United Kingdom
14 October 2011 - £4,000 'bona vacantia' limit withdrawn
The Bona Vacantia Division of the Treasury Solicitor's Department has withdrawn its 'Guidelines about the Distribution of a Company's Share Capital', with effect from 14 October 2011.
Amongst other things, the guidelines stated that the Treasury Solicitor would waive the Crown's right to any funds which a company distributes to its members prior to an informal striking off using Extra-Statutory Concession ESC C16, where the amount of the distribution is £4,000 or less.
The Treasury Solicitor's Department states that there is now no need to contact the Bona Vacantia Division regarding distributions of any amount. The Treasury Solicitor's Department states that the Guidelines have been withdrawn because, following the introduction of the Companies Act 2006, it is now easier to reduce capital and to restore companies to the register.
However, draft legislation has been issued which would put Extra-Statutory Concession ESC C16 on a statutory basis, but restrict its application to cases where no more than £4,000 is distributed.
At present, companies can continue to use Extra-Statutory Concession ESC C16 and make distributions to members, until such time as new legislation is enacted limting the amount which can be distributed under the new statutory procedure.
It should be borne in mind that an informal striking off does not provide 'finality', in that creditors could apply for the company to be restored to the register for up to 20 years after it has been struck off. As a commercial matter, larger companies in particular may therefore prefer to use the formal liquidation procedure.