Making an application to court under the Companies Act 2006

There are occasions that require a company to make an application to court. Our summary takes you through the procedure.

When is a court application necessary?

There are numerous occasions in the Companies Act 2006 that call for court approval or allow an interested party to apply to court to resolve a problem. Thankfully, these situations do not arise regularly in the life of most companies, so court applications are not routine. Examples include approval of a reduction of capital or scheme of arrangement, and enabling someone involved in a company to assert their rights, like calling a shareholder meeting where they are being prevented from doing so.

Types of application

Most applications under the Companies Act are made under the “Part 8” procedure. This is a streamlined application process designed for companies and governed by Part 8 of the Civil Procedure Rules and its related Practice Directions. Further rules relating to Companies Act applications are included in Practice Direction 49A.

Other types of civil claim relating to a company or its activities, such as for breach of contract, are made by ordinary claim form. Straightforward money claims of debts up to £100,000 can be made online via: https://www.gov.uk/make-money-claim.

Action can be taken against companies and their officers for breach of the Companies Act. However, these are criminal offences so go through the magistrates’ or Crown court.

Costs

There are fees to pay for issuing claims (see link below). In addition, a company is responsible for paying its legal representatives’ fees. One party can be required to pay the other’s legal costs, but costs orders are assessed by the court and rarely match the actual costs incurred. A company’s legal advisor should always make the costs position clear from the start of the process.

Further information

The court forms and information on the courts generally (including fees for different applications) can be found at: https://www.gov.uk/government/organisations/hm-courts-and-tribunals-service.

The Civil Procedure Rules and Practice Directions are at: http://www.justice.gov.uk/courts/procedure-rules/civil/rules.