Once a company has been incorporated, if the director of the company decides to close it down and dissolve it, an application to strike off the company can be made under Section 1003 of the Companies Act 2006. However, the company needs to meet certain requirements to be able to use this method. The requirements a company needs to meet before closing it down include:
- The company should not have traded in the last three months.
- The name of the company should not have been changed in the last three months.
- It should not be subject to any legal proceedings, either current or proposed.
- It should not have made a disposal for value property or rights in the last three months.
If the above requirements are met by the company, the company’s directors are able to apply to strike off the company by filing a DS01 Striking-off application form with Companies House. In order to dissolve in this manner the company should not be insolvent.
It is important to inform HMRC if the company is going to be dissolved or stops trading because HMRC can help the company to get tax and National Insurance in order. Additionally, the company should ensure that all debts have been settled, otherwise a creditor may object to the dissolution. Similarly, the company should not hold any assets when it dissolves, as any assets left within the company after dissolution will become bona vacantia (property of the Crown).
Unlike choosing to strike off and dissolve a company, liquidating a company is not usually done on voluntary basis. Often a company is liquidated when it cannot pay off its debts and this leads to the complete closure of the business.
If you have any questions or queries related to company secretarial services or company formations please email email@example.com or call us on 0844 893 0808.