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Rise in 'bad admin' sees demand for company restoration instructions soar
10/07/2008

Corporate lawyers in Liverpool are reporting a dramatic increase in demand for Company Restoration Orders due to sloppy administration.

Companies with poor control of their paperwork and statutory filings are more commonly being struck off the register by Companies House, according to law firm Brabners Chaffe Street LLP.

Adrian Rogers, associate in the corporate team at the Exchange Flags-based firm, warned that businesses with overdue filings could face a time-consuming and costly procedure if they do not act quickly.

He said: “Recently, we have seen a very noticeable increase in the number of companies needing to be re-instated.

“The most common scenario is that a property management company, set up at the beginning of a property development to manage the freehold to the estate once the units are sold, is ignored as the project progresses and the relevant paperwork is not filed.

“Setting up a new company to resume this activity is very rarely a realistic option, as assets held in the old company will not be able to be transferred due to the lack of legal status.

“If funds need to be withdrawn from a bank account in the company's name or the company has other assets registered to it that need to be transferred, such as land, it will need to make a Company Restoration Order to enable it to do so.

The poor administration is particularly striking considering Companies House's procedure for removing what it considers to be ‘inactive' organisations.

Warning letters will initially be sent to the company. If no corrective action is taken, which can be as simple as phoning Companies House and asking for more time to make the necessary filings, a notice appears in the London Gazette stating that at the expiration of three months, the name of the company will be struck from the register.

The procedure to restore a company begins with a Court Application and a witness statement detailing why the company was struck off and why the Court should grant the Order.

Mr Rogers added: “Given that the Court fee and the mandatory fees for the Treasury Solicitors office combined are almost £500, not to mention the late filing penalties Companies House may levy, it pays to be more thorough with your company administration.”

ENDS


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