A dissolution ends a company’s legal existence by striking it off the register at Companies House. This procedure is voluntary and is for a company that has perhaps reached the end of its useful life. Although an insolvent company can be dissolved in certain circumstances, the procedure should not be used as an alternative to formal insolvency procedures where these are appropriate.
What are the criteria for me to strike off my company from the register?
In the three months prior to your application the company must not have:
- Any ongoing or pending legal or insolvency proceedings.
- An administrative or Law of Property Act receiver in office
- The company is or could be subject to prosecution or disqualification or a pension scheme that has not been finalised.
- Changed its name
- Traded or disposed of stock. It can, however, dispose of assets which it previously used as a means of trading (e.g. selling a now-redundant machine).
You should be aware that for six years after dissolution your company can be restored by a creditor if they have a valid reason. A court order will be necessary to bring the company back by declaring the dissolution void and restoring it to the Companies House register.
What you need to do before applying for a dissolution
There are many steps you will need to complete in order to dissolve your company. Here is our step by step guide for how to deal with this:
- Get in touch with us to discuss your company’s current situation and we can help you decide whether a dissolution is the correct option for you.
- We can then help you fill in the appropriate paperwork or you can complete an application form yourself to apply to strike off your company from the register at Companies House.
- You will need to make a copy of this application and send it off to all creditors and interested parties such as shareholders, employees etc.
- There will be a distribution to all shareholders if the company is solvent. Do take advice though as it may be more time efficient to do this via an MVL..
- All employment liabilities should be dealt with including PAYE, outstanding wages or holiday pay, National Insurance Contributions and any redundancy pay.
- All statutory returns to HMRC and Companies House will need to be completed and filed with them.
- You will need to pay off any outstanding tax debts/liabilities.
- Finally, you will need to close your company’s bank accounts.
Who do I need to notify about my company’s dissolution?
After sending your application to Companies House to strike your company off the register, you have seven days to send a copy of the application to employees, shareholders and any other directors who have not already been informed. However, it is not just current employees that will need to be made aware, any old employees that have an employee pension fund with you should be informed.
You should also let all existing and contingent creditors (those with products under warranty for example), including HMRC, the DWP, your bank, your landlord, any suppliers and customers, know of your intentions to close your company. Rather than the creditors having to agree, the registrar will publish in the Gazette notice of the proposed striking off and all parties have three months in which they may object. If nobody objects the company will be dissolved and a further notice will be published in the Gazette.
How long does this take and how much will it cost me?
After your creditors and interested parties have received notification, three months must elapse to allow any obligations to be made. If no issues arise after this time period then the company will be struck off the register.
Three months is the minimum time that this process can take but it can be a longer process if any objections are made. You will also need to place an advert in The Gazette at an additional cost, this should be followed by a notice of company closure.
If your company is fairly modest and has relatively few interested parties to contract (i.e. shareholders, employees, creditors etc.) then it is a simple task to submit form DS01 to Companies House with a £10 fee.
For more complex businesses with numerous interested parties, Wilson Field offer a service to handle all paperwork and notices. Contact us now for a quote.
Can the company be restored?
If a creditor does not agree and feels that there are issues then they can request the company’s restoration. If this happens then the conduct of the director may be investigated to discover whether any other issues need addressing.
Issues that could halt a dissolution from taking place include the director deliberately hiding problems, the company was insolvent or an interested party of the company’s, such as a supplier, was not informed of proceedings.
Who can apply to restore a company?
According to the Insolvency Service’s website, “any other person appearing to the court to have an interest in the matter” can apply for the restoration of a company. This would mean a creditor of the dissolved company, a former employee, former shareholder or former director would all be eligible to apply.
A creditor or the interested party will need to obtain a court order to be able to restore your company and they must have a good argument for why your company deserves to be restored. After restoration, your company will exist again and issues will be dealt with.
Dissolution vs. liquidation
Dissolution – also known as strike off. This process removes your company from the Companies House register. This is usually voluntary for a solvent company which no longer has a purpose or is no longer active.
Liquidation – this is usually forced on a company due to its insolvent position and assets will be sold off to pay debts. You can either be forced into this position with the issuing of a winding up petition leading to compulsory liquidation or you can choose to enter into liquidation as a result of your company’s insolvency through CVL. You can voluntarily liquidate your solvent company via a MVL.
Dissolution in liquidation
In rare cases, your company can be dissolved after entering into liquidation proceedings. If your company has no assets and no investigation is required then the Insolvency Service can apply for a dissolution as a matter of expediency.