Re Grencorp Ltd

• Jurisdiction: Cayman Islands
• Judge: (Foster, J.)
• Judgment Date: 15 August 2013
• Court: Grand Court (Cayman Islands)
• Date: 15 August 2013

Grand Court, Financial Services Division

(Foster, J.)

IN THE MATTER OF GRENCORP LIMITED

D. Butler and A. Jackson for the petitioner;

Ms. J. Wilson, Solicitor General, for the Registrar of Companies.

Cases cited:

(1) Haltone (Cork) Ltd., In re, [1996] 1 I.R. 32, considered.

(2) Test Holdings (Clifton), In re, [1970] Ch. 285; [1969] 3 W.L.R. 606; [1969] 3 All E.R. 517, followed.

Legislation construed:

Companies Law (2012 Revision), s.159: The relevant terms of this section are set out at para. 6.

s.168: The relevant terms of this section are set out at para. 6.

s.169: The relevant terms of this section are set out at para. 6.

s.170: The relevant terms of this section are set out at para. 6.

Companies-Register of Companies-restoration to Register-as condition of restoring company to Register, courts may order that applicants for restoration (including creditors) pay fees and penalties owed by defunct company to Registrar-Registrar not creditor of company in respect of unpaid fees and penalties whether company to be wound up after restoration or not-Companies Law (2012 Revision), s.159 not cap on sum payable

The petitioner applied to have a company reinstated on the Register of Companies.

Grencorp Ltd. was struck off the Register of Companies, inter alia for failing to pay annual fees and consequent penalties to the Registrar. The petitioner, who claimed to be owed between $2.8m. and $6.5m. by Grencorp Ltd., applied to have it restored to the register and subsequently wound up.

The petitioner was informed that it needed to pay both a reinstatement fee of $470, plus the arrears of annual fees and penalties payable by the company amounting to $5,240. The petitioner accepted the obligation to pay the reinstatement fee of $470, but disputed whether, as a creditor of Grencorp Ltd., it was also obliged to pay the outstanding fees and penalties before the company would be restored to the register.

The petitioner submitted that whilst the Companies Law (2012 Revision), s.159 was clear that a reinstatement fee was payable, it made no mention of the payment of arrears of fees and penalties, and that the introduction of the reinstatement fee had been intended as a cap on the amount courts could require petitioners for reinstatement to pay. Where the company was insolvent, it submitted, the Registrar should rank as one of its creditors.

The Registrar of Companies submitted that since Grencorp Ltd., once reinstated, would be deemed to have continued in existence, it was just that the court require that the fees and penalties it would have had to pay to have continued in existence were actually paid, and that parties who applied for reinstatement of a company for their own benefit had to be prepared to meet the costs of properly doing so.

Held, ordering that Grencorp Ltd. be reinstated on the condition that the petitioner pay both the reinstatement fee, and the arrears of annual fees and penalties:

(1) The court had jurisdiction to require, as a condition of restoring a company to the register, that an applicant for that restoration, whether or not a creditor of the company, pay what the company owed the Registrar if it were just to do so. The Companies Law (2012 Revision), s.159 should not be interpreted as creating a cap (in the amount of the reinstatement fee) on the sum payable by a party petitioning to have a company reinstated; to do so would fetter the wide discretion given to the court by that section to impose such conditions as it saw just on any reinstatement (paras. 13–14; para. 20).

(2) It was just to require, as a term or condition of the restoration, that the petitioner pay the arrears of fees and penalties. Since a reinstated company was put in the position in which it would have been had it never been struck off, it would be wrong to compel the Registrar to restore companies which were not in good standing. The company having been struck off inter alia for non-payment of fees, it was inappropriate to compel the Registrar to reinstate it without those fees being paid. The fact that the company was to be wound up after restoration did not detract from this. Since reinstatement must precede winding up, the Registrar did not therefore simply rank as a creditor in respect of any outstanding fees and penalties. Requiring the Registrar to bear the uncertainty, cost and delay of recovering the outstanding fees and penalties as a creditor in winding up was not appropriate (paras. 15–17; paras. 19–20).

1 FOSTER, J.: Although there is...