The information provided in this guidance is aimed at the most common circumstances for strike off, dissolution and restoration of a limited company. It is not drafted with unusual or complex circumstances in mind. If you are in any doubt about your responsibilities, you should consider seeking professional advice.
When a company can apply to be struck off the register
A company can apply to the registrar to be dissolved and this usually occurs when:
- 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
- the company is dormant or no longer trading
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 at a point in the future.
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 acting unanimously or a majority of them. There are certain conditions that the company must meet to be able to undertake the process:
- it has not traded or otherwise carried on business within the last 3 months
- it has not changed its name within the last 3 months
- it has not engaged in any other activity within the last 3 months, except one which is necessary for the purpose of making an application for strike off, concluding the affairs of the company, such as settling liabilities or complying with any statutory requirement
- it has not within the last 3 months 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.
A company cannot make an application if it is subject to any insolvency proceedings such as liquidation, including where a petition has been presented but has not yet been dealt with or it has entered into a Scheme of Arrangement as set out in the Companies Act 2006.
Furthermore, 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 sections 1004 & 1005 of the Companies Act 2006. It is an offence if a director is in breach of these restrictions with the penalty being either a fine or a 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 outstanding creditors or employees, you should inform these people before applying. This is because anyone who is owed money by the company has the right to object to the company being struck off. It is therefore recommended that you should deal with any loose ends, such as closing the company’s bank account or the transfer of any domain names before the application is made.
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.
How to apply for strike off
Simply complete Form DS01 – Striking off application by a company. This form must be signed and dated by all directors, or the majority of directors, if there are more than two.
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:
- creditors, including all existing and contingent creditors such as banks, suppliers, former employees (if the company owes them money), landlords, guarantors, personal injury claimants, HMRC and Department of Work and Pensions (DWP)
- 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:
- 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. The directors will 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.
How to tell interested parties about the strike off application
You can post a copy of the completed application to the last known address (if an individual) or the principal / registered office (if a company or other legal entity). Additionally, you can also fulfil your obligations by delivering a copy in person. Usually the directors will serve the application on the creditors’ regular place of business with which the company has had dealings in relation to the current debts, for example the branch from where goods were ordered from. It is advisable to keep proof of delivery or posting.
What Companies House does with the strike off application
Subject to the forms being completed properly, Companies House will:
- register the information and put it on the company’s public record
- send an acknowledgement to the address shown on the form
- send a notification to the company at its registered office address to enable it to object (a safeguard against bogus applications)
- publish notice of the proposed striking off in the Gazette to bring it to the attention of potentially interested parties and to give them 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.
How the Gazette publishes notices about strike off or restoration
The Gazettes (there are three of them – London, Edinburgh and Belfast) are the official newspaper record in the United Kingdom. When the registrar publishes a notice to strike off or restore a company, the notice will appear in the relevant Gazette depending upon which part of the United Kingdom the company was formed. The gazettes are published weekly and also published online.
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 relevant form.
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 (e.g. 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
- engages in any other activity, unless it was necessary to proceed with the 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) or to comply with a statutory requirement.
Any director may file the application to withdraw the strike off action. 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 7 days
- not to withdraw application if the company becomes ineligible
The offences attract a potentially unlimited fine. 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 7 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.
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. 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 enquire whether it is still carrying on business or in operation. If the registrar 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.
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 enquiry letter from the registrar and make sure that your statutory obligations, such as filing a confirmation statement or accounts, are up to date. Failure to deliver the necessary documents may also result in the directors of a company being prosecuted.
Assets of a dissolved company
Upon the dissolution of a company, any assets that remain will immediately be deemed to ‘bona vacantia’. Bona vacantia means ‘vacant goods’ and is the technical name for assets or property that become the property of the Crown because they no longer have a legal owner. In practice, this is often a bank account operated by the company which will be frozen and any credit balance in the account will be passed to the Crown.
If a company was incorrectly dissolved or the directors become aware of significant assets after the date of dissolution, it is possible to make an application to Court to have the company restored. This is a complex process and given that a Court application is required, it is recommended that professional advice is sought in this regard.
Objecting to a company’s 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 2 weeks prior to the notice expiry date.
For further information on dissolution, or if you’d like to discuss the options available for your business, please get in touch with the team at BLB Advisory.
This guide is based upon the information available on the Companies House website dated 7 February 2018 which can be accessed by following this link www.gov.uk/government/publications/company-strike-off-dissolution-and-restoration/strike-off-dissolution-and-restoration