High Court Clarifies Whether The Conversion Of A Company To A Registered Society Creates A New Legal Entity

Published date24 August 2021
Subject MatterCorporate/Commercial Law, Energy and Natural Resources, Corporate and Company Law, Energy Law, Renewables
Law FirmWinckworth Sherwood
AuthorSarah Grant (Trainee Solicitor) and Joanna Bussell

HHJ Paul Matthews in the recent case of Mount Wellington Mine Ltd v Renewable Energy Co-operative Limited has provided clarification on whether the conversion of a company to a registered society, under the Co-Operative and Community Benefit Societies Act 2014 ('CCBS 2014'), creates two separate legal entities.

The Case

The question of the effect of conversion was brought before the High Court as part of proceedings brought by the claimant Mount Wellington Mine Ltd ('MWML'). The case encompassed several additional points; however, this commentary will focus upon the effect of conversion.

MWML was the landlord under a lease granted to Renewable Energy Co-operative ('the Company'). During the term of the lease, the Company legitimately converted to a registered society under s115 CCBS 2014 to become Renewable Energy Co-operative Limited ('the Society').

A dispute arose under the lease, which was resolved in favour of the Society by way of arbitration. MWML's argument centred around the claim that, on conversion, the Company became a separate legal entity in the form of the Society. The lease was never assigned from the Company to the Society and, as such, the arbitrator had no jurisdiction in any dispute involving the Society as it was not, and never had been, party to the lease.

Does a Company, upon Converting to become a Registered Society, become a New, Separate Legal Entity?

HHJ Matthews' reasoning focused upon the effect of s115 CCBS 2014: the Company ceased to be a registered company at the exact moment the Society was registered, meaning at no point did the Company and the Society exist simultaneously.

HHJ Matthews was critical of the claimant for failing to provide any explanation of how the Company would have been able to assign its rights under the lease, given the above conundrum.

It was held that, should the Company and Society be two separate entities, the Company's assets, including its rights under the lease, would have passed to the crown bona vacantia upon conversion. This, and the considerable complexities the Society would have suffered to regain these rights, could not have been Parliament's intention. Rather, the conversion from company to registered society should be seen as analogous to a change of status under the Companies Act 2006, for example from a private limited company to a public company.

On conversion, whilst the regime governing the entity changed, moving from a...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT