Striking off a company
There are two separate company law regimes in the Isle of Man, the Isle of Man Companies Acts 1931-2004 and the Isle of Man Companies Act 2006. Regardless of which regime a company is incorporated under, all companies are under an obligation to make certain statutory filings with the Isle of Man Companies Registry (the Registry). These obligations differ between the two regimes and therefore if any company officer is uncertain as to a company’s filing obligations they should seek legal advice.
Failure to file a document within the prescribed filing period can lead to:
(a) the payment of a late filing fee,
(b) the prosecution of a company and/or its officers, and
(c) the Registry commencing strike off action to remove the offending company from the register.
1. When will the registry commence strike off action?
1.1 The Registry will commence strike off action against a company when it has reasonable cause to believe that the company is not carrying on business or in operation. Failure to file the required statutory documents may give the Registry cause to believe that a company is not carrying on business or is in operation. For example:
(a) every company must forward to the Registry a completed annual return within one month of the company’s return date. A company which has failed to file an annual return within six months of the return date shall be deemed to not be in operation; and
(b) every company must maintain a registered office in the Isle of Man. If the Registry has reasonable cause to believe that a company has abandoned its registered office, either by the filing of the requisite form or otherwise, the company is liable to strike off proceedings being commenced against it.
2. What happens?
2.1 The procedure to commence strike off action against a company is as follows:
(a) the Registry will send to the company a letter by recorded delivery:
(i) inquiring whether the company is carrying on business or in operation; and
(ii) stating that if no answer is received within two months from the date of the letter, a notice will be published with a view to striking the name of the company off the register.
(b) if the Registry either:
(i) receives an answer to the effect that the company is not carrying on business or in operation, or
(ii) does not within two months after sending the letter receive any answer,
it will send to the company by post, a notice that at the expiration of two months from the date of the notice the company will be struck off the register and the company will be marked as dissolved – unless cause is shown to the contrary. A notice to that effect will also be published in one newspaper circulating in the Isle of Man and on the Registry’s website.
(c) at the expiry of the two months the Registry will send one final letter to the company confirming that the company has been struck off and marked as dissolved.
2.2 All communications will be:
(a) addressed to the company at is registered office; or
(b) if there is no registered office, sent care of a director or officer of the company; or,
(c) if there is no director or officer of the company, sent to each person who subscribed to the memorandum at the address mentioned in the memorandum.
3. Does strike off relieve any liability owed?
Strike off action does not reduce or extinguish the liability of any director, officer or member of the company. The liability of every director, officer and member continues and may be enforced as if the company had not been struck off and dissolved. To that end, allowing a company to be struck off by the Registry is not a viable option in order to conclude a company’s existence. Isle of Man company law provides for two options for the voluntary winding up of a solvent company, liquidation by way of members voluntary winding up and administrative dissolution. If the need for a company has concluded, appropriate advice should be obtained in order to find the most efficient and effective way to correctly wind that company up.
4. Liquidator and receiver
The appointment of a liquidator or receiver to a company or over its assets does not mean that the Registry will not commence strike off action. Both liquidator’s and receiver’s are required to make regular statutory filings at the Registry and these must be attended to. If a liquidator or receiver is uncertain as to his statutory filing obligations as a matter of Isle of Man law, he should seek appropriate advice.
5. Restoration
If a director, creditor, member or the company itself feels aggrieved by the company having been struck off the register, an application for restoration of the company (within 12 years of publication of the strike off notice) either administratively or by applying to court can be made. If the company is restored to the register the company shall be deemed to have continued in existence as if it had not been struck off.
6. Bona vacantia
When a company is struck off and dissolved, all property vested in the company immediately before its dissolution shall be deemed to be bona vacantia and shall vest in the Isle of Man Treasury on trust for the Crown. In respect of non-Isle of Man situs assets, the Isle of Man Treasury’s interest in property situated outside of the Isle of Man is considered to be subject to the laws of the jurisdiction in which it is located and appropriate advice should be sought.
