The Retrospective Effect Of Court Orders Restoring A Dissolved Company

In a recent decision1 the Court of Appeal clarified the meaning and effect of a restoration order under the Companies Act 2006 procedure by holding that a court order restoring a dissolved company to the register of companies retrospectively validates proceedings commenced against the company during the period of its dissolution. When a company is struck off the register of companies, it loses its legal personality. Sometimes companies can be restored to the register after dissolution by applying to the court for a restoration order. This is often the case if a third party has a claim against the dissolved company that cannot be resolved without commencing proceedings against it.

Under the Companies Act 1985 (CA85) there were two processes for applying to the court to have a company reinstated:

1. Section 653 CA85 conferred on the court a power in limited circumstances (but exercisable for up to 20 years after dissolution) to order the restoration of a company that had been previously struck of by the Registrar. The effect of the order was that the company was "deemed to have continued in existence as if its name had not been struck off". 2. Section 651 CA85 conferred on the court a more general power (exercisable only within two years after dissolution) to make an order declaring the dissolution of a company as void. This meant that "such proceedings may be taken as might have been taken if the company had not been dissolved".

   Pursuant to section 1032 of the Companies Act 2006 (CA06), these two processes have been streamlined to create a single procedure for the courts to restore a company to the register. The main differences to the previous procedure are:

   (1) Time limit: Applications for restoration of a company may only be brought within six years from the date of dissolution of the company. However, an application for restoring a dissolved company to the register for the purpose of bringing a personal injury claim for damages against the company may be brought at any time. (2) Effect of restoration order. The effect of a restoration order which under the CA85 had only applied in certain limited circumstances (section 653 CA85), namely that the company is "deemed to have continued in existence as if its name had not been struck off", now applies generally in every case.

   The facts in Peakton Ltd v Kenneth Joddrell

   Mr Joddrell brought a personal injury claim for loss of hearing against his former employer, Peaktone Limited (Peaktone). Mr...