The news of a company being struck off can be heart-wrenching and difficult to accept. It is one thing for a company to be struck off and another for it to be relisted on the register of companies. Both experiences can be daunting. In Nigeria, the Corporate Affairs Commission reserves the right to strike off the name of any defaulting company from its register. The Companies and Allied Matters Act 2020 guarantees the power to strike off companies. The basis for the exercise of this power could be due to non-compliance with statutory and regulatory procedures, default in payment of outstanding fees for a protracted period, etc. In this article, we will explore in detail the reasons and effects of striking off a company, the status of a company after striking off, and how to relist a struck off company in Nigeria.
What are the reasons for Striking Off a Company?
A company may be struck off for the following reasons:
- Failure to file annual returns or non-compliance with the provisions of the law for a consecutive period of ten (10) years,
- prolonged dormancy of the company without commencing business operations for a period of 10 years and without any undischarged obligations, [1]
- or a special resolution passed by the company, followed by an application to CAC requesting its name be removed from the register. The application will be advertised in three national daily newspapers within 28 days of passing the resolution calling for objections.[2]
What are the Effects of Striking Off a Company?
Ultimately, once a company is struck off the register, the company ceases to exist as a legal entity.[3] Others include:
- The liability of directors, officers, and members continues even after striking off.[4]
- Any legal claims or debts remain enforceable against directors or shareholders where applicable.
What are the Grounds for Relisting a Company?
Thankfully, the law provides ways to relist a struck off company in Nigeria based on the following grounds:
- Where the company was struck off by mistake, or maybe due to incorrect records, or failure to receive important notices, it can apply to be relisted.
- Whereupon an application, the court is reasonably satisfied that the company should be relisted.
Who Can Apply for Relisting?
The law allows any of the following persons to apply[5]:
- The company itself,
- Member or shareholder
- A creditor
When to Apply for Relisting?
The timeline for applying depends on the reason for the striking off. If the company was struck off voluntarily through a special resolution, the application for restoration must be made within 2 years from the date of striking off. If the company was struck off by the Commission, based on a reasonable belief that the company was not carrying on business, or had not complied with the Act for a consecutive period of 10 years, then the application must be made within 10 years from the date the striking off was published in at least three national daily newspapers. That gives some flexibility, but it’s best not to delay, especially if legal or financial matters are at stake.
How to relist a struck off company in Nigeria
STEP ONE:
In both cases where a company has been struck off the register, whether voluntarily by the defunct company or by the Commission, the company itself, a member, or a creditor who is aggrieved may apply to the Federal High Court for an order to restore the company to the register.
When an application is made to the Federal High Court seeking to restore a company’s name to the register, the court may grant the request if it is satisfied that at the time of striking off, the company was still actively operating or carrying on business or it is fair and just to restore the company to the register.
STEP TWO
Once an official copy of the court order is submitted to the Corporate Affairs Commission (CAC), the Commission will proceed to register the order provided that the applicable administrative relisting fees are paid, as follows:
- ₦50,000 for companies limited by guarantee
- ₦25,000 for small companies
- ₦50,000 for private companies that are not classified as small
- ₦100,000 for public companies
In addition to these fees, the company must also settle all outstanding annual returns before being relisted. After payment of all outstanding annual returns, the company shall apply for activation of its status by the Commission.
What is the Legal Effect of Relisting a Company?
The legal effect of relisting a struck off company in Nigeria, especially by an order of court, is to the effect that the company and all other persons in the same position as nearly as may be, as if the company had not been struck off the register.[6]
Conclusion
Being struck off isn’t necessarily the end for a company. Companies have a legal route to bounce back, whether due to an error, ongoing activity, or a sense of fairness. If your company has been removed from the register and you believe there is a valid reason to restore it, consider speaking with a lawyer or exploring your options.
If you’d like us to assist you in relisting your struck-off company, you may reach out to our team through the WhatsApp icon on this page or HERE, and we’ll attend to you.
[1] Section Section 692 (1) (d)(i) & (3) CAMA 2020
[2] Section 692 (1)(a-c) CAMA 2020
[3] Section 692 (6) CAMA 2020
[4] Section 692 (7) CAMA 2020
[5] Section 692 (6) CAMA 2020
[6] Section 692 (6) CAMA 2020
