Treasury solicitors remove provision for dissolved companies

THE GOVERNMENT has removed a provision that allows businesses to retain share capital of less than £4,000 when it is dissolved.

The Treasury Solicitor's Department (TSC) has withdrawn guidelines from its Bona Vacantia website, which explains the rules when a company is dissolved. The TSC said that share capital can be distributed before the dissolution without consulting the department, but any money left within the company becomes the property of the Treasury.

Nigel May, partner at MacIntyre Hudson, said that this signals a policy shift from the TSC. "Strictly the position has always been that the company's share capital (and any other non distributable reserves) remains within the company and belongs to the crown when the company is struck off, however, by concession, the Treasury Solicitors took the view that provided that the share capital was less than £4,000 they would not take the point," he said.

Following the removal of this concession will mean that "greater care" is needed when striking a company off: "It will be vital first to reduce the company's share capital before proceeding to strike the company off," he said.

"The annoyance is the very short notice given of this change," he added.