Under English law, all assets, including intellectual property (IP), remaining in a dissolved company are deemed ‘bona vacantia’ – ownerless goods. Much like when an individual dies without a will or beneficiaries, these ownerless goods vest in the Crown and the assets may be available for sale.
In this guide, our intellectual property solicitors discuss what happens to intellectual property owned by a dissolved company, how to identify if assets are ownerless and whether the assets can be purchased.
Contents:
- What does ‘bona vacantia’ mean?
- What happens to intellectual property owned by a dissolved company?
- Who deals with bona vacantia?
- Are intellectual property rights of dissolved companies available for sale?
- How can companies or individuals determine if an intellectual property right is bona vacantia?
- How does bona vacantia work?
- What happens to intellectual property rights if the dissolved company is restored?
- How can the directors or shareholders of a dissolved company get the assets back?
- Summary
What does ‘bona vacantia’ mean?
Bona vacantia means vacant goods – property that does not belong to anyone. The best-known example of bona vacantia is probably the estate of someone who dies intestate, with no one to inherit.
What happens to intellectual property owned by a dissolved company?
On the dissolution of a company, the directors have a duty to realise the assets but may well overlook some of them. The company’s undisposed-of property, found without any apparent owner, belongs to the Crown. This property then becomes available for someone else to buy.
The Crown may disclaim bona vacantia, and if the assets are likely to prove burdensome may well do so. The liabilities of a dissolved company do not pass to the Crown: they are extinguished.
Who deals with bona vacantia?
While the legal principle is that bona vacantia belongs to the Crown, in practice they are usually handled in England and Wales by the Bona Vacantia division (BVD) within the Government Legal Service.
This guide deals with England and Wales only, and there are differences in the way Scotland and Northern Ireland deal with ownerless assets. The location of the company’s last registered office, and the situation of the asset, together determine who has jurisdiction.
Are intellectual property rights of dissolved companies available for sale?
Yes. There is a clear economic benefit in putting these assets to work and selling them will bring in money for the Treasury. The process for buying bona vacantia IP assets from BVD is set out below.
BVD does not deal with foreign assets, which includes foreign intellectual property rights. It is no longer possible to acquire a dissolved company’s EU trade mark through bona vacantia.
How can companies or individuals determine if an intellectual property right is bona vacantia?
BVD does not keep a huge register of bona vacantia. Generally speaking, it only becomes aware of bona vacantia when someone asks if they can buy an asset, then it has to check whether it has the right to sell. Prospective purchasers, with experienced legal advice, will have an idea whether the asset they are after belonged to a dissolved company and, after doing the necessary due diligence, instruct their solicitors to make an approach to BVD.
How does bona vacantia work?
The prospective purchaser must show BVD that the dissolved company owned the asset before dissolution. To meet this requirement, prospective buyers must provide certain information to BVD, including:
- the name, company number and last registered office of the relevant dissolved company
- details of the IP and evidence that the dissolved company owned it (more on this below)
- details of why they are interested in purchasing the IP and what plans they have for it
- details of any past or current disputes relating to the IP or its use
- who, if anyone, is currently using the IP
- the name, address and reference of their solicitor or agent
- In relation to certain types of IP, the prospective buyer must also provide additional evidence regarding the dissolved company’s ownership.
For trade marks, a copy of the registration details must be provided, which can be obtained from the Intellectual Property Office (IPO) for UK trade marks.
In respect of copyright, the prospective buyer must also provide a copy of the assignment of the copyright to the dissolved company or other evidence that demonstrates the dissolved company owned the copyright.
For any other IP, a copy of the patent registration details (available from the IPO) or other evidence that the dissolved company owned the IP, must be provided.
Using the information provided by the prospective buyer, BVD will seek to verify that the dissolved company was the owner of the IP at the time of dissolution.
If BVD deems the IP bona vacantia, it will consider how best to dispose of the asset. BVD is under no obligation to sell – it will make an independent assessment of the correct manner of disposal, and who to sell to (if anyone). BVD may choose to sell to a third party, retain the asset for itself or it may choose to disclaim the asset, giving up the Crown’s interest.
If BVD is willing to sell, it will sell at open market value - BVD is under a duty to get the best price it can for the asset and will take steps to ascertain an appropriate valuation. BVD may seek a professional valuation and the prospective buyer will be expected to pay for this valuation in advance.
BVD will not sell an asset for less than the minimum value set out below:
| Asset | Price (plus VAT) |
| UK trade mark | £1000 |
| Copyright | £1000 |
| Patent and other IP | £1000 |
BVD also charges costs of £300 plus VAT per asset. If the total value of the deal exceeds £10,000 the BVD will require proof of identity in accordance with its anti-money laundering procedures.
If BVD agrees to sell, it will dictate the terms of the assignment, and will also prescribe a time frame within which the sale must be completed.
Following the sale, the new owner should arrange registration of the assignment and will be responsible for associated fees. It is worth noting that BVD will not assist with any enquiries or requisitions raised by the registration authority.
Lack of information, as well as the absence of the usual representations and warranties a buyer might expect, is the main drawback, and potential risk, with buying IP bona vacantia.
Typically, a buyer might expect the benefit of representations or warranties as to title, quality, value, validity, and infringement, as well as any implied statutory warranties. Bona vacantia IP is sold without any title guarantee, and BVD give no representations or warranties in relation to the IP.
The buyer has no assurance that BVD has the right to sell the IP and they will have no assurances or information relating to past disputes and these will be the risk and responsibility of the new owner. This highlights the importance of the buyer’s preliminary investigations.
What happens to intellectual property rights if the dissolved company is restored?
The dissolved company can (subject to time limits and other matters) be restored to the register, and indeed this is one of the possibilities that BVD will often explore. If the dissolved company is restored, it means that there were never any bona vacantia, and the assets remain with the company – unless BVD has sold them in the interim, in which case the restored company gets the proceeds of sale less BVD’s expenses.
A company can be restored by the Registrar of Companies if it was dissolved less than six years ago, was trading at the time, and the applicant was a director or shareholder. This will cover most cases where restoration might be considered – but if not, there is the much more expensive possibility of obtaining a court order.
How can the directors or shareholders of a dissolved company get the assets back?
We would normally advise the directors or shareholders of a dissolved company to seek to get it restored to the register if there are assets that need to be recovered. The alternative is to refer the asset or assets to the Treasury Solicitor, with a view to buying them back from BVD, but that sets in train the process described above which could result in the asset being sold to someone else.
It’s always worth investigating exactly who owned the IP used by the company. Very often founders hang on to IP rights themselves, licensing the company to use them. Alternatively, IP assets used by the company might have belonged to a third-party licensor all along. Depending on the type of IP it might be enough to know that no one is in a position to sue you if you go ahead and use it, although as noted earlier it is usually better to get the security that comes from owning the IP outright.
Summary
When you need IP that belonged to a dissolved company, bona vacantia provides a fairly simple way to acquire it. Unusually, it requires you to convince the seller that they own it first, and once alerted to the fact that they have something to sell they will seek an open market price. But bona vacantia is a sort of last resort, in that the company should have disposed of its assets before dissolution, so the best way to obtain that piece of IP (or other asset, for that matter) if you know the company is on the way out is to make it, or the liquidator, an offer they are unlikely to refuse.
