Company reactivation

Companies can be struck of the registry deliberately or mistakenly. This often is the result of voluntary winding up of the company or a procedural violation of the domestic companies law in the state of incorporation or registration. The scope and nature of a company that limits liability might require reactivation to avoid personal liability from one side, and restricted possibilities for use of the dormant or closed legal person. Company reactivation or reopening can be justified for a variety of reasons. This is often disclosed for asset recovery purposes where next of kin cannot collect on assets belonging to a dormant legal entity, or a corporate bank account is blocked due to the lack of good standing of the company.

As a rule of thumb, inactive company have no rights to the corporate assets. The beneficial owner of an inactive company does not automatically owns the corporate assets. Company reactivation to restore proprietorship or a court order can justify the transfer of ownership. Yet, this migration to the personal sphere of the beneficiary often triggers a taxable event which if not executed appropriately, even disqualifies the takeover.

Company reactivation or reinstatement can require intervention by the court. Such intervention is often needed when the company was dormant for several years or the beneficiaries of the company did not comply with mandatory company law and regulation. Alternatively, (offshore) companies can be reactivated or reinstated by paying late fees and penalties imposed by the registrar. For both procedures, the assistance of a corporate service provider can avoid irreparable damages, exorbitant penalties and failure to achieve the desired end-goal.