What Happens to the Property of Dissolved Companies?
What happens to the property of a company that is dissolved and then subsequently restored to the register? In providing an authoritative answer to that question, the High Court delved into arcane and complex doctrines of medieval property law.
A company which owned the freehold of a trading estate was voluntarily struck from the register and dissolved. The Treasury Solicitor (TS) later disclaimed any interest in the estate on behalf of the Crown. The company was, however, subsequently restored to the register by a judge following an application by a bank which held a mortgage in respect of certain tenanted units on the estate. In those circumstances, an issue arose as to who owned the freehold title to the estate and the bank launched proceedings in order to resolve that question.
Ruling on the matter, the Court noted that, by Section 1012(1) of the Companies Act 2006 (the Act), the estate was deemed to be bona vacantia once the company was dissolved. As the estate was freehold land in which the company held no further interest, it reverted to the Crown pursuant to the doctrine of escheat, one of the last relics of the medieval principle that all freehold land is held directly from the Crown.
The estate therefore fell to be dealt with on the Crown’s behalf by the TS. The latter’s disclaimer operated to extinguish the Crown’s interest in the land, but that was not the end of the matter. The doctrine of escheat led to the curious result that, despite the TS’s disclaimer, the estate nonetheless belonged to the Crown and fell to be administered by the Crown Estates Commissioners.
By Section 1032 of the Act, however, the general effect of restoring a company to the register is that it is deemed to have continued in existence as if it had not been dissolved or struck off. On restoration, therefore, the company was deemed to have been the owner of the estate throughout. The bank was granted a declaration that the estate remained vested in the company.
In the Matter of Carrowreagh Management Company Limited.