Grupo Mexico SAB DE CV & Ors v The Registrar Of Companies For England And Wales & Ors

Section 1096 of the Companies Act 2006, as applied to limited liability partnerships, gives the court power to rectify the register where restoration was procured by factually inaccurate or fraudulent material. Where the material has legal consequences concerning dissolution, the court must balance the LLP’s interest in removal against the interests of others in its continued registration. Fraudulent restoration will ordinarily justify rectification, although exceptional circumstances may support retaining the material. Administrative restoration requires the LLP to have been carrying on business or in operation at the relevant time. The threshold is low but depends on the facts. Legal advice does not prevent conduct from being dishonest where the defendant knowingly makes false statements by ordinary standards.

The proceedings comprised a rectification claim and a restoration claim concerning Infund LLP. The claimants sought to reverse Infund’s administrative restoration to the register and remove material derived from alleged false statements, fraudulent accounts and a forged mandate. The defendants sought restoration under section 1029 of the Companies Act 2006.

The central issues were whether the court had jurisdiction to rectify the register, whether the information supplied for restoration was inaccurate and dishonest, whether the relevant members had validly resigned, and whether it was just to restore Infund so that it could pursue proceedings in Mexico.

1. Rectification. The court held that section 1096 required a two-stage analysis. First, the material had to fall within section 1096(1), including material that was factually inaccurate, derived from inaccurate material or forged. Secondly, where registration had legal consequences concerning dissolution, the requirements of section 1096(3) had to be satisfied ([65]–[78]).
2. The section 1096(3) balancing exercise applied not merely to the entry recording Infund as active, but also to documents filed to obtain restoration where those documents produced the legal consequence of reversing dissolution ([67]–[71]). Fraudulent material was presumed to have caused, or potentially caused, damage to the LLP, and the LLP was presumed to have an interest in its removal ([72]–[75]).
3. The court applied the objective test for dishonesty in Ivey v Genting Casinos (UK) Ltd [2017] UKSC 67. It first determined the defendant’s actual knowledge or belief concerning the facts, then assessed honesty by the standards of ordinary decent people. Mr Garcia knew that he was not a former or designated member and knowingly signed falsely dated and inaccurate forms. Reliance on legal advice did not make that conduct honest ([87]–[95]).
4. The Corplaw Entities were entitled to resign. Clause 7.4 did not prevent resignation except where a member sought to withdraw capital or receive a distribution. Section 4(3) of the Limited Liability Partnerships Act 2000 did not prevent simultaneous resignation leaving an LLP without members ([96]–[106]).
5. The phrase “carrying on business or in operation” imposed a low threshold, but its application remained fact-sensitive. Applying Re Priceland Ltd [1997] BCC 207, Infund was dormant and neither carrying on business nor in operation when dissolved. Holding a bank account and later pursuing claims did not establish operation ([107]–[120]).
6. Fraudulent accounts fell within section 1096. The separate provisions concerning defective accounts addressed non-compliance with statutory accounting requirements, not fraudulent accounts or accounts derived from fraudulent representations ([134]–[146]). The June 2003 mandate was forged, and the claimants could rely on that allegation because the notice to prove it gave sufficient advance notice ([147]–[156]).
7. The section 1096(3) factors favoured rectification. Declaratory relief was appropriate, having regard to justice, usefulness and the special circumstances of the case. Restoration was refused under the discretionary gateway in section 1031(1)(c), because the Mexican claim was shadowy and it was not just to restore an LLP whose restoration had been procured by fraud and forgery ([157]–[182]).

The Rectification Claim succeeded. The Restoration Claim was dismissed.

First-instance decision. No prior appellate decision is stated in the judgment.