade once dissolution has occurred. There can be severe consequences if you continue to do so.
There are various reasons why you, as a company director, would decide to restore your previously dissolved company, for example:
- The company was dissolved against the will of the shareholders. As part of a shareholder’s authority, they have a say in dissolution. If this decision was made without the shareholder’s complete understanding, they have the power to request restoration and continue trading.
- Forgetting to file a Confirmation Statement. When a company is dissolved, all records must be kept up to date, which includes filing a Confirmation Statement. Often, companies are restored in order to file this and ensure everything is updated.
- Retrieving funds. When a company is dissolved, the assets are passed to the Crown, which means they no longer have access to these funds. To retrieve the money, the company can be restored.
- Pursuing an injury claim. The company still has a legal obligation to follow through with claims, such as for injuries; in these cases, the company must be restored.
- Paying debts. Furthermore, it is the company owners’ legal obligation to ensure all debts are paid before dissolution, and if not, the business can be restored to pay these debts.
- Release funds. If the company is still in debt to assets for shareholders or pensions for employees, restoration must begin to ensure these are followed up.
Checking Eligibility Before Restoring a Company
The first step before restoration is to check that your company is eligible to do so. To ensure you are eligible, you must check the following:
- The company must have been dissolved by the Registrar of Companies of the Companies Act 2016 or under sections 1000 or 1001.
- The restoration application must be made by a director or shareholder present while the company was initially dissolved.
- You are requesting restoration within a six-year period of the company’s dissolution.
- Finally, the company must have been trading when it was dissolved.
Once this has been cleared and the above statements remain valid for your circumstances, you can follow through with the application.
One of the ways you can restore a dissolved company is through a court order. This is usually the chosen method if you are restoring temporarily to pursue an injury claim, release funds, or pay debts, as listed above, as it is cost-effective and the least time-consuming option.
You must prepare a witness statement as well as a £280 free which will be presented to the court, which will issue the claim before serving upon the Registrar of Companies and The Treasury Solicitor. From here, the court can decide whether restoring the company is in the best interest of everyone involved.
An administrative restoration is usually chosen if the company director(s) or shareholders wish to restore to begin trading again. This is usually a time-consuming and complicated procedure, so using our company secretarial services is recommended to ensure everything is completed correctly.
You must file form RT01 with Companies House with the accompanying fee alongside anything else you need to ensure your record is updated.
Once it has been agreed that the company can be restored, you can begin trading again. The company can even take back its previous name if a new company hasn’t taken this during the dissolution period.
How Can CRO Help?
As mentioned, this can be complicated and must be followed officially to avoid legal issues. Here at Company Registrations Online, we take applications like this very seriously and ensure that everything is handled accordingly.