THE deletion of a company from the registry of the Registrar of Companies can be effected through liquidation or when it is not carrying out any business or fails to submit to the Registrar the documents required by law or even when the company itself causes its deletion through a relevant letter to the Registrar.
Certain companies pursue their deletion to avoid their obligations, such as compliance with the requirements of the Registrar of Taxation to submit financial accounts or pay their creditors. The question arises whether it is possible to restore a company to the registry retrospectively once deleted and under what circumstances. This is possible through an application to the court by the company itself, any of its members or creditors.
In such a case, if the court is satisfied that the company was operating at the time of its deletion or that it is fair to restore it to the registry it issues an order for its name to be restored in the same position before its deletion. Upon submitting the order to the Registrar of Companies and payment of the relevant fees, the company is re-registered. The procedure before the court is administrative and any intense litigation should be avoided, the only litigant necessary being the Registrar of Companies.
The restoration of a company deleted from the registry was examined in a recent judgment of Nicosia District Court, whereby the applicant claimed the restoration of a construction company which was a third party litigant in the proceedings of his action regarding his claim for damages to his house during the construction of a neighbouring house. In this case, the company itself caused its deletion from the registry through a relevant letter by its directors.
The court referred to the case of Logicom, whereby the Supreme Court had dealt with the issue of whether a creditor of a company has a locus standi to file an application for its restoration. It was decided that the creditor’s claim can be accepted for him to proceed with legal steps to recover the debt.
In the above case, the Nicosia District Court held that the company’s deletion by its own act deprives a creditor or a potential creditor of his right to seek recovery of a debt, something which contradicts article 30 of the Constitution.
The court also made reference to the provisions of the Civil Procedure Law protecting the right of a creditor to proceed with an application aiming to search the debtor’s financial position or any assets concealed resulting in the creditor being prevented from recovering the judgment debt. It was held that if the company remained deleted, the applicant who requested its restoration would have been deprived of his right to collect the debt claimed.
The court concluded there are two instances in which it can exercise its discretion to restore a company, (a) if satisfied that the company at the time of its deletion carried on business or was in operation, or (b) considers that it is fair the company to be restored to the registry despite its activities. Summing up, it mentioned that in the first instance it is sufficient to prove that the company has a potential value to its shareholders or to third persons, hence the general rule is to restore it.
The essential time to examine the company’s activities or operation is the time of its deletion. With regard to the second instance, the court has the discretion to order the restoration of the company regardless of its activities and it is considered fair to restore the company to the registry and all the persons in their previous positions.