Companies that have been through a formal liquidation process are difficult to restore to the Companies Register. This can often make liquidation a more attractive option for company closure than the short form removal. It provides more certainty that the company has been brought to an end.
Any company restoration requires a formal application and good reason.
Restoring a company to the Companies Register in New Zealand can be necessary when a company has been struck off for various reasons, such as failure to file annual returns, short form removal under section 318(1)(d) of the Companies Act 1993, or following formal liquidation. The process and requirements for restoration depend on the reason for removal.
1. Struck Off Due to Failure to File Annual Returns
When It Can Be Restored:
• The company can be restored if it was struck off the register by the Registrar of Companies for failing to file annual returns.
The grounds for restoration are that the company was carrying on business at the time of removal or was party to legal proceedings or was in liquidation or receivership or both.
To apply under S328(1)(a) you need to show and provide sufficient evidence that the grounds under which the company was removed did not exist.
Process for Restoration:
• Apply to the Registrar online: The company must apply directly to the Registrar of Companies. The application should include:
o Payment of outstanding fees and a restoration fee.
o Submission of all overdue annual returns.
o Payment of any penalties.
An application made to the Registrar under section 328 of the Companies Act 1993 (the Act). This application must be made by a :
- shareholder/director,
- liquidator/receiver, or
- creditor of the company.
Note | This process can take up to six to eight weeks to complete.
Registrar's Decision:
• The Registrar may restore the company to the register if satisfied that all requirements have been met and there are no other reasons preventing restoration.
2. Short Form Removal Under Section 318(1)(d) of the Companies Act 1993
When It Can Be Restored:
• The company can be restored if it was removed under section 318(1)(d) of the Companies Act 1993, which typically involves short form removal due to inactivity, lack of assets, or a request from the company’s directors.
The grounds for restoration are that the company was carrying on business at the time of removal or was party to legal proceedings or was in liquidation or receivership or both.
Process for Restoration:
• Apply to the Registrar: The company must apply to the Registrar of Companies. The application should include:
o Evidence that the company still has assets or business to conduct or is party to a proceeding.
o Any relevant documents to support the restoration request.
Registrar's Decision:
• The Registrar may agree to restore the company if satisfied that the company has a valid reason for restoration and it is in the public interest. Where the Registrar of Companies is satisfied that a company should be restored to the register, he gives public notice of that intention. The intention to restore the company is advertised in the New Zealand Gazette and on the Public notices. There then follows an objection period of 20 working days for applications made under s328 of the 1993 Companies Act
3. Formal Liquidation and Striking Off
When It Can Be Restored:
• Restoration is more complex if the company was formally liquidated and struck off the register. This can occur when all assets have been distributed and the company’s affairs have been fully wound up. This may be required if an asset is discovered after the formal strike off or the company continues to own property that otherwise vests in the Crown if the company is not restored or other legal matters arise.
Process for Restoration:
• Application to the High Court: Restoration after formal liquidation generally requires an application to the High Court under Section 329. The application must be made by a person with an interest in the company, such as a former director, shareholder, liquidator or creditor. This is a costly exercise and often a reason it is not advanced.
High Court Consideration:
• The High Court will consider whether it is just and equitable to restore the company. Factors include:
o Whether there are assets or liabilities that were not dealt with during the liquidation.
o If there was any procedural irregularity in the liquidation process.
o The interests of creditors and shareholders.
Court Order:
• If the court is satisfied, it will issue an order to restore the company to the register. The order must then be filed with the Registrar of Companies to effect the restoration.
Once the Registrar is in receipt of a signed and sealed High Court Order to restore the company the Registrar can restore the company immediately without the need to give public notice.
If the Court Order stipulates that outstanding documents and/or fees are required then these will also need to be submitted.
Cases When the Company Can Be Restored
• Registrar's Agreement: The Registrar will agree to restore a company if the application meets all administrative requirements and there are no legal impediments. This applies mainly to cases of failure to file annual returns and short form removal under section 318(1)(d).
• High Court Application: A High Court application is required in more complex cases, such as after formal liquidation. The court must be convinced that restoration is justified and equitable.
Summary
Restoring a company to the Companies Register in New Zealand varies depending on the reason for its removal. Simple administrative failures, like not filing annual returns, can often be resolved by direct application to the Registrar. However, more complex cases, such as those involving formal liquidation, typically require a High Court application and are expensive and difficult. The proof for restoration is difficult when a company has followed a formal liquidation process - however more simple if the reason for restoration is to distribute more assets.