Restoration of a company

Corporate Restoration Applications: Legal Framework and Practical Guidance 

Restoring a company to the corporate register is a critical legal process governed by specific statutory provisions, case law, and judicial discretion. Below is a detailed exploration of the key elements of such applications. 

Legal Framework 

The right to seek a company’s restoration is codified in Article 327(7) of the Companies Law, Cap. 113. Restoration applications may be grounded on procedural principles found in the Civil Procedure Rules and broader equity principles. 

Article 327(7) of Cap.113 provides that: 

• Any company, member, or creditor dissatisfied with its removal, or anyone suffering damage from its pre-removal actions, may apply to the court for restoration. 
• Such applications must be made within 20 years from the date of publication of the company’s removal. 
• The court may order restoration if it is satisfied that the company was operational at the time of removal or if justice requires restoration. 

Eligibility to Apply 

Under Article 327(7)(a) of Companies Law, the following parties are eligible to file a restoration application: 

1. The Company Itself:
   Despite its removal, the company retains legal standing solely for the purpose of applying for its restoration. This is supported by Re Conrad Hall & Co [1916] WN 275 and subsequent rulings like RUAL TRADE LTD v. NATICA SHIPPING & TRADING LIMITED (556/2020). The court has clarified that this “statutory fiction” allows the company to act as if it exists solely to pursue restoration. 
2. Members of the Company:
   Any shareholder can apply, provided they are affected by the removal. 
3. Creditors or Damaged Parties:
   Creditors dissatisfied with the removal or individuals who suffered damage due to the company’s actions before its removal are entitled to file. Courts, such as in Re Harvest Lane Motor Bodies Ltd [1968] 2 All ER 1012, emphasize that even pending claims can satisfy the damage requirement, provided they are substantiated and not frivolous. 

Court’s Discretion in Granting Restoration 

Key Criteria for Restoration:
According to Article 327(7)(b), the court will grant a restoration order if: 

1. The company was operational at the time of removal, or 
2. Restoration is “just.” 

In Cyprus the Court held that issuing a restoration order is the norm unless exceptional reasons preclude it. The term “just” is context-specific, allowing for flexibility. Similarly, in Re Priceland Ltd [1997] BCC 207 and Re Blue Note Enterprises Ltd [2001] 2 BCLC 427, courts confirmed that restoration should only be denied under extraordinary circumstances. 

Procedure and Notifications 

Service Requirements:
Applications must be served on the Registrar of Companies, as per Stanhope Pension Trust Ltd v. Registrar of Companies [1994] 1 BCLC 628. The court has clarified that serving the company itself is unnecessary. 

Opposition to Applications:
A dissolved company cannot contest its restoration. In Re H Clarkson (Overseas) Ltd (1987) 3 BCC 606, the court ruled that a dissolved entity lacks procedural capacity to oppose the application. 

Timeframe for Filing 

Applications must be submitted within 20 years from the publication of the company’s removal, as stated in Article 327(7)(a). This extended window underscores the importance of allowing affected parties ample time to seek redress. 

Restoration Costs 

The applicant bears the initial costs of the process, including any outstanding fees owed to the Registrar. However, they may later recover these expenses from the restored company (RUAL TRADE LTD case). 

Conclusion 

Corporate restoration is a nuanced process requiring compliance with legal provisions and judicial interpretation. For assistance in preparing a robust restoration application, supported by case law and detailed procedural guidance, consult our experienced legal team.