What happens if a company wants to stop trading? Who can apply to have a company struck off and what conditions need to be fulfilled? What if you change your mind or provide false or misleading information? This article explains how to voluntarily strike-off and dissolve your company and takes you through the process step by step. If you want to restore a company, or avoid Companies House striking off the business without your knowledge, or want answers to the frequently asked questions surrounding these issues, then follow the links to separate articles and websites.
Voluntary striking-off and dissolution
Who can apply to have a company struck off the register?
A private company that is not trading may apply to the Registrar to be struck off. This could be because the company is no longer needed, perhaps active directors want to retire and there is no-one to take over, maybe it is a subsidiary that is no longer needed, or the company was set up to exploit an idea that simply didn’t work.
However, this procedure is not an alternative to formal insolvency proceedings where these are appropriate, as creditors are likely to prevent the striking off (even if the company is struck off and dissolved creditors and others can apply for it to be restored to the register).
What conditions need to be fulfilled for a private company to be struck off?
A private company can apply to be struck off if, in the previous three months it has not:
- traded or otherwise carried on business
- changed its name
- for value, disposed of property or rights that, immediately before it ceased to be in business or trade, it held for disposal or gain in the normal course of its business or trade
- engaged in any other activity – apart from obviously making a striking-off application, setting the company’s affairs or meeting a statutory requirement (e.g. seeking professional advice on the application). However if a company has settled trading or business debts in the previous three months it can still apply for striking off
A company cannot apply to be struck off if it is subject to possible insolvency proceedings such as liquidation, or there is a Section 425 scheme that is a compromise or arrangement between a company and its creditors/members.
What should I do before applying to be struck off?
Warn members (usually shareholders), creditors, employees, managers or trustees of any employee pension fund and any directors who have not signed the form 652s. Any of these people may object. The bank account should be closed, domain names transferred and any other loose ends dealt with before you apply.
How do I apply?
Request form 652a from the Registrar at Companies House. Make sure the form is signed and dated by:
- the sole director, if there is only one
- by both, if there are two
- by the majority, if there are more than two
Make sure you give the name, address and telephone number of the person Companies House should contact about the application. Send the completed form, plus the fee (£10 at present, but this could change) to the Registrar of Companies, Companies House, Crown Way, Maindy, Cardiff CF14 3UZ.
Who else do I need to contact?
Within seven days of sending Form 652a to the Registrar, you must provide copies of the form to:
- members, usually the shareholders
- creditors, including all existing and likely creditors such as banks, suppliers, former employees who are owed money by the company, landlords, tenants, guarantors and personal injury claimants
- appropriate Inland Revenue offices, DSS and HMRC if there are contingent and prospective liabilities
- employees
- managers or trustees of any employee pension fund, plus any directors who have not signed the form
In addition, anyone who becomes a member, creditor, etc, after the application must also be sent a copy of the form within seven days.
How exactly to I contact everyone involved?
You must make sure the form 652a is delivered to, left at, or posted to them at either the last known address (if individual) or, if it is a company or partnership, the principal/registered office. If creditors have more than one place of business, you must send copies of the form to all the places of business where the company has had dealings in relation to the current debts. It is advisable to keep proof of delivery or posting.
How is the form registered?
First the Registrar checks the form and if acceptable it will be put on the company’s public record. An acknowledgement will be sent to the address on the form. The company will also be notified at its registered office address to enable it to object if the application is false.
Who can object to the dissolution?
Any interested party may object.
How and why can anyone object?
Objections must be in writing and sent to the Registrar of Companies with any supporting evidence (e.g. copies of invoices that may prove the company is trading).
Reasons for objecting include:
- the company has broken any of the conditions of its application (e.g. by trading, changing its name or become subject to insolvency proceedings) during the three-month period before the application, or afterwards
- the directors have not informed interested parties
Can I change my mind and withdraw my application?
Yes. Directors must withdraw the application using form 652c if a company ceases to be eligible for striking-off. This may be because
- trades or caries 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
- becomes subject to formal insolvency proceedings or makes a Section 425 application (this is a compromise or arrangement between a company and its creditors)
- engages in any other activity, unless in connection with the striking-off application
Any director can complete and sign form 652c.
What happens when the registrar accepts form 652a to strike off the company?
The Registrar will advertise and invite objections to the proposed striking-off in the London Gazette. The Registrar will strike the company off the register in not less than three months after the date of this notice, if he sees no reason to do otherwise or the notice is not withdrawn.
What happens if I provide false or misleading information in support of an application?
Offences carry a fine of up to £5,000 in the magistrate court, but fines are unlimited on indictment (before a jury). Anyone convicted may also be disqualified from being a director for up to 15 years.
It is an offence to apply to the Registrar when the company is ineligible for striking-off, or to provide false or misleading information. It is also an offence not to copy the application to all relevant parties within seven days or not to withdraw the application if the company becomes ineligible.
See separate articles on how to restore a company to the register plus a section on frequently asked questions
Useful websites: www.companieshouse.gov.uk.
