When a UK Limited Company has ceased activity, it can be dissolved. In certain circumstances, the most efficient and cost effective way to dissolve a company is a voluntary strike off.
New regulations introduced as part of the Small Business Enterprise and Employment Act 2015 mean that companies which apply to be struck off after the 10th of October 2015 should be removed from the register not less than two months after the publication of the Gazette notice, instead of three months which was the previous timeframe.
Qualifying for Strike Off
A company may only apply to be struck off if it meets the following criteria:
• Have no outstanding liabilities
• Has not traded or carried out business in the last three months - this relates to the usual activities of the company and would not include:
o settling debts which arose before the three month period;
o seeking professional advice in relation to the strike off;
o selling assets which would not have been sold during the normal course of business e.g. a business which sold apples may sell its delivery van and trailer but it may not sell apples;
• Sold stock in the last three months; • Has not changed the company’s name in the last three months;
• Is not threatened with liquidation e.g. winding up petition.
If the company does not match the above criteria, applying for liquidation is an alternative process to remove a company from the register.
Filing with Companies House
Where the above criteria are satisfied, a board meeting should be held or a written resolution passed in order to approve the dissolution.
To strike off a company, a DS01 form needs to be signed by any director and filed with Companies House.
In advance of filing the DS01 the Company must ensure to:
• Close any bank account(s) it may hold;
• Deregister for VAT;
• Ensure all assets have been disposed/distributed;
• Prepare the necessary cessation accounting and tax return obligations
If a company still holds assets on the date of dissolution the rights to same will be transferred to the British Crown and all proceeds will be transferred to the Treasury.
After Filing the DS01
When the DS01 is submitted and registered with Companies House (a filing fee of £10 applies) a notice of dissolution is typically posted in the local Gazette within 2 weeks of the DS01 being submitted.
Within seven days of submitting the DS01 the director who signed the document must provide a copy to all members, fellow directors, employees and creditors.
It is an offence to not provide the former with a copy of the document, and attempting to conceal the strike off application could result in a term of imprisonment or a ban from holding directorships.
After the publication of the first notice, creditors will have two months to challenge the application for strike off.
Objections to Strike Off
Objections must be made in writing and sent to the registrar with any supporting evidence, such as copies of invoices to prove the company is trading or to state that the creditor had not been informed of the application.
If no objections are received during the two month period a further notice will be published in the Gazette, and the company will be removed from the public register.
If you are in the process of closing a company and are unsure about any stage of the process please seek advice from a professional Corporate Services provider.
Disclaimer Please note that this commentary is general in nature and is not intended to represent formal advice. Appropriate advice should be taken on all aspects of UK Company Dissolutions and related obligations.
