Dissolving a company represents the end of its existence. A dissolved company is a company that was once a validly existing company but has since been struck from the BC Registry (in the case of a BC company) and no longer exists. A dissolution may be voluntary or involuntary. Involuntary dissolution most commonly occurs when the company fails to file their annual reports for two consecutive years. A director or authorized authority may also voluntarily choose to dissolve a company by preparing and filing an application to dissolve.
Restoration is the process of reviving a dissolved company. A restoration can either be a full restoration or a limited restoration. A limited restoration only restores the company for a specified time period, up to a maximum of two years. Deciding between these two options depends on who is seeking the restoration and the purpose of the restoration.
Any person may apply for a limited restoration, whereas only a “related person” may apply for a full restoration. A “related person” includes directors, officers or shareholders at the time of its dissolution, or heirs or personal representative of a deceased shareholder.
A person may choose to restore a company for the following reasons:
- Involuntary Dissolution – The company was never intended to be dissolved and wishes to continue operations.
- Litigation – A company can only sue or be sued during the two years following dissolution. Therefore, if you wish to commence litigation for or against the company two years after its been dissolved, the company must be restored. If the only purpose of restoring the company is to commence litigation, a limited restoration may be appropriate.
- Assets – Once a company is dissolved, it cannot carry or own personal or real property. Personal property of the company vests in the Crown as bona vacantia and land escheats to the Crown. A company may be restored to transfer, sell or otherwise deal with its assets.
A company may be restored through the BC Registry or by court order. If a company has been dissolved for longer than two years, the Crown may dispose of escheated land. Therefore, a court order may be necessary to retrieve the company assets. A court order may also be required where a party seeks restoration for the purpose of suing the company. The BC Registry may be appropriate where the restoration is relatively uncontentious, the company holds no assets, or the company has assets but has been dissolved for less than two years. Comparative to a court order, the BC Registry is usually the faster more cost-effective option.
Assuming the BC Registry application process is used versus a court order, a restoration includes the following steps:
1. Submit a Name Reservation
Once a company is dissolved, it loses its rights to its name. Therefore, when you choose to restore a company, it may no longer be able to use the name it once had. Before submitting a name request, we recommend searching BC Registry Services to see if the previous name or a confusingly similar name is being used by an active company. If it is, the company may be restored with either a new name or as a numbered company. For more information on naming a company visit: http://touchstonelawgroup.com/kelowna-lawyers/whats-name/.
2. Provide Notice
A notice of restoration must be published in the BC Gazette and provided to the last known address of the registered office of the company and the last known address of the directors. A company may not be restored until the later of 21 days after the notice is published in the BC Gazette or notice was mailed to the registered office.
3. File Restoration Application and Outstanding Documents
A restoration application in the correct form must be filed with BC Registry Services, in addition to any outstanding annual reports or other filings. A limited restoration and a full restoration use different restoration applications. If all appropriate documents have been filed, the notice period has passed and the BC Registry considers the restoration appropriate, the BC Registry will issue a Certificate of Restoration (or Certificate of Limited Restoration).
Once a company has been completely restored it is deemed to exist as if it has never been dissolved, subject to the time limitation in place if the restoration has been completed as a limited restoration.
Restoration can be a useful tool. However, depending on the reasons for restoration and the assets held by the dissolved company, it may be a more practical to incorporate an entirely new company. If you are considering restoring a dissolved company, we recommend discussing the benefits with your lawyer or accountant.
Author: Sasha Platz
This information is general in nature only. You should consult a lawyer before acting on any of this information. This information should not be considered as legal advice. To learn more about your legal needs, please contact our office at (250)448-2637 or any of our lawyers practicing in the area of corporate law at the following:Una Gabie: firstname.lastname@example.org Danielle (Dani) Brito: email@example.com Jane Otterstrom: firstname.lastname@example.org