As a director of a limited company, understanding what happens to the assets of a dissolved company is crucial.
This knowledge is especially important if you are considering dissolving your company or if you are interested in acquiring assets from a company that has been dissolved.
In this article, we will explore what happens to the assets of a dissolved company, the nature of these assets, and the legal implications surrounding them.
What Happens to Company Assets When Dissolved?
When a company is dissolved, it legally ceases to exist, and its name is removed from the Companies House register. But what happens to the assets of such a company?
The answer lies in the doctrine of “Bona Vacantia” which literally translates to “ownerless goods.”
In essence, when a limited company is dissolved, any assets it had at the time of dissolution become “ownerless” and revert to the Crown.
This includes any cash, property, rights, and liabilities. However, the process is not immediate, and there are ways to recover these assets or even restore the company, as we will discuss later in this article.
It’s worth noting that before a company is dissolved, it is the responsibility of the directors and shareholders to ensure that all assets are dealt with appropriately.
If this is not done, the assets can be claimed by the Crown under Bona Vacantia.
NOTE – You might also find this post useful: How To Dissolve a Limited Company in the UK.
What Counts as an Asset of a Dissolved Limited Company?
A company’s assets are not limited to physical goods such as office equipment or property.
They also include intangible assets such as intellectual property, shares in other companies, debts owed to the company, and even the company’s reputation or brand.
For instance, if a dissolved company owned a patented technology, that patent would become an asset under Bona Vacantia.
Similarly, if the company had outstanding invoices at the time of dissolution, these debts would also be considered assets.
It’s essential to consider this broad definition of assets when planning the dissolution of a company or when trying to recover assets from a dissolved company.
What Happens to Any Land Owned by a Dissolved Company?
Land and property owned by a dissolved company also fall under the umbrella of Bona Vacantia. However, the process and implications may vary depending on the specific circumstances.
If a company is dissolved while still owning land or property, this asset will transfer to the Crown. The Crown can then decide to sell the property, lease it out, or even donate it to a community or charitable organisation.
However, this doesn’t mean that the property is lost forever. Former directors, shareholders, or other interested parties may be able to buy the property back from the Crown.
This process can be complex and often requires legal advice.
Can You Purchase Assets From a Dissolved Company?
Yes, it is possible to purchase assets from a dissolved company. These assets can be bought from the Crown through the Bona Vacantia division (BVD).
This process, however, can be quite intricate and often requires professional assistance.
To buy assets from a dissolved company, you need to contact the BVD and express your interest. They will then provide you with the relevant information and guide you through the process.
It’s important to note that the Crown does not have to sell the assets if they believe it’s not in the public interest.
What is Bona Vacantia, and How Does it Affect a Dissolved Company?
Bona Vacantia is a Latin term that means “ownerless goods.” In the context of a dissolved company, this refers to the assets left behind when a company is dissolved. These assets are then transferred to the Crown.
The Bona Vacantia division of the Government Legal Department is responsible for dealing with these assets. This includes selling them, leasing them out, or even donating them to charities or community organisations.
Bona Vacantia also applies to liabilities, meaning the Crown can choose to enforce or waive any debts owed to the dissolved company.
The Bona Vacantia division also handles requests from individuals or entities interested in purchasing assets from the dissolved company. However, it’s important to understand that the Crown is under no obligation to sell these assets, and they will only do so if they believe it’s in the public interest.
One key aspect of Bona Vacantia is the possibility of disclaiming assets.
In some cases, the Crown may choose not to take ownership of certain assets, particularly if they are associated with significant liabilities or if they have no value. This is known as “disclaiming” the assets.
If a Company Has Been Dissolved Can it be Restored?
A dissolved company can indeed be restored, but the process can be complex and time-consuming.
Restoration involves a court application and can only be done by certain people associated with the company, such as former directors or shareholders, or anyone with a legal claim against the company.
There are two primary methods of restoring a company: administrative restoration and court-ordered restoration. Administrative restoration can only be used if the company was struck off the register by the Registrar of Companies and not by the members.
Court-ordered restoration, on the other hand, can be used in a broader range of situations.
Restoring a company can have significant implications for its assets. If a company is restored, any assets that had become Bona Vacantia will typically revert back to the company.
However, any actions taken by the Crown regarding the assets during the period of dissolution will remain valid.
What Happens to the Shares of a Company that is Dissolved?
When a company is dissolved, any shares in the company also become Bona Vacantia and belong to the Crown.
This means that shareholders lose their ownership of the shares.
If the company is restored, shareholders may regain their shares, but this is not always the case. In some cases, the Crown may have sold the shares during the period of dissolution.
If this has happened, the shareholders may not be able to recover their shares even if the company is restored.
What Should You Do if You Need Help with Company Dissolution?
If you’re considering closing your limited company and are unsure of the process or the implications for your company’s assets, Marchford can help.
As specialists in limited company closures, we can guide you through every step of the dissolution process and help you navigate complex issues such as Bona Vacantia.
Don’t leave the future of your company’s assets to chance.
Final Notes On What Happens to The Assets of a Dissolved Company
Understanding what happens to the assets of a dissolved company is crucial for any director or shareholder.
As we’ve seen, dissolution can have significant implications for a company’s assets, and it’s important to ensure that these are properly dealt with before the company is dissolved.
If a company is dissolved without properly disposing of its assets, these will become Bona Vacantia and will belong to the Crown.
However, there are ways to recover these assets or even restore the company, although these processes can be complex and often require legal advice.
Finally, it’s worth noting that the definition of “assets” is broad and includes both tangible and intangible assets.
Therefore, directors and shareholders should consider all possible assets when planning the dissolution of a company.
While this article provides a comprehensive overview of the topic, it’s always recommended to seek professional advice when dealing with company dissolution and its implications for company assets.