The striking off of a company from the Register of Companies does not necessarily extinguish the rights of its creditors or bring an end to the remedies available to them.
Under the Companies Act, 2015, a company that has been dissolved following striking off may, in appropriate circumstances, be restored to the Register. Restoration may therefore provide a creditor with a means of reviving the company's legal existence for purposes of pursuing a claim or enforcing a debt.
The High Court considered the statutory safeguards applicable to striking off and restoration in Kenya Revenue Authority v Dream Dressing and Household Items Trading Co. Limited & 3 Others [2021] eKLR. The decision underscores the importance of complying with the statutory procedure governing the removal of companies from the Register and the legal consequences that follow upon dissolution.
The Court's consideration of the statutory framework demonstrates that striking off should not be viewed as an absolute bar to the enforcement of a creditor's rights. Where the statutory conditions for restoration are satisfied, the company may be restored to the Register, with the effect that the legal consequences prescribed by the Companies Act follow from such restoration.
The position may therefore be stated as follows:
The dissolution or striking off of a company does not, in every case, permanently extinguish the rights of its creditors. A creditor may, subject to the statutory requirements and applicable limitation periods, seek restoration of the dissolved company to the Register and thereafter pursue the company's outstanding liabilities.
Authority:
- Kenya Revenue Authority v Dream Dressing and Household Items Trading Co. Limited & 3 Others [2021] eKLR.
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