Company Strike Off

Company Strike Off

What does it mean to strike off a company?

When you strike off – or dissolve – a company, you are informally closing it down. This could be due to the fact that the company has stopped trading, the director is seeking retirement, or because the director has lost enthusiasm for running the business.

There are two types of strike off; a compulsory strike off and a voluntary strike off.

What is a compulsory strike off?

A compulsory strike off is the process by which a company is removed from the register of companies by a government agency, typically a Registrar of Companies.

This is generally due to the company’s failure to comply with certain legal requirements or obligations.

It can happen for several reasons:

▪️ When the company has not been in operation for a certain period.

▪️ When it hasn’t filed its annual returns

▪️ Or hasn’t paid fees or taxes.

The compulsory strike off process is initiated by the Registrar of Companies. If the company does not take steps to rectify the issue, it will eventually be struck off the register and cease to exist as a legal entity.

It’s important to note that a compulsory strike off has serious consequences for a company. Including the loss of its legal status and the inability to carry out business activities.

The directors and shareholders of the company may also face personal liability for the company’s debts and obligations.

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    What is a first gazette notice for compulsory strike off?

    A first gazette notice for compulsory strike-off is the first step in the process of removing a company from the register of companies. Normally due to the company’s failure to comply with certain legal obligations or requirements.

    The notice is typically published in the official gazette by the Registrar of Companies. This announces  the intention to remove the company from the register.

    The notice will include the name of the company, the reason for the proposed strike-off, and the date by which the company must take action to avoid being struck off.

    Once the notice has been published, the company has a specified period of time to respond and rectify the issue that led to the proposed strike-off.

    If the company takes no action or fails to rectify the issue, the Registrar of Companies may proceed with the compulsory strike-off and remove the company from the register.

    Receiving a first gazette notice for compulsory strike-off is a really serious matter and should be addressed promptly by the company to avoid being struck off.

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    What is a Voluntary Strike off?

    A Voluntary strike off is a process where a company can be removed from the register of companies through its own decision. Rather than being removed by the Registrar of Companies due to non-compliance with legal requirements.

    A company may choose a voluntary strike off if it:

    ▪️ Ceased to trade.

    ▪️ Has no assets or liabilities.

    ▪️ Or is no longer needed.

    The process involves filing a formal request with the Registrar of Companies and providing evidence that the company meets the criteria for a voluntary strike off.

    Once the request has been approved, the company will be removed from the register. The company directors will then need to take steps to wind up the company’s affairs and settle any outstanding debts or liabilities.

    It’s important to note that a voluntary strike off is a formal process that must be followed correctly. This ensures the company is properly dissolved and that the directors and shareholders are not personally liable for the company’s debts or obligations.

    We’d highly recommend you seek professional advice before pursuing a voluntary strike off.

    First gazette notice for voluntary strike off

    A first gazette notice for voluntary strike-off is the first step in the process of removing a company from the register of companies through request made by the company itself.

    The notice is published in the gazette by the Registrar of Companies, announcing the intention to remove the company from the register following the company’s request to do so. The notice includes the name of the company and the date by which any objections to the strike off must be received.

    Once the notice has been published in the Gazette, creditors or shareholders, have a specified period of time to object to the strike off.

    If there aren’t any objections or if the objections are resolved, the Registrar of Companies may proceed with the voluntary strike off and remove the company from the register.

    What happens when you're closing down a company?

    Before applying to strike off your limited company, you must close it down legally. This involves:

    ▪️ Announcing your plans to interested parties and HM Revenue and Customs (HMRC)

    ▪️ Making sure your employees are treated according to the rules.

    ▪️ Dealing with your business assets and accounts.

    When your company is dissolved, all the remaining assets will pass to the Crown (including any bank balances).

    Who do I have to tell?

    Fill in an application to strike off and send a copy within 7 days to anyone who could be affected. This includes:

    ▪️ Members (usually the shareholders).

    ▪️ Creditors.

    ▪️ Employees.

    ▪️ Managers or trustees of any employee pension fund.

    ▪️ Any directors who didn’t sign the application form.

    What is a DS01 form?

    The DS01 form is a document that is used to formally dissolve or strike off a company that is no longer wanted. It will remove the company name from the Companies House register, meaning that it no longer exists legally.

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    What are my Strike Off options?

    You might find that your request has been blocked if you have made the decision to strike your company off by submitting the DS01 form to Companies House. This is usually because you have outstanding creditors who are set to lose the money that they are owed from your company, if your company is struck off and taken off the register. It could be a supplier chasing an unpaid invoice or HRMC looking to gather unpaid tax. Companies have two months to oppose your strike off, following your initial application. Your company will remain active if Companies House verifies these objections, and your strike off will of course be suspended.

    Your 4 options

    1. Submit your application again

    You can hope that it’s second time lucky for you and your application. There is the possibility that your application could squeeze through this time around but it won’t necessarily be that easy. After all, your creditors could be aware of your intention to strike off your company and they will be ready to launch an opposition to this.

    2. Pay off your creditor

    If a small outstanding debt is the stumbling block, you could simply pay off that debt. There is no reason for your company strike-off to be rejected if you have paid back everything that you owe.

    3. Show caution with multiple creditors

    You cannot simply go ahead with option 2 if you have multiple creditors who you owe money to. If you can pay all of them off then fair enough, however, you should not attempt to pay some of them off without paying others off as well. This can look like you are prioritising creditors and this is seen as a wrongful form of trading.

    4. Enter a Creditors Voluntary Liquidation (CVL)

    A CVL will allow an insolvency practitioner to manage the affairs of your company before closing it down. Assets within the company will be liquidated and ratioed out to outstanding creditors in a fair manner. Outstanding debts on top of that will be written off during the process.

    A licensed insolvency practitioner is needed to make sure that the company is closed down in a correct and proper way. You do not have to worry about liquidation after petitioning for your company to be reinstated. Instead, you can be clear that the company has been shut down formerly and you can move forward.

    Striking off a business infographic

    How do I place my company into a Creditors Voluntary Liquidation?

    A Creditors Voluntary Liquidation can only be entered into under the guidance of a licensed Insolvency Practitioner. An Insolvency Practitioner will be able to give you the sound, practical advice you need when dealing with a distressed company and you are highly encouraged to speak to one at the earliest signs of insolvency.

    They will be able to discuss the various options available to you and your company which may involve rescue and restructuring procedures such as Administration or a Creditors Voluntary Arrangement.

    Get in touch

    If you are unsure of which pathway is right for you and your business, don’t hesitate to contact us.

    You can call one of our compassionate experts on 0800 088 2142.

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