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If the owner of the arms (Borough of Deal) is defunct, any rights to the arms must also be extinct. The town council could of course commission a fresh coat of arms at great expense to the taxpayer, unless some local worthy wanted to fund it. It's my understanding that arms granted to a civic or commercial organisation cannot pass to its successors in title.
In short, there is no criminal offence committed and as the only body against whom a civil tort could be committed no longer exists, Deal organisations ought to be able to use the old arms with total impunity even though it is technically unlawful.
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