In its judgement on the 14th May 2019, delivered in the names of Mark Bugeja vs Ir-Registratur tal-Kumpanniji, the Civil Court (Commercial Section) (the ‘Commercial Court’), presided over by Judge Joseph Zammit McKeon held, inter alia, that the in the interest of creditor protection, it has the power, as provided in the Companies Act, Chapter 386 of the Laws of Malta (the ‘Companies Act’), to request that a name of a Company that has been removed from the Registry of Companies to be reinstated.
On the 11th May 2019 Mark Bugeja (the ‘Liquidator’) filed an application to the Commercial Court, highlighting that Malta Win Containers Limited (the ‘Company’) was voluntary wound up by the creditors of the Company on the 15th May 1998, following which all the required forms were presented to the Registry of Companies in order to appoint a liquidator and subsequently once the liquidation process is complete have its name removed the Registry of Companies. The Plaintiff had been appointed as Liquidator of the Company on the 26th May 1998.
However, the Company was ‘struck off as defunct’ from the Registry of Companies on the 21st September 2016 without the liquidation process being finalised.
The Liquidator brought the action to revoke the Registry of Companies action and reinstate the name of the Company on the Register for Companies, in the interests of the creditors of the Company. The Liquidator further held that it was never the intention for the Company’s name to be cancelled before the liquidation of the company is properly carried out. The Liquidator brought further evidence that the Company was the owner of various liquidated assets which could not be assigned to creditors due to the Company’s name being struck-off.
The Liquidator further highlighted that 5 years have not passed from the date when the Company’s name was struck off and that in terms of Article 325 (4) of the Companies Act (Chapter 386 of the Laws of Malta):
‘If any member of creditor of the Company, or any other person who appears to the Court to have an interest feels aggrieved by the fact that the name of the Company has been struck off the register, the Court on an application made by the member or creditor or such other person before the expiration of five years..... may.... order that such name be restored to the register, and upon an official copy of the order being delivered by the Registrar of the Courts to the Registrar for registration, the company shall be deemed to have continued in existence as if its name had not been struck off...’
The Liquidator held that, all the requirements of Article 325(4) of the Companies Act are present and if the Company’s name is not placed on the Register for Companies, the creditors of the Company will be denied from the above mentioned liquidated assets to make good for any outstanding debts.
The Registry of Companies presented its replies on the 10th April 2019, confirming that the Company was placed in voluntary winding up, the plaintiff was appointed as Liquidator and that after his appointment, due to the Company not being liquidated within 12 months, during the period between 1999-2011, the Liquidator was sending the required statements, on the position of the liquidation, as required by Article 322(1) of the Companies Act in intervals of six months as stipulated within the Companies Act, until the winding up is concluded.
However, after the last statement provided in 2011, the Liquidator stopped providing the required statements and the Registry of Companies held that it had sufficient reason to apply Article 325(3) of the Companies Act and remove the name of the Company from the Registry of Companies.
‘If, in any case where the company is being wound up voluntarily, the Registrar has reasonable cause to believe either that no liquidator is acting..... and the returns required to be made by the liquidator interms of article 322 are overdue by six months or more, the Registrar may publish in the Gazette or on a website maintained by the Registrar and in a daily newspaper.... a notice that at the expiration of three months from the date of the last publication of the said notice, the winding up of the company shall, unless cause is previously shown to the contrary, be deemed to be concluded and consequently that the company’s name be struck off the register. The Registrar shall also cause a copy of the said notice to be sent by post to the company and to the liquidator if any. At the expiration of the aforesaid period of three months the winding up of the company shall, unless cause is previously shown to the contrary, be deemed to be concluded and the Registrar shall strike the name of the company off the register and the company’s assets shall devolve upon the Government of Malta.’
Consequently to the above, the Registry of Companies proceeded to publicize the required notice on the website maintained by itself and in a daily newspaper, however, after the 3 months as stipulated above, nor the Company, the Liquidator or any third party, informed the Registry of Companies with regards to their interest of not having the Company’s name removed from the Register for Companies. Subsequently the Company’s name was struck off on the 21st September 2016.
The Commercial Court, in deciding the merits of the above case considered the reasons given by the Liquidator as to why he did not continue to provide the above required statements and also the reasons as to why there is the need for the Company’s name to be reinstated, particularly to make the liquidated assets of the Company available to creditors.
The Commercial Court further considered that, the Liquidator has stated that he was willing to regularise his position with regards to any missing documentation that was meant to be sent to the Registry of Companies. Furthermore during a previous sitting the representative of the Registry of Companies held that, the lack of action of the Liquidator resulted from the necessary statutory documents not being provided. The Liquidator regularised his position during the course of the case and provided all the necessary documentation.
Ultimately the Commercial Court considered that, the Liquidator regularised his position with regards to the required submission to the Registry of Companies, and furthermore, the Registry of Companies, had no objection to re-listing the Company’s name on the Registrar of Companies.
In giving its judgement, the Commercial Court held that, when considering article 325(4) of the Companies Act, there is no dispute that the Plaintiff was appointed as the Liquidator of the Company and thus he meets the required criteria of having sufficient interest to request that the Company’s name is reinstated in order to be able to finalise the liquidation and furthermore person, particularly creditors of the Company, would be prejudiced by the removal of the name from the Register of Companies.
When considering all the facts of the case in hand, particularly the reasons which led to the Liquidator to bring such action; in order to protect creditors, it is satisfied that the Company’s name should be reinstated in the Register of Companies.
Dr Neil Bezzina is an Advocate at GANADO Advocates