Insights: Reinstatement of a Struck-Off Company in Cyprus – Sections 327 and 327A of Cap. 113

Two consequences of strike-off are consistently underestimated: personal exposure survives dissolution, and the company’s assets do not.

Dissolution does not extinguish personal exposure. The proviso to section 327(5) preserves the liability of every director, managing officer and member of the company, which continues and may be enforced as if the company had not been dissolved.

Nor do the company’s assets simply disappear. Under section 328 of Cap. 113, property and rights belonging to a dissolved company may vest in the Republic as bona vacantia. A company holding immovable property, shares, bank balances or contractual rights at the date of dissolution therefore faces an additional layer of complication, which has direct consequences for any later restoration application.

The Companies Law, Cap. 113 provides two distinct routes back onto the Register:

• Administrative restoration by the Registrar
• Restoration by order of the Court

Each has its own eligibility criteria and time limits. This article sets out how the two procedures work and when each is available.

How a Company Comes to Be Struck Off

Section 327 of Cap. 113 empowers the Registrar of Companies to remove a company’s name from the Register in a number of situations. These are:

1. Where the Registrar has reasonable cause to believe that a company is not carrying on business or is not in operation, a letter of enquiry is sent to the company. If no reply is received within one month, a second registered letter follows. If that too goes unanswered within one month, the Registrar may publish notice under section 365A of an intention to strike the company off.

2. The Registrar may also strike a company off:

• on the application of its directors, in the prescribed form, provided the company has met its obligations under the Law;
• where the company has failed to pay the annual fee under section 391 for a period of one year from the date it became payable; and
• where the special resolution required by section 370ΙΕ(2) has not been filed within the statutory period.

In each case the Registrar publishes, and sends to the company, a notice stating that after three months from the date of the notice the company’s name will be removed from the Register unless cause is shown to the contrary — whereupon the company is dissolved.

3. A separate power exists under section 327(6) where a company has failed to file a document required by the Law: removal may follow at least six months after the Registrar’s letter requesting it.

Objecting Before Strike-Off

Under section 327(5), the company, or any member or creditor of it, may show cause to the contrary before that period expires by filing an objection in the prescribed form. Where a voluntary application has been made by the directors, section 327(3A) allows that application to be withdrawn by notice in the prescribed form before the three months elapse.

Acting within the notice period is materially simpler and less expensive than restoring a company after dissolution. Where a notice has been received, or a Gazette publication is spotted, it should be dealt with immediately rather than left to run.

Route 1: Administrative Restoration under Section 327A

Section 327A allows the Registrar to restore a company’s name without a Court application.

The section applies only where the company was struck off under section 327(3)(α), section 327(3)(γ) or section 327(6) — broadly, non-response to the Registrar’s enquiries, non-payment of the annual fee, or failure to file a required document. It is not available where the company was struck off on the voluntary application of its own directors.

Who may apply: any director or member of the company.

Conditions. The Registrar must be satisfied that:

1. the application is made within 24 months of the date of removal;
2. the company was carrying on business and/or in operation when it was struck off;
3. all relevant forms, reports, financial statements and documents have been delivered or annexed so that the company’s file can be brought up to date;
4. all fees, charges and default penalties arising or imposed before removal have been paid;
5. the administrative restoration fee has been paid with the application; and
6. the Registrar has reasonable cause to believe that the removal has placed the applicant at a disadvantage.

Where the company’s property or rights have been dealt with by the Republic under section 328, the applicant must also annex the written consent of the competent representative of the Republic.

Form and fees. The application is submitted by hand or by post to the Department of the Registrar of Companies, accompanied by the outstanding forms, reports, financial statements and documents, the outstanding fees, charges and penalties, and any consent required under section 328.

Effect. Where the Registrar is satisfied that the company was carrying on business or in operation at the time of removal and that the applicable requirements have been met, a restoration certificate is issued, the register is updated and notice of the restoration is published in the Official Gazette under section 365A.

Route 2: Restoration by Court Order under Section 327(7)

Where administrative restoration is unavailable or unsuitable, application may be made to the Court.

Who may apply. Section 327(7)(α) identifies the company itself, any member or creditor of it who is aggrieved by the removal, and any person who has suffered damage from the acts of the company before its removal.

Time limit. The application must be made before the expiry of 20 years from the date of publication of the removal. The passage of more than two years since strike-off therefore does not put restoration out of reach – it simply means the administrative route has closed and the Court route must be used.

Test. Under section 327(7)(β) the Court may order restoration if satisfied either that the company was carrying on business or was in operation at the time of removal, or that it is otherwise just that the company be restored. The disjunctive second limb gives the Court a broad discretion, and restoration is accordingly not confined to companies that can prove active trading at the relevant date.

Availability. Unlike administrative restoration, the Court route is not confined to particular grounds of removal. It is available whether the company was struck off on the Registrar’s initiative or on the voluntary application of its own directors.

Effect and ancillary orders. An office copy of the order must be delivered to the Registrar for registration, by hand or by post, with the prescribed fee. On registration the register is updated, notice is published in the Official Gazette, and the company is deemed to have continued in existence as if its name had never been removed. Section 327(7)(γ) additionally empowers the Court to:

• give such directions and make such provisions as it considers just to place the company and all other persons, so far as possible, in the position they would have occupied had the name not been removed;
• order the delivery to the Registrar of documents necessary to update the register;
• order payment of the company’s outstanding fees to the Registrar; and
• order payment of the Registrar’s costs of the restoration process.

For assistance with a strike-off notice, an application to the Registrar under section 327A, or Court proceedings under section 327(7) of the Companies Law, Cap. 113, please contact us.

This article is provided for general information purposes only and does not constitute legal advice. It reflects the position as at the time of writing, including the status of draft legislation that remains subject to change; readers should seek specific advice on their circumstances.

Theodorou Law is a Cyprus law firm with Cyprus lawyers and other legal experts on legal matters involving Cyprus law, EU law and international law. The above should be used as a source of general information only. It is not intended to give a definitive statement of the law.

Also relevenat – Administrative restoration of a Cyprus Company struck-off from the companies register

Also relevenat – Reinstating a Cyprus Company struck-off the register

How can we help?

We can advise and assist shareholders, directors and creditors to reinstate a company which has been struck off the Cyprus Register of Companies. For assistance in reinstating a company struck off the Cyprus Register of Companies. Please contact us using [email protected] to arrange a consultation.