Thursday, February 16, 2012

Companies House – it has finally happened!

As you know we have posted a number of Blog articles recently on problems IPs have had with Companies House filing documents. As we feared when this all started, we are now aware of an instance where an IP has filed a notice of move from Administration to CVL, but because of the delay in Companies House dealing with it the notice was not registered until after the 12 month duration of the Administration had expired. Although we discuss the impact below and come up with some relief for the situation, our main concern is that it is the IP who is affected by the delay at Companies House and is the one who then has to sort it out.

Fortunately there is a decided case on this issue, Re E Squared Ltd, which held that as long as the Administrator sends the notice prior to the automatic cessation of the administration, then even if it is not registered by the Registrar of Companies until after the expiry of the administration it is still effective. Even so, we would still recommend taking legal advice on the position to ensure that no further action is required to gain the protection afforded by Re E Squared Ltd. In addition, that case was decided prior to the change to a two stage exit process in the 2010 Rules, so if you do seek legal advice it might be worth checking that Re E Squared Ltd can still be relied upon under the revised rules.

Whilst the decision in Re E Squared Ltd suggests that the liquidator is still validly appointed, that appointment is only effective from the date the notice of move is registered at Companies House (paragraph 84(4), Schedule B1) and the Administration will have ended automatically on the anniversary date (paragraph 76, Schedule B1), which could possibly be several days earlier. What is the position in respect of any actions taken in that hiatus period? What if a problem occurs in that period? The IP is not in office as either Administrator or liquidator so can they in fact legally take actions in that period? The answer to each of the above is, “we don’t know!” Those questions would be for a lawyer, and possibly even the Courts to answer.

From a compliance perspective it is clearly preferable that such a problem never arises. To help minimise the risk of it doing so, when filing documents you need to factor in time for delay at Companies House, or even their rejection of the document itself and its re-submission. There are certain forms where you should particularly err on the side of caution and allow sufficient time when filing them. These include the “notice of move from Administration to CVL” (Form 2.34B) and the “notice of extension of period of administration” (Form 2.31B).

If you have left it until the last minute, then consider contacting someone in the liquidations section to explain your predicament and then arranging to either hand deliver or courier the documents to that specific person at Companies House. Such an approach should, however, only be used as a last resort in exceptional circumstances.