A company can apply to be removed and struck off the register of companies and dissolved where it is no longer needed. There are various reasons why this may be required, for example:
- The directors are retiring, and there is nobody to take their place.
- The company is a subsidiary that is no longer needed.
- The company was set up for a purpose that was not feasible.
- The company is dormant or no longer trading.
Voluntary strike off and dissolution does not replace formal insolvency proceedings where these are relevant, and if a dissolved company has outstanding creditors, then they can apply for the company to be restored to the register. Directors must ensure that they follow the correct procedure and notification requirements to avoid penalties.
How is a company struck off and dissolved?
Before a company applies to be dissolved and struck off, the creditors must be notified. All final matters should be dealt with before the application is made, such as closing bank accounts and transferring the domain name. All assets belonging to the company including bank accounts must be closed and sold off since, on dissolution, any credit or assets remaining will vest in the Crown. The directors then need to complete a form DS01 which has to be signed by a majority of directors. There is also a nominal fee that needs to be paid when the form is submitted.
Within 7 days of making the application, the directors must notify all interested parties including members, creditors, employees, suppliers, banks, guarantors, managers/trustees of any employee pension fund and any directors that have not signed the DS01 form. Anyone that becomes a director, member, creditor, employee or manager/trustee of any employee trust fund must also be notified within 7 days of the appointment. Organisations interested in the company's affairs must also be notified, for example, the HMRC, Department of Work and Pensions, local authorities and government agencies.
Once Companies House receives the application it will respond to the address given as well as the company's registered address to confirm the application is not bogus. It will also publish a notice in the London, Edinburgh or Belfast Gazette (depending on where the company was formed). That allows interested parties the opportunity to object as well as placing a copy on the company's public record. If there are no objections, then the company will be struck off the register within three months of the date of the notice and dissolved after the publication of a further notice in the relevant Gazette.
Any interested party can object to the company being struck off if there are relevant grounds under the Companies Act 2006. This can occur where the company:
- Has committed fraud, misrepresentation or tax fraud.
- Has not complied with the relevant procedural requirements.
- Has resumed trading.
- Is the subject of insolvency proceedings.
- Has other legal action being taken against it.
- Has made false declarations on the application.
- Has failed to notify the interested parties.
Where the directors change their mind, they can apply to withdraw their application.
It is also possible for the registrar to decide to strike off a company. The registrar must have reasonable cause to believe the company is not carrying on business. Situations, where this may occur, is where any letters sent to the registered address are returned as undelivered, the company has no directors or any relevant documentation required from the company has not been sent to the registrar. The registrar must issue two formal letters to the company’s registered offices to confirm if this is the case. Where the registrar does not receive a suitable explanation, it will then place a notice in the Gazette that allows interested parties to object. Where this does not occur then the company will be struck off once two months has passed from the notice being published.
Can all companies follow this procedure?
Voluntary dissolution and strike off are not available to every company. Companies that fall under the following circumstances are not allowed to apply:
- It has traded or carried on business in the last three months.
- It has changed its name in the last three months.
- Is the subject of any insolvency proceedings.
- Is the subject of a section 895 scheme, which is an arrangement between a company and its creditors or members.
Penalties
Where the company commits an offence in relation to this procedure, the directors can face stiff penalties. It is an offence to apply for a company to be struck off when it is not eligible or to not withdraw the application when a company becomes ineligible. It is also an offence not to inform any interested parties within 7 days, which can result in a fine and up to 7-years’ imprisonment. It is also an offence to give false or misleading information in support of an application. These offences can result in fines of up to £5000 for summary trial and unlimited on indictment. Directors that fail to comply with the relevant statutory requirements can face criminal sanctions and disqualification from being a director for up to 15 years.
Restoration
Any interested party can apply to the Courts to have a company that has been struck off and dissolved to be restored to the register of companies. This would result in the company being brought back as if it was never struck off. The time period to allow for restoration by the Courts is generally 6 years from dissolution. There are no time limits for personal injury claims.
Normally a company will be restored with the name it used before it was struck off and dissolved. However, where another company now uses that name, this is not possible. Therefore, the Court order may give a different name that the company being restored is to use. Companies House will issue a change of name certificate as if the company had applied to change its name. Or the company can be registered with the registered company number as its name. The company has 14 days from the date of restoration to apply for a name change for the company and will need to pay the necessary fees.
Contact our Company Solicitors in Mayfair and throughout London
Bringing a company to an end requires meticulous attention to what debts and liabilities are owed and to which interested parties who might object to the company being struck off.
The Insolvency Solicitors at Lewis Nedas have served a wide range of clients with their financial affairs during difficult times, including directors in insolvency and stakeholders such as banks, sponsors and landlords. We have provided expert advice on salvaging company prospects, including reorganising and restructuring of debts.
For further information or to speak to our expert Corporate Recovery & Insolvency Lawyers, please contact us on 020 7387 2032 orcomplete our online enquiry form.
