Bona vacantia: the money you could lose by striking off

If you close your company by striking it off via a DS01 dissolution, and there’s still money, or any other asset, sitting in it when it’s dissolved, that money doesn’t come back to you. Instead, it passes to the Crown under a rule called bona vacantia. Getting it back is difficult, slow, and requires a restoration of the company back to the Companies House register.

It’s one of the quieter risks of opting for a strike-off, and it’s a big part of why a Members’ Voluntary Liquidation is the safer route if there’s a significant sum of money in the company at the time of closure.

Bona vacantia is Latin for “ownerless goods.” When a company is struck off the register and dissolved, it ceases to exist as a legal entity, and consequently anything it still owns at that moment effectively has no owner. Under the Companies Act, those assets of the dissolved company automatically pass to the Crown.

In practice, that means any cash left in the company’s bank account, along with anything else it still holds, becomes the Crown’s. Not yours, and not your fellow shareholders’.

To strike a company off cleanly, you’re meant to deal with all outstanding matters first. These include settling any debts and getting the remaining money out of the company and over to the shareholders, before you apply for strike off. The trouble is that as strike off is an informal process not overseen by an insolvency practitioner or any other professional, it’s easy for things to slip through. These include:

• Money that was overlooked, or left in the account as a buffer, when the company is dissolved
• A tax refund, rebate or final payment that arrives after applying for strike off
• An asset nobody realised the company still held

Whatever the reason, and whatever the asset, once the company is gone, anything left in it belongs to the Crown. To get it back, you’d generally have to apply to restore the company to the register, which takes time and costs money, or make a discretionary application to the Crown, with no guarantee of success. It’s a lot of effort to recover money that was yours all along.

When it comes to bona vacantia, a Members’ Voluntary Liquidation helps to eliminate this risk. In an MVL, a licensed insolvency practitioner is appointed to manage the process of winding the company up properly. Part of their role in an MVL involves identifying everything the company owns, realising it, and distributing all of it to you and any fellow shareholders before the company is dissolved.

Nothing gets left behind to fall to the Crown, because making sure everything is distributed to shareholders is the liquidator’s job.

For a company with only a small amount in it, a strike off may be appropriate for the situation. However, once there’s a meaningful sum at stake, knowing every penny is accounted for is a big part of an MVL’s value.

Bona vacantia is one of several reasons an MVL tends to win out over a strike-off once there are significant sums of money involved. This is in addition to the favourable tax treatment given to distributions over £25,000.

If your company’s affairs are simple and straightforward, we can provide you with a fixed-fee quote for an MVL with absolutely no obligation to proceed.