You set up your company, it was a successful operation, but now you’ve moved on and the company is just sitting there. How do you go about closing it down?
First of all, let’s look at the issues a dormant company may create as could just keep it there for the future.
There are compliance matters that need to be kept up-to-date for any company, even a dormant one. Confirmation Statements need filing and (dormant) accounts need filing, both of which take time and money when you’re trying to focus your mind elsewhere.
Also, if you did decide that you wanted a company in the future, using the old one has the risk of bringing all the baggage and history of your last business to the new one. When you can incorporate a new company so quickly and easily, why bother keeping the old one around?
There are various forms of liquidation procedure that you can adopt, but for most of them you need to bring in qualified insolvency practitioners which can be an expensive and time consuming process.
In this article we look at the much simpler and more common option of striking a company off the register. This is a procedure for removing a company from the official register at Companies House.
The company is formally dissolved at the end of the process but any liability of the directors, officers or members continues as if it wasn’t dissolved.
It is therefore possible for the company to be reinstated in the future and consequently, it is essential that the process is carried out properly.
In order for a company to be eligible for striking off (under s.1003 of the Companies Act 2006), in the preceeding 3 months, the company must not have:
- traded or otherwise carried on business;
- changed its name;
- 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; and
- engaged in any other activity except one which is necessary or expedient for the purpose of:
i. making an application for strike off or deciding whether to do so (which would include contacting Elemental CoSec to discuss the striking off procedure); ii. concluding the affairs of the company; and iii. complying with any statutory requirement.
There are also some further exclusions set out in section 1005 Companies Act 2006 which should be considered. The exact requirements of each of these conditions can be complicated, so we suggest that you get in touch with an expert if you’re in any doubt about these.
The process for striking off a company from the register is much simpler than a formal liquidation, but it is still an involved process and can take some time.
Firstly you should make sure that all of the liabilities are taken care of and any remaining assets are extracted. Any assets left in the company after striking off will pass to the Crown under the bona vacantia rules.
The main requirements for actually strike the company off are that the directors need to sign a statement in the prescribed form confirming, amongst other things, that all of the above conditions have been met. Then two notices have to be served in Gazette (separated by at least three months).
Once everything is completed, the company will be removed the official register and will be dissolved.
This article was provided by Elemental CoSec as general advice and it is not intended to comprehensive. They can handle the entire process of striking off a company for you and if you are considering this we recommend that you get in touch with them directly to discuss your specific needs.