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Overview Of How To Dissolve Or Strike Off A Company

This guidance will be relevant to you if you want to dissolve or strike off a company and you are:

• a director or secretary of a company
• an adviser to the company

The information provided in this guidance explains Part 31 of the Companies Act 2006.

How To Dissolve A Company

When a company can apply to be struck off the register

A company can apply to the registrar to be struck off the register and dissolved. This is known as Voluntary Strike Off.

The company can do this if it’s no longer needed, for example, if:

• the directors wish to retire and there is no one to take over the running of the company
• the company is a subsidiary whose name is no longer needed
• the company was originally set up to exploit an idea that turned out not to be feasible

Some companies which are dormant or no longer trading can choose to apply for strike off. If you have decided that you do not want to retain your company and wish to have it struck off, the registrar will not normally pursue any outstanding late filing penalties unless you restore the company to the register at a later stage.

This procedure is not an alternative to formal insolvency proceedings where these are appropriate. Even if the company is struck off and dissolved, creditors and others could apply for the company to be restored to the register.

When a company cannot apply to be struck off the register

An application for voluntary striking off can only be made on the company’s behalf by its directors or a majority of them.

Section 1004 and section 1005 of the Companies Act 2006 set out the circumstances in which the company may not apply to be struck off.

For example, the company may not make an application for voluntary strike off if, at any time in the last 3 months, it has:

• traded or otherwise carried on business
• changed its name
• engaged in any other activity except one which is necessary for the purpose of:
• making an application for strike off or deciding whether to do so (for example, seeking professional advice on the application or paying the filing fee for the strike off application)
• concluding the affairs of the company, such as settling trading or business debts
• complying with any statutory requirement
• made a disposal for value of property or rights that, immediately before ceasing to trade or otherwise carry on business, it held for the purpose of disposal for gain in the normal course of trading or otherwise carrying on business

For example, a company in business to sell apples could not continue selling apples during that 3 month period but it could sell the truck it once used to deliver the apples or the warehouse where they were stored.

A company cannot apply to be struck off if it is the subject, or proposed subject, of:
• any insolvency proceedings such as liquidation, including where a petition has been presented but has not yet been dealt with
• a section 895 scheme (that is a compromise or arrangement between a company and its creditors or members)

A company cannot apply to be struck off the register if it has bearer shares in issue. Bearer shares are where a warrant has been issued in respect of shares and there is no registered shareholder in the register of members. You can find further circumstances in which you cannot make an application in section 1004 and section 1005 of the Companies Act 2006.

You will commit an offence if you breach these restrictions, and are liable for a fine on conviction.

Before you apply for strike off

There are safeguards for those who are likely to be affected by a company’s dissolution. If your company has creditors, members, employees etc, you should inform all the necessary people before applying, as any of them may object to the company being struck off. You should deal with any loose ends, such as closing the company’s bank account or the transfer of any domain names before you apply.

You may notify any other organisation or party who may have an interest in the company’s affairs, otherwise they might later object to the application. For example, HMRC, local authorities (especially if the company has any obligation involving planning permission or health and safety issues), training and enterprise councils and government agencies.

If you are a director you should not resign before applying for strike off as you must be a director at the time the Registrar receives the application.

The company’s bank account will be frozen from the date of dissolution, and any credit balance in the account will pass to the Crown. Any assets of a dissolved company will also belong to the Crown.

How to tell interested parties about the strike off application

Use the online service to Close a company.

Who to tell about the strike off application

The directors who make the application must, within 7 days of sending the application to the registrar, send a copy to:

• members, usually the shareholders
• creditors, including all existing and likely creditors such as:
• banks
• suppliers
• former employees if the company owes them money
• landlords or tenants (for example, where a bond is refundable)
• guarantors
• personal injury claimants
• HMRC and Department of Work and Pensions (DWP)
• employees
• managers or trustees of any employee pension fund
• any directors who have not signed the form

The company’s directors must also send a copy of the application to any person who, at any time after the application has been made, becomes a:

• director
• member
• creditor
• employee
• manager or trustee of any employee pension fund

This must be done within 7 days of the person becoming one of these.

This obligation continues until the dissolution of the company or the withdrawal of the application. You’ll be committing an offence by not sending the notice to the relevant parties, and could face a fine or, in the most serious cases, a maximum of a 7 year prison sentence.

Using a DS01 form to strike off a company can be posted to, or leave it at:

• the last known address (if an individual)
• the principal or registered office (if a company or other body)

You can also make a creditor of the company aware of the application by leaving a copy of it at, or posting a copy of it to, the place of business with which the company has had dealings in relation to the current debts, for example, the branch from where you ordered goods or which invoiced you.

If there is more than one such place of business, you should deliver a copy of the application to each of those places. It is advisable to keep proof of delivery or posting.

What Companies House does with the strike off application

Companies House will examine the form and, if it is acceptable, will:

• register the information and put it on the company’s public record
• send an acknowledgment to the address shown on the form
• send a notification to the company at its registered office address to enable it to object if the application is bogus
• publish notice of the proposed striking off in the Gazette to allow interested parties the opportunity to object
• place a copy of the Gazette notice on the company’s public record

If there is no reason to delay, the registrar will strike the company off the register not less than 2 months after the date of the notice. The company will be dissolved on publication of another notice in the relevant Gazette.

Publication, withdrawal and offences

How the Gazette publishes notices about strike off or restoration

The Gazette is the official newspaper record in the United Kingdom. There are three Gazettes:

• the London Gazette – for companies incorporated in England and Wales
• the Edinburgh Gazette – for companies incorporated in Scotland
• the Belfast Gazette – for companies incorporated in Northern Ireland
When the registrar publishes a notice to strike off or restore a company, the notice will appear in the Gazette for the part of the United Kingdom in which the company was formed. The gazettes are published weekly and further information can be found on the Gazette website.

Withdrawal of the strike off application

If the company changes its mind and no longer wants to be struck off, or if the company becomes ineligible for strike off, the directors must ensure the application is withdrawn immediately by completing the ‘Withdrawal of striking off application by a company’ form DS02. It’s easier and quicker to file your withdrawal of strike off application online.

A company must withdraw their application to strike off immediately if it:

• trades or otherwise carries on business
• changes its name
• for value, disposes of any property or rights except those it needed in order to make or proceed with the application (eg the company may continue with the application if it disposes of a telephone used to deal with enquiries about its application)
• becomes subject to formal insolvency proceedings or makes a section 900 application (a compromise or arrangement between a company and its creditors)
• engages in any other activity, unless it was necessary to:
• make or proceed with a striking off application
• conclude affairs that are outstanding because of the need to make or proceed with an application (such as paying the costs of running office premises while concluding its affairs before disposing of the office)
• comply with a statutory requirement

Any director may file the application to withdraw the strike off action to the registrar using our WebFiling service. Alternatively, the application can be withdrawn by submitting a paper form DS02.

Section 1009 of the Companies Act 2006 contains the full circumstances that mean you must withdraw an application for strike off. There are offences associated with failure to withdraw an application.

Offences and penalties

It is an offence:

• to apply when the company is ineligible for striking-off
• to provide false or misleading information in, or in support of, an application
• not to copy the application to all relevant parties within seven days
• not to withdraw application if the company becomes ineligible

The offences attract a potentially unlimited fine on summary conviction (before a magistrates’ court or Sheriff Court) or an unlimited fine on indictment (before a jury).

If the directors breach the requirements to give a copy of the application to relevant parties and do so with the intention of concealing the application, they are also potentially liable to up to seven years imprisonment as well as an unlimited fine.

Anyone convicted of these offences may also be disqualified from being a director for up to 15 years.

Before a prosecution can be considered, as a prosecuting authority the Department for Business, Energy and Industrial Strategy must ensure it complies with the Code for Crown Prosecutors. The Code requires prosecuting authorities to take account of various matters when deciding whether to prosecute. You can find out more in The Code for Crown Prosecutors publication.

Advantages of dissolution of a company

The advantages of dissolving a limited company when there are no debts or objecting creditors are:

  • it is a quick process
  • it is cheap
  • there is no investigation as would be undertaken by a Liquidator into the conduct of the Directors
  • once dissolved all filing obligations such as accounts and confirmation statements cease
  • once dissolved the company in effect ceases to exist
  • you are free thereafter of the administration burdend of a limited liability company and to deal with its tax affairs

Disadvantages of dissolution of a company

The disadvantages of dissolving a limited company are as follows:

  • creditors can object which will lengthen the process
  • the company can be fined if the process is abused by the company directors
  • if the company needs to go into liquidation the whole process will take even longer
  • the debts of the company are not forgiven and creditors can still apply to reinstate it
  • assets left in the company are lost

Companies no longer carrying on business or in operation

When the registrar may strike a company off the register

If a company is neither carrying on business nor operation, the registrar may take action to strike a company off the register. This is known as Compulsory Strike Off.

The registrar may take this action if he has reasonable cause to believe that a company is not carrying on business or in operation. The registrar may take this view if:

• he has not received company documents that should have been sent to him
• mail that the registrar has sent to a company’s registered office is returned undelivered
• the company has no directors

Before striking a company off the register, the registrar is required to write two formal letters and send notice to the company’s registered office to inquire whether it is still carrying on business or in operation. If he is satisfied that it is not, he will publish a notice in the relevant Gazette stating his intention to strike the company off the register unless he is shown reason not to do so.

A copy of the notice will be placed on the company’s public record. If the registrar sees no reason to do otherwise, he will strike off the company not less than 2 months after the date of the notice. The company will be dissolved on publication of a further notice stating this in the relevant Gazette.

There is a difference between a compulsory strike off and a voluntary strike off. They both produce the same end result with the company ceasing to be registered at Companies House but the process of getting to that position is not the same.

How you can avoid your company being struck off

If you need your company to remain on the register, you must reply promptly to any formal inquiry letter from the registrar and deliver any outstanding documents. Failure to deliver the necessary documents may also result in the directors of a company being prosecuted.

Assets of a dissolved company

From the date of dissolution, any assets of a dissolved company will be ‘bona vacantia’. Bona vacantia means ‘vacant goods’ and is the technical name for property that passes to the Crown because it does not have a legal owner. The company’s bank account will be frozen and any credit balance in the account will be passed to the Crown.

Objecting to dissolution

Any interested party can object to a company’s application to be struck off the register and dissolved.

An objection can only be considered by the registrar once notification has been published in the Gazette showing the registrar’s intention to strike the company off the register at the expiration of 2 months.

It is important to send any objection to the registrar at the earliest opportunity after publication of the Gazette notice and at least two weeks prior to the notice expiry date.

How and why objections are made

Reasons for objection might be:

• the company has broken any of the conditions of its application (for example, if it traded, changed its name, or become subject to insolvency proceedings during the 3 months prior to the application, or afterwards)
• some form of action is being taken, or is pending, to recover any money owed (such as a winding-up petition or action in a small claims court)
• the directors have not informed interested parties
• any of the declarations on the form are false
• other legal action is being taken against the company
• the directors have wrongfully traded or committed a tax fraud or some other offence

A full list of conditions can be found in section 1004 and section 1005 of the Companies Act 2006.

In most instances, you should make your objection in writing. The safest and quickest way for an objection to be considered is by emailing enquiries@companieshouse.gov.uk. Send your objection by post to the dissolution section. You must include supporting evidence.

Contact the government enquiries department on 0303 1234 500 if you can’t send an objection by post.

Information on accessibility

For example, if you are complaining that the company has traded within the 3 months prior to the application for voluntary strike off being made, you should provide a copy of a receipt/proof of purchase from the limited company that is dated within 3 months of the application being made. Or, if you are a creditor then you should provide evidence that you are actively pursuing a debt by providing copies of invoices sent to the company or court action you have taken to recover the debt. In such cases, supporting evidence should show the full limited company name (including the word limited) and be recent, usually dated within the last 6 months.

When an objection is received

When an objection to strike off, the registrar will respond to advise whether the objection has been accepted or rejected. Every response will give a deadline and if we receive no further evidence that action is progressing by that date, action to remove the company from the register will resume.

If you need more time, you should lodge another objection, by writing to us two weeks before the deadline you have been given. You will need to provide evidence, including the full limited company name, stating what action you have taken since last contacting us.

If you have made a complaint about the company not meeting the conditions required for voluntary strike off, we will advise you whether or not we intend to take your complaint further.

Objector’s details are not in the public domain and we will only provide these if consent is given. When registering your objection, please state whether you are prepared for your details to be given.

GET IN TOUCH FOR HELP

For a free no obligation chat about any of the matters detailed above, please do get in touch for help. An expert will call you back or if you prefer exchange emails.

We can explore your situation and consider the best way to help you and your business needs. You can call us 020 3925 3613 or fill in the form below and will get back to you quickly. We Know Insolvency Inside Out.

Elliot Green

Author: Elliot Green
Last Updated: June 12, 2024

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Disclaimer: How To Dissolve Or Strike Off A Company

This page is not legal advice and is not to be relied upon as such. This article How To Dissolve Or Strike Off A Company is provided for information purposes only. You should take independent advice on the facts of your case. No liability is accepted for reliance upon this post.

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