Collas Crill explains...Reinstating a dissolved Jersey company
15 January 2020
This guide is one in a series of 'Collas Crill explains...' in which we examine areas of Jersey law that frequently arise in practice.
Jersey is a popular place to establish an asset holding company because the Law is modern, flexible and modelled on English companies legislation.
The Law has a procedure that allows a Jersey company which has been dissolved to be reinstated. This guide looks at the key things you need to know about reinstating a dissolved company.
Words in bold text are defined at the end of this guide.
Why are companies dissolved?
A company may have been dissolved for a range of reasons, including that it:
- was no longer needed and was wound up on a solvent basis;
- was wound up on a just and equitable grounds (eg as a result of a shareholder dispute);
- became insolvent and was liquidated; or
- was struck off by the registrar for failing to comply with an administrative requirement under the Law (eg to file an annual return).
Once a company is dissolved, its name is removed from the register of companies kept by the registrar.
Why reinstate a dissolved company?
The Law allows an eligible person to apply to the Court within the eligibility period for an order declaring the dissolution of a company void. The process is colloquially known as a reinstatement because the dissolved company's name will be reinstated on the register of companies if the Court makes the order.
An applicant will typically want to reinstate a dissolved company because:
- the company was struck off for a breach of the Law and the breach has been remedied;
- it has been discovered that the company owns assets of which it was unaware at the time of its dissolution so they have not distributed to its shareholders or creditors; or
- the applicant is a creditor that wishes to make a claim against the company or its directors.
Who may make a reinstatement application?
Only an eligible person may apply to reinstate a dissolved company.
The Court has said that, where an applicant wants to make a claim against the company, the applicant is only required to satisfy the Court that its claim is more than merely shadowy.
When may a reinstatement application be made?
An application to reinstate a dissolved company may only be made during the eligibility period.
What orders may be made?
If an application is successful, the Court will declare the dissolution of the dissolved company to be void. The Court has the power to:
- make any order on any terms it thinks fit for the purpose of reinstating the dissolved company;
- give any directions and make any arrangements that seem just for placing the company and all other persons in the same position (as nearly as possible) as though the company had not been dissolved; and
- order a potential contributory to contribute to the assets of the company in the circumstances described under Application for contribution by creditor below.
What is the effect of reinstatement?
If a dissolved company is reinstated:
- its dissolution is declared to be void so that it is treated (to the extent possible) as though it had not been dissolved;
- its name will be reinstated on the register of companies; and
- any proceedings may be taken against it that could have been taken if it had not been dissolved.
When does the reinstatement take effect?
A dissolved company is reinstated with effect from the date on which the order declaring its dissolution to be void is made.
How long does the reinstatement process take?
An application is normally considered by the Judicial Greffier in chambers rather than being heard in the Court. If an application is relatively straightforward, once it is filed with the Court, it is normally considered and (if successful) orders made within seven days.
What is the reinstatement process?
Before making an application to reinstate a dissolved company, the applicant must take the following steps.
- Write to the company's registered office provider at the time of its dissolution and ask whether it:
- will allow the company to use its address as the company's registered office address; and
- it has any fees unpaid by the company and (if so) pay them.
- Write to the Comptroller to obtain confirmation that the Comptroller has no objection to the company being reinstated. The Comptroller:
- must be given a draft of the application;
- may require (among other things) financial statements for the company to be filed; and
- will give the confirmation if:
- the applicant files any outstanding tax returns for the company; and
- the company does not have any unpaid tax liabilities or owe any penalties or (if it does) the applicant has paid them in full.
- Write to the JFSC to obtain confirmation that the JFSC has no objection to the company being reinstated. The JFSC:
- must be given a draft of the application;
- may require information regarding the ownership of the company to be filed; and
- will give the confirmation if the applicant:
- files any outstanding annual returns for the company;
- pays any outstanding fees and penalties; and
- provides evidence that the company's registered office provider at the time of the company's dissolution (or a new one) authorises the company to use its address as the company's registered office address.
The application process is as follows.
- A written application is made to the Judicial Greffier.
- The application comprises a representation (which is like a petition) and an affidavit which confirms the details in the representation. The representation and affidavit explain why the:
- company was dissolved; and
- applicant would like the company reinstated,
and the affidavit attaches a letter from each of the Comptroller and JFSC confirming that it has not objection to the company being reinstated.
- If the Court grants the application, it will make an order declaring the company's dissolution void. The applicant must file a copy of the order with the registrar within 14 days' of the order.
- On receiving a copy of the court order, the registrar will register it and restore the dissolved company's name to the register of companies.
Application for contribution by creditor
- the Court orders the reinstatement of a dissolved company that was dissolved by way of summary (solvent) winding up;
- the company's assets were not, in fact, sufficient to discharge its liabilities at the time it was dissolved; and
- a creditor asks the Court to do so,
the Court may order a potential contributory to contribute to the assets of the company to enable the insufficiency to be met.
The Court may order:
- a recipient to contribute an amount up to the amount or value of the assets that were distributed to the recipient; and
- an officer, jointly and individually with any other person who is liable, to contribute an amount up to the amount of the insufficiency in the company's assets.
An officer will not be liable to contribute if the officer can show that the officer had reasonable grounds for being satisfied when signing the solvency statement that the dissolved company had no liabilities.
Where a potential contributory has contributed to the assets of a dissolved company after being ordered by the Court to do so, the Court may order any other person who is jointly and individually liable to contribute to the company's assets pay to the potential contributory any amount the Court thinks just and reasonable.
Comptroller means the Jersey Comptroller of Taxes.
Court means the Royal Court of Jersey.
eligible person means:
- a liquidator of a company; or
- any other person appearing to the Court to be interested in the reinstatement of the company.
eligibility period means the period of 10 years starting on the date on which a company was dissolved.
JFSC means the Jersey Financial Services Commission.
Law means the Companies (Jersey) Law 1991.
officer means a director or liquidator of a company who signed a solvency statement delivered to the registrar in connection with the company's summary winding up stating that the company had no liabilities.
potential contributory means an officer or a recipient.
recipient means a person to whom any assets of a company were distributed in its summary winding up.
registrar means the Jersey registrar of companies.
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About this guide
This guide gives a general overview of this topic. It is not legal advice and you may not rely on it. If you would like legal advice on this topic, please get in touch with one of the authors or your usual Collas Crill contacts.
This note is a summary of the subject and is provided for information only. It does not purport to give specific legal advice, and before acting, further advice should always be sought. Whilst every care has been taken in producing this note neither the author nor Collas Crill shall be liable for any errors, misprint or misinterpretation of any of the matters set out in it. All copyright in this material belongs to Collas Crill.