The Registrar of Companies has power under Part 31 Chapter 1 s1000 of the Companies Act 2006 to strike a company off the Companies Register if he/she has reasonable cause to believe that a company is not carrying on business or is in operation because accounts and returns have not been received on time or there has been a change of the registered office address.
If a company doesn’t have the assets to justify a formal liquidation, the company Directors can simply make an application for voluntary strike off (also known as voluntary dissolution). Dissolution removes the need for filing annual returns and accounts.
This the simplest and least expensive method of closing a company down, as it avoids liquidation costs, fees and expenses. It also avoids formal investigation into director conduct which is required in liquidation or receivership.
It is of the utmost importance that directors check with the main stakeholders of the company, such as its creditors, employees or investors if they want to have the company struck off the Register.
The correct procedure to dissolve a company is to complete and return Form 652a to Companies House along with a small fee.
Copies of the form asking for dissolution must be given to the following groups within 10 days of the application being submitted:
- Creditors; (given 3 months to consider the request to dissolve the company and can reject such a request if they believe fraud may have occurred). In this instance the company will either be liquidated voluntarily or compulsorily.
- Managers or Trustees;
- Directors (who have not signed the form).
Clearance must be obtained from the Inland Revenue before the company is struck off and it can only be dissolved if the following conditions apply:
- The company has not traded for 3 months; this must be a genuine cessation of trade;
- The company has no assets, property or cash at any bank.
- The creditors must be circulated requesting their permission for the company to be dissolved under this process. Creditors are given 3 months to consider the request to dissolve the company and can reject such a request.
- The company cannot change its name during this three-month period.
- The company may not have disposed of any property or assets (this may include land and buildings, plant and equipment, debtors and other assets).
REGISTRAR AND THE LONDON GAZETTE
On receiving the application, the Registrar will write formally to the company’s registered office (default notices) advising of the intent to strike the company off and inviting objections to the proposed striking off in the London Gazette. A copy notice is placed on the company’s public record.
The Registrar will strike the company off the register not less than 3 months after the date of this notice is she sees no reason to do otherwise and the application has not been withdrawn.
- A notice of intent is then published in the London Gazette which is the official newspaper of record containing various statutory notices and advertisements and which is published daily.
- If no reply is received within a specified time limit a notice stating that at the expiration of 3 months (unless cause is shown to the contrary) the name of the company will be struck off the Companies House Register if the Registrar sees no reason to do otherwise and the application has not been withdrawn. This notice is published in the London Gazette;
- The company will be dissolved on publication of a further notice stating this in the Gazette.
Note: At the time of striking off, a letter will be issued to the contact name on Form 652a confirming the proposed date of dissolution. If the company to be dissolved owns property then leaseholders must be informed.