As you may be aware when a company that was registered under the Companies Acts is dissolved, all its property in England and Wales (but not its liabilities) pass to the Crown as bona vacantia (“ownerless property”) pursuant to section 654 of the Companies Act 1985. If the company’s last registered address was in England or Wales (other than the Duchies of Cornwall or Lancaster), the Treasury Solicitor is nominated by the Crown to deal with its assets. This includes funds held in dissolved companies’ bank accounts and surplus funds held in solicitors’ client accounts in the name of dissolved companies.
The collection and disposal of bona vacantia is a public function carried out by the Treasury Solicitor’s Department. In this capacity he is accountable to Treasury Ministers, who are required to lay an annual account of what is collected before Parliament.
In the case of bank balances and monies held in solicitors firms’ client accounts, the Treasury Solicitor relies on banks, building societies, and on solicitors to notify him of any bona vacantia funds and to send these to this office as soon as they become aware of them.
If you are a bank or building society
If you are a bank or building society you may shortly be participating in the scheme being proposed in the Dormant Bank and Building Society Accounts Act 2008. By way of summary, under this scheme where money has been lying “dormant” in an account these sums can be forwarded to a “Reclaim Fund” by the bank or building society. The Reclaim Fund will retain a proportion to meet future claims from account holders and the balance will be used to benefit communities.
However, you should note that the position regarding “dormant” account funds held by a dissolved company remains unchanged. The “dormant” account funds held by a dissolved company are still bona vacantia funds, which should be forwarded to this department. Therefore, in the process of identifying dormant accounts, please also ensure that you carry out your usual checks (with Companies House and the London Gazette) as to whether the company that holds the account is dissolved.
Whether or not you are participating in the Dormant Accounts Scheme, the position remains that any sums held in an account by a company which has since dissolved are bona vacantia funds which should be forwarded to the Treasury Solicitor.
If you are a solicitor
You may have been contacted recently by the Solicitor’s Regulation Authority (“SRA”) following the recent Solicitors Accounts (Residual Client Account Balance) Amendment 2008 which came into effect on the 14th July 2008 and deals with surplus client money and clearance of small residual client money balances. As you know the SRA is encouraging client monies to be returned promptly to the client following the end of the retainer.
The SRA have also simplified the position regarding the clearance of residual client balances under £50.00 which may be paid to charity without client authorisation provided the solicitor can demonstrate that all reasonable attempts have been made to establish the identity and return the monies to the rightful owner. Balances over £50.00 (or balances under £50.00 not paid to charity) will continue to require SRA authorisation as before. The SRA will not deal with applications where the company has been dissolved unless you can confirm that you have contacted the Treasury Solicitor’s Department and we have confirmed that we will not deal with the monies.
Please note that the position regarding residual balances held in client accounts in the name of a dissolved company remains unchanged. These funds (whatever the amount) remain bona vacantia assets and should be forwarded to the Treasury Solicitor. Therefore, in the process of identifying the owners of residual client account balances, you will need to carry out checks (with Companies House and the London Gazette) to ensure that the company that the monies are due to be returned to is not dissolved.