Guide to Application for Restoration of a Deregistered Hong Kong Company by Court Order
Before the implementation of the new Companies Ordinance on 13 March 2014, anyone who intends to apply to restore a company which was previous struck off by the Companies Registry or deregistered upon an application by the company itself voluntarily, will need to submit an application to the Hong Kong High Court and obtain a court order accordingly.
The new Companies Ordinance introduced an alternative procedure named “Administrative Restoration” which allows a company to be restored without a court order. The new Administrative Procedure not only reduces the costs of restoration but also saves a great deal of time to have a company restored.
1. Introduction to Restoration by Court Order
In the case where a company has been deregistered and is dissolved, under section 291AA of the predecessor Ordinance (previous Company Ordinance, Cap. 32) or under section 750 of the current Ordinance (Companies Ordinance, Cap. 622), that is, the company has been deregistered voluntarily by itself, an application may be made to the Hong Kong High Court under section 765 of the current Ordinance by the company, a shareholder or a creditor of the company or a person who fees aggrieved by the deregistration, for an Order that the company be restored to the Register.
2. Main Reason for Company Restoration
In accordance with Companies Ordinance (the Ordinance), if a company is dissolved under Part 15 of the Ordinance or section 226A, 277, 239 or 248 of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32), every property and rights vested in or held on trust for the company immediately before the dissolution is vested in the Hong Kong Government as bona vacantia.
The main reason for having a company restored is that, on dissolution, any property belonging to the company is taken by the government. The property is said to 'vest in the Hong Kong Government' as 'bona vacantia'. So if the company is deregistered when it has money in the bank, the bank account is frozen and the money in it taken by the government. The same will apply to any other assets.
Also, there are cases where the members or directors of a company, after the company is dissolved, found out that there are deposits, security or provisional tax to be refunded. As the company has already been dissolved, it became impossible to collect those deposits or receivable.
Having the company restored to the Register then is the only way that the company can collect those receivables or get back the assets vested in the government.
3. Conditions for Reinstatement by Court Order
(1) The court may order that the Registrar reinstate the registration of a company that was deregistered under section 291AA of the predecessor Ordinance if an application for reinstatement is made to the court within 20 years of the deregistration and the court is satisfied that it is just that the registration of the company be reinstated.
(2) During the course of application for reinstatement, the company or the applicant is required to file all outstanding Annual Returns from the day when the company was deregistered to the time of application for reinstatement, as if the company has never been deregistered pay all Annual Return statutory filing fees together with late filing penalty, if any.
(3) In addition, the company or the applicant is required to renew the business registration certificate from the day when the company was deregistered to the time of application for reinstatement, as if the company has never been deregistered.
4. Procedures for Reinstatement by Court Order
(1) An application for restoration is made to the court. The application must be supported by an affidavit sworn by an authorised representative of the applicant.
(2) The application, sworn affidavit and draft Order are filed with the Clerk of the Court.
(3) Upon receipt of the written application, the Court will send a request to the Companies Registry to confirm if the Registrar would object to the reinstatement application;
(4) Then, the Registrar will send a letter to the Lawyers directing to pay the costs for giving their consent to Originating summons. The Registry will require the filing of all outstanding annual returns, confirm to the Registry as to who will act as the director and secretary upon restoration and to where the registered office will now be located; after all outstanding annual information is provided and returns are filed, the Registrar will write to the Court to confirm that he has no objection to the reinstatement application.
(5) Usually, the Court will determine the application on paper without the need for a hearing. If the Court is satisfied with the application and the evidence as filed, the Order will be made confirming the restoration subject to the conditions that the fees are paid as stated in the Registrar's letter and that a notice of the new registered office is filed with the Registrar of Companies.
(6) If the Court is not satisfied with the application, it may order that further evidence be filed, that the application be served on the Registrar of Companies, that an oral hearing take place before a judge or he may dismiss the application.
(7) Once the Order is made, it has to be advertised in the Hong Kong Government Gazette. It normally takes three weeks to publish the same in the Gazette.
5. Effect of Restoration
When it has been restored, the general effect is that a company is deemed to have continued in existence as if it had not been dissolved. In addition, the Court may give directions or make orders for placing the company and all other persons in the same position as nearly as may be as if the company had not been dissolved.
6. Comparing Benefits to Costs
The first stage will be to calculate the costs of the application. These can be quite high as they will include a fee to the Hong Kong Companies Registry and, usually much more significantly, the penalty fees and registration fees payable to Companies Registry in respect of the late annual returns. In many cases, the Annual Returns were more than several years late, the penalty for which is HKD3,480 each year.
In addition to filing of Annual Returns, it is also required that the business registration certificate which had not been renewed previously should be renewed and relevant business registration fee for each year be paid.
If two or more years were not filed, the total costs for late filing, together with the costs of payment of business registration fees and the fees for handling the restoration itself, will be significant.
The question then arises whether the benefits from having the company restored outweigh the costs involved.
7. Alternative to Restore a Company
In some cases it may not be necessary to have the original company restored, but just to set up a new company with the same name or, if that is no longer available, in a slightly different name. It depends on the circumstances. This will often be a cheaper and quicker solution, especially where a dissolved property management company is concerned.
If you wish to obtain more information or assistance, please visit the official website of Kaizen CPA Limited at www.kaizencpa.com or contact us through the following and talk to our professionals:
Tel: +852 2341 1444
Mobile: +852 5616 4140, +86 152 1943 4614
WhatsApp/ Line/ Wechat: +852 5616 4140
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