Bona vacantia is a concept familiar to many – especially in the context of assets owed by dissolved UK registered companies. But how does this concept apply to foreign assets owned by dissolved UK registered companies or UK based assets held by dissolved non-UK registered companies?
Bona vacantia: the basics
Bona Vacantia meaning vacant goods refers to a process by which assets owned by dissolved companies pass to the Crown. It is a process that is largely (in respect of UK registered companies) governed by the Companies Act 2006 (2006 Act).
Company assets that can be passed to the Crown bona vacantia include: property, interests in land (freehold/leasehold), cash, intellectual property (including patents & copyrights) and contractual rights.
When assets are passed to the Crown, the Crown (or more specifically the Treasury Solicitor) will either sell the asset at market value or give up its interest in the title and disclaim the asset – the latter option usually being the case where the asset in question has risks or liabilities associated with it (for example an occupational lease that requires the paying of a market rent). Should any properties or interests in land be based in the Duchies of Cornwall or Lancaster, these will be dealt with by the Duke of Cornwall and the Duchy of Lancaster respectively.
When title in a vacated asset is disclaimed, the asset is treated as though it has never vested in the Crown. Although in the case of freehold land this will generally ‘escheat’ to the Crown Estate, so that someone owns the freehold land.
We will not be discussing how the legislation and case law applies to Scottish property in this article.
How does bona vacantia apply to UK based assets owned by non-UK registered companies?
Whilst non-UK registered companies do not fall within the scope of the 2006 Act, the approach taken by the Court of Appeal and the High Court in Pennistone Holdings Limited v Rock Ferry Waterfront Trust [2021] EWCA Civ 1029 and Hamilton v Attorney-General [2022] EWHC 2132 (Ch) (respectively) suggests that if a non-UK registered company gets dissolved, it is likely that any UK based assets would be subject to English law.
Pennistone involved freehold land (situated in England) that was owned by a dissolved Isle of Man registered company, where the Court of Appeal found that the freehold land was subject to English law (rather than the Isle of Man Companies Act).
Hamilton also involved freehold land (situated in England) owned by a dissolved Guernsey registered company, however the freehold land in question was held on trust. The High Court found that English common law governed the devolution of English freehold property held on trust by a foreign registered company.
Does the concept of bona vacantia apply to foreign assets owned by UK registered companies?
By virtue of the 2006 Act, it is arguable that such foreign assets may become bona vacantia. However, the reality is that the Crown will likely have no dealings with such assets.
Commentators consider that the approach likely to be taken is that the jurisdiction where the asset is situated (or in the case of intangible assets i.e. contractual rights, the jurisdiction that governs the relevant contract) will determine whether the relevant asset is bona vacantia following dissolution of the UK registered company.
What happens if the dissolved company is restored?
When a UK registered company is restored, any assets that have become bona vacantia will be re-vested in the company; this is provided that the assets in question had not been disposed of by the Crown, the Duke of Cornwall or the Duchy of Lancaster).
If, before the restoration, there has been a disposal of a property to a third party, the Crown (or Duke or Duchy) is required to pay the restored company:
- the amount of consideration received for the property;
- the value of such consideration at the time of the disposition; or
- (if no consideration was received), an amount equal to the value of the property at the date of the disposition.
For non-UK registered companies, any UK based assets that have become bona vacantia will not automatically re-vest back to the company given that non-UK registered companies are not governed by the 2006 Act. As such, the newly restored company will need to make an appropriate application for a “vesting order” to request a re-vesting of title.
For UK registered companies owning foreign assets, the company will need to take into account how the jurisdiction (of where the asset is situated) deals with the re-vesting of assets.
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