The First Hall of the Civil Court, presided over by Mr Justice Joseph Zammit Mc Keon, on June 30, 2015, in the case ‘Notary Gerard Spiteri Meampel and others v Registrar of Companies’, ordered that Coastline Development, which had previously been struck off the companies’ register, be reinstated for a period of six months.

The members of Coastline Development Ltd, which had been struck off the Register of Companies, applied to reinstate the company. Five years had not yet lapsed from when the company had been cancelled. Article 325(4) of Chapter 386 provides that:

“If any member or 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 by virtue of this article, the court on an application made by the member or creditor or such other person before the expiration of five years from the publication of the notice of the striking off provided for in sub articles (2) and (3) may, if satisfied that it is proper that the name of the company be restored to the register, 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; and the court may by its order give such directions and make such provisions as seem fit for placing the company and all other persons in the same position as nearly as may be as if the name of the company had not been struck off.

“The Registrar shall forthwith proceed to publish a notice in the Government Gazette or on a website maintained by the Registrar and in a daily newspaper circulating wholly or mainly in Malta that the name of the company has been restored to the register.”

The company was the owner of certain immovable property which had not yet been distributed. Notary Gerald Spiteri Maempel, Johanna Spiteri Maempel and Nicola Pace, as members, claimed that they had an interest to restore the company back on the Register of Companies.

Applicants claimed there existed all elements contemplated under article 325(4) of Chapter 386 for the company to be revived. They requested the court to order that the company be reinstated, subject to such conditions which the court deemed fit.

Coastline Development was registered on July 9, 1966. On December 29, 1997, the company was dissolved and documents were submitted at the Registry to appoint a liquidator to attend to its dissolution.

Article 322(1) of the Companies Act provides that:

“If, where a company is being wound up, whether by the court or voluntarily, the winding up is not concluded within 12 months after the dissolution of the company, the liquidator, not being the official receiver, shall, within 30 days from the expiry of the said period of 12 months, and subsequently at intervals of six months, until the winding up is concluded, send to the Registrar for registration a statement with respect to the proceedings in and position of the winding up commencing on the date when the liquidator was first appointed and drawn to the end of the period in respect of which the statement is due, and made in such form and containing such particulars as may be prescribed.

“In a winding up by the court, where the assets of the company have been fully realised and distributed before the expiration of a six-monthly interval, a final statement shall be sent to the Registrar for registration.

“If the liquidator failed to observe these provisions he was liable to a penalty.”

On December 19, 1999, and January 28, 2000, the liquidator failed for several years to submit the necessary declarations required under article 322 and accordingly a penalty was due to the Registry.

The court stated that it was not granting a carte blanche to its shareholders and the liquidator to redo all acts which were not done properly before the company’s cancellation

Under article 325(3), if the Registrar had sufficient reasons to assume that the liquidator of the company was not performing and failed to make the necessary statements, he could proceed to publish in a local daily newspapers that, at the end of a period of three months from the publication of such notice, the dissolution of the company would be deemed to have been completed and for the company to be struck off the register. Unless reasons were brought to justify why the company should not be dissolved, the dissolution was to be deemed complete and the Registry of Companies had to cancel the name of the company off the register, and all its assets, if any, devolved to the government of Malta.

In this case, on July 3, 2013, the Registrar wrote to the directors and to the liquidator of the company. On July 11, 2013, the Registrar gave notice, and as no one came forth with reason why the company should not be dissolved within the stated period of three months, the Registrar published another notice on October 17, 2013, where it was stated that, with effect from October 10, 2013, the company was cancelled from the Register of Companies.

Any member, creditor or any other person who had an interest that the company should not be cancelled, could apply to the court before the lapse of five years from the publication of such notice and, if appropriate, the name of such company be restored on the register. The court could give such order so that the company be placed in a position as close as possible as if it had not been dissolved.

Initially, the Registrar of Companies opposed the reinstatement of the company. Later, however, during the proceedings as the applicants complied with all requirements under the Companies Act, he found no objection that the company be restored on the register under such conditions as the court felt opportune to impose. The Registrar maintained that they should not suffer judicial expenses.

The court noted that the company was dissolved voluntarily by its shareholders. A liquidator was appointed, but the Registrar of Companies took action under article 325 of Chapter 386, as the liquidator failed to carry out his duty, and cancelled the company from the Registry.

Applicants based their action on article 325(4) of Chapter 386. Applicants were shareholders of the company and had locus standi to proceed. Not only were they members but also qualified as aggrieved persons.

The court considered that the applicants showed that they wished to rectify matters. Despite the lack of action by the liquidator, applicants completed all pending issues with the Registry before the court sitting of June 16, 2015.

Article 325 of Chapter 386 regulated the power of the Registry of Companies in cases where a company either ceased to carry out its business or was dissolved. The Registry did not receive any feedback on the liquidation, not even the minimum required by law.

The court said that the Registrar acted correctly, in view of the failure of its members to monitor the liquidation and/or the failure of the liquidator himself.

The court felt that it was appropriate in this case for the company to be reinstated. All penalties due to the Registry were now settled and, in particular, the Registrar did not oppose the reinstatement of the company on the register.

The court stated, however, that it was not granting a carte blanche to its shareholders and the liquidator to redo all acts which were not done properly before its cancellation. Once the company was dissolved, there was no turning back. This court wanted that the liquidation be continued from where it was left off and for it to be completed within certain time limits.

Furthermore, the court said that, in view of the reinstatement of the company, and that the liquidation of the company was legally correct, it was not necessary for the Registrar to take legal action owing to the failures of interested persons, including the applicants.

For these reasons, on June 30, 2015, the First Hall of the Civil Court gave judgment.

It ordered the reinstatement of the company within seven days. The Registrar was ordered to restore the company on the register, and to publish a notice in the Government Gazette or on its website to state that the company was reinstated.

The liquidator had to reassume his duties and powers.

Applicants and/or the liquidator had to finalise the liquidation within six months. The Registrar of Companies was also ordered, with effect from December 16, 2015, to cancel the company from the register.

Dr Grech Orr is a partner at Ganado Advocates.