Company Struck Off: Restoration Procedure and Time Limits

At a glance

Time limits, conditions and fees are as set out in the Companies Ordinance and most recently published by the Companies Registry.

Why was my company struck off?

The usual reason is not that anything was done wrong — it is that nothing was filed for a long time.

The Registry watches for companies that go a long time without filing annual returns, that do not answer enquiries, and whose mail to the registered address comes back undelivered. The Registrar has the power to conclude that the company is no longer in operation and start the striking-off process.

Along the way, the Registry issues notices and publishes in the Gazette. The problem is that those notices go to the company’s registered address. If you have moved, or are still using the address of a company secretary whose service has been terminated, you may never receive any of it.

And in law, sending it to the registered address counts as service. Which is why many owners only discover the company no longer exists when they go to use it again.

The most expensive part: where the money goes

This is the loss most people underestimate.

At the moment of dissolution, all property still belonging to the company becomes bona vacantia and vests in the Government. That includes:

• The balance in the bank account
• Property and vehicles in the company’s name
• Uncollected receivables
• Deposits and security bonds of every kind

Banks also run periodic searches. Once a company is found to be struck off, the account is frozen.

Recovering those assets means going through restoration — and where property that has already vested in the Government is involved, it also requires the Government to have no objection to the restoration, and payment of the costs the Government incurred in dealing with that property during the dissolution.

Which is to say: let it run to striking off and the cost escalates from “catching up on filings” to “getting your assets back”.

Two routes: administrative restoration or the court?

Administrative restoration — an application to the Registrar of Companies. The thresholds are broadly:

• The company was dissolved after being struck off by the Registrar
• Where Hong Kong immovable property has vested in the Government, the Government does not object to restoration
• The applicant has delivered to the Registrar the documents needed to bring the register up to date on the company
• The costs, expenses and liabilities the Government incurred in dealing with the relevant property during the dissolution have been paid or reimbursed by the applicant

A court application — for cases that do not meet the administrative conditions (for example, where the company was dissolved following liquidation, or where there is a dispute), an order for restoration has to be sought from the court.

Administrative restoration is simpler and quicker, but the conditions are tight. In practice the third point — “delivering the documents needed to bring the register up to date” — means filing every outstanding annual return.

Once it is restored, is that the end of it?

No. This is the point most people get wrong.

The legal effect of restoration is that the company is treated as having never been dissolved. That sounds like good news, but it also means:

• Filings that should have been made during the dissolution still have to be made
• Late registration fees and penalties still have to be paid
• Unfiled returns and unpaid tax at the IRD are still pursued
• The prosecution risk built up in the meantime does not disappear

In other words, bringing the company back brings back all of its liabilities with it. On how far those can build, see what happens if you leave a company alone.

Bring it back, or start a new one?

This is the decision that actually has to be made.

Worth bringing back if the company has: a bank account and track record, long-term contracts or leases signed in the company’s name, licences, trade marks, assets in its name, or an established commercial reputation.

A new company may be the better deal if the old one has no assets, no contracts, and no particular value in its name — in which case the restoration fees plus the cost of catching up may well exceed simply starting again.

The arithmetic is straightforward: the total cost of bringing it back (the restoration application + catching up on every year + penalties + unpaid tax) against the cost of starting fresh (government fees of around HK$3,895 + service fees), plus the price of losing the old account and track record.

One thing to be clear about: starting a new company does not make the old company’s liabilities go away. The old company’s director obligations remain, and “just open a new one” is not a way around them.

Deal with it as soon as you find out

The nature of this problem is that the longer it runs, the more property the Government has dealt with, the higher the restoration cost, and the 20-year clock keeps running throughout.

Suspect your company has been struck off? A company search will confirm it. Want someone to work out with you whether it can be brought back, and whether it is worth it? Talk to us.

The time limits, conditions and procedures described here are as set out in the Companies Ordinance and most recently published by the Companies Registry, and this does not constitute legal advice. Where a court application or property that has vested in the Government is involved, advice from a solicitor is recommended.