The Treasury Solicitor has made a partial U-turn in respect of Bona Vacantia.
It was previously announced that the Treasury Solicitor would be withdrawing its £4,000 concession in relation to Bona Vacantia from 14 October 2011.
A company will no longer be able to rely on the concession that previously permitted the board to informally distribute up to £4,000 of share capital or other non-distributable reserves prior to winding up.
The Treasury Solicitor's office has now changed its mind and says that it will not claim sums that are illegal repayments of share capital.
This leaves the law in a bit of a muddle:
- It remains illegal to distribute share capital or other non-distributable reserves.
- Capital remaining in the company (or distributed illegally) becomes under Bona Vacantia "ownerless goods" these are the property of the Crown.
- The Crown will be ignoring the law, by creating a new concession and so turning a blind eye to illegal distributions of share capital.
Despite the partial U-turn companies are still be required to use the procedure of Capital Reduction in order to reduce other non-distributable capital reserves to a nominal figure prior to making an application to strike off a company.
The withdrawal of the orginal concession is justified because the Companies Act 2006 simplifies the Capital Reduction procedure.
Companies which are dissolved by a liquidator are not affected by the measure. Nor does it affect HM Revenue & Customs Extra Statutory Concession C16. It is anticipated that HMRC will withdraw ESC C16 shortly.
Nichola Ross Martin comments: "The Treasury Solicitor's original decision to drop its £4,000 concession in relation to Bona Vacantia raised an eyebrow or two. That concession only affected those who have stopped trading, so arguably this added no new administrative burdens for existing businesses. The new concession in respect of share capital seems a sensible measure, and we assume that the Bona Vacantia website will be fully updated to correct the position.
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