How a company asset becomes bona vacantia
Property, cash and any other assets owned by a company when it is dissolved automatically pass to the Crown. This is because the law says this happens. You can find the main provisions of this law in the Companies Act 2006.
Liabilities of a company do not pass to the Crown on dissolution: they are normally extinguished.
A company is dissolved in two ways. The Registrar of Companies can strike off a company for failure to comply with its legal obligations. Alternatively, a company can be dissolved after a formal liquidation by its members or creditors.
The Treasury Solicitor collects some bona vacantia assets for the Crown. The Bona Vacantia division (BVD) of the Treasury Solicitor’s department is responsible for this function.
Jurisdiction and its importance in bona vacantia
Who deals with dissolved companies’ assets depends on
- the last registered office address
- where the asset is situated
If the company’s last registered office and the asset was in England or Wales, but not in the Duchies of Lancaster or Cornwall, its assets are dealt with by the Treasury Solicitor.
If the company’s last registered office and the asset was in Scotland its assets are dealt with by the Queen’s and Lord Treasurer’s Remembrancer
If the company’s last registered office and the asset was in Northern Ireland its assets are dealt with by the Crown Solicitor’s Office
If the company’s last registered office and the asset was in the Duchies of Cornwall or Lancashire, its assets fall to be dealt with by the Duchies’ solicitors, Messrs Farrer & Co
Farrer & Co.
66 Lincolns Inn Fields
London WC2A 3LH
The Duchy of Cornwall comprises the County of Cornwall. The Duchy of Lancaster comprises the Counties of Lancashire, Merseyside and parts of Greater Manchester, Cheshire and Cumbria. Further details as to the precise boundaries of the Duchy can be obtained from the Duchy Office.
1 Lancaster Place
London WC2E 7ED
Tel: 020 7836 8277
If the last registered office and the asset are in different jurisdictions, the location of the last registered office will usually determine who deals with the asset.
BVD do not deal with foreign assets but may deal with assets in England and Wales which are owned by a foreign company. If you are unsure please contact BVD and they will discuss the situation with you.
Any asset can become bona vacantia including:
- land and interests in land in England and Wales
- bank accounts
- other forms of cash (such as insurance policies, tax refunds or sums paid into court)
- patents and other intellectual property
- the benefit of mortgages where sums are owed to a dissolved company
- the benefit of other assets or agreements that the company entered into
BVD do not deal with assets which are held by a dissolved company as a trustee for someone else.
If an asset becomes bona vacantia it belongs to the Crown. The Crown does not have to deal with it in any particular way.
Normally an asset will either be disclaimed or sold for full market value.
What the Treasury Solicitor cannot do for you
- pay the liabilities of dissolved companies
- manage or insure property or assets
- take formal possession of assets before selling them
- sell assets for less than market value
- sell where it is not cost effective to do so
- give any form of title guarantee when selling – the risk of buying a bona vacantia asset is with the purchaser
- give you legal advice
- help resolve problems where there is no value for the Crown or where it would not be cost effective to do so
Avoid bona vacantia
It is the responsibility of the directors and shareholders to deal with the property and assets of a company before it is dissolved. Bona vacantia can be avoided by ensuring assets or property are transferred or dealt with before a company is dissolved.
You should ensure this happens as the role of the Treasury Solicitor is not to correct mistakes or negligence.
If you are a former member, shareholder or liquidator of a company and you want to get an asset back from the Crown you will need to restore the company or buy it from BVD for open market value.
There is no guarantee that BVD will sell it back to you or at all – they may want to sell it on the open market if that would get better value for the Crown.
It may be possible to restore the company. If this happens, the company comes back to life, bona vacantia no longer exists and the asset belongs to the company again. However, if while the company has been dissolved the Crown has disposed of the asset, you will not be entitled to the asset back but BVD will pay you whatever consideration they received from the sale (less whatever costs they had in dealing with the asset).
Refer an asset to the Treasury Solicitor
You don’t have to be a former director or shareholder of a company: anyone can refer an asset.
There are many types of common assets each requiring different information to be provided when being referred to the Treasury Solicitor.
Guidance specific to various types of asset is detailed below:
Please remember, just because you refer an asset doesn’t mean BVD will deal with it in the way you would like and remember that BVD cannot provide you with advice.
If you have instructed a solicitor to deal with your case, BVD can only speak and communicate with the solicitor instructed because of professional conduct rules.
Please don’t call BVD if your solicitor is acting for you: ask him or her to contact BVD for you.
The Crown has a statutory power to disclaim (give up) its interest in bona vacantia.
If BVD disclaim an asset it means that a particular asset is treated as never having passed to the Crown as bona vacantia.
BVD can disclaim any kind of asset, at any time and without prior notice to anyone.
The power to disclaim is frequently used in relation to difficult or problematic land, land which has limited value or where it would not be cost effective to dispose of it.
As soon as BVD have evidence that an asset has vested in the Crown they will consider whether it should be disclaimed before taking further steps.
They will continue to consider whether the asset should be disclaimed as the case progresses.
BVD usually disclaim
- land used in common, such as private roads, service yards, amenity land, or the common parts of an estate or a block of flats
- property subject to onerous covenants or other potential liabilities
- property which is contaminated or has buildings, trees, or other items which are in a dangerous state and condition
- property in negative equity
- property subject to a dispute or competing claims
- low value property
- commercial leases that pass to the Crown as bona vacantia
- assets which are the subject of dispute or litigation.
If BVD decide to disclaim an asset they will issue a notice of disclaimer.
A copy of the disclaimer notice will be published in the London Gazette and a copy sent to the Registrar of Companies and anyone who has given BVD notice that they claim to be interested in the asset.
The effect of disclaimer is that the property or asset is deemed not to have vested in the Crown as bona vacantia.
Leasehold title is extinguished on disclaimer.
If the property disclaimed is freehold land, the freehold title will be extinguished and the property will ‘escheat’ to the Crown Estate. Enquiries about the property should be addressed to the solicitors for the Crown Estate: Burges Salmon LLP
Burges Salmon LLP
One Glass Wharf