How to dissolve a company in the UK?

When a subsidiary company is no longer needed, the directors are retiring and there is no replacement for them in view, the company has been dormant for too long, or the company’s services are no longer profitable, it may be time to officially dissolve it.

For whatever reason that may warrant that you close or dissolve your limited company, informing the Companies House is not the first step to take. It is probably the last step in the series of steps to take in a company dissolution process. This is because the form DS01 for company dissolution has some details that must be filled in for the process of dissolving your company to run smoothly.

What is company dissolution?

Company dissolution is simply to apply to the Companies House, when your company has met all requirements, for its name as a legal entity to be stricken off the company register. 

Company dissolution can also be referred to as a company’s strike-off, closure, or wind-up. 

You can either voluntarily apply for dissolution or the Companies House may dissolve your company if it has not met certain requirements. All these will be discussed in detail in this article.

The types of company that requires formal closure with the Companies House are private and public limited liability companies (PLCs and LLCs) as well as limited liability partnerships (LLPs).

Things to do before dissolving a company

A company cannot apply to be stricken off the Companies House register if it has not fulfilled all the requirements set out in sections 1004 and 1005 of the Company Act 2006. Therefore, here are some things that must be put in place before applying for the voluntary dissolution of a company.

1. Make sure that the company has not transacted any business in the last three months. The types of transactions that the Companies House will consider as rendering the company still valid include:
   1. Change of company name,
   2. Made any significant trading through the company’s account which includes receiving funds in the account,
   3. Carried out any activity except trading off properties or rights that were held for profits immediately before applying for company dissolution, settling debts, paying for legal advice for company dissolution, applying to the Companies House for dissolution, or complying with any other statutory requirements. Any other action apart from these may result in the company not being dissolvable yet.
   4. Cases regarding insolvency proceedings are yet to be resolved.
2. Make sure to inform all the necessary stakeholders that may be affected by the company’s decision to be dissolved. Some of these stakeholders include all company’s directors, employees, shareholders or guarantors, members, creditors, debtors, etc. Even the HMRC, local authorities, or any other government agencies which may have a stake in the company must be made aware. Everyone who may suffer any loss, financial or otherwise, must be duly informed before you apply to have your company dissolved.
3. Close all company accounts before you apply for company dissolution. This is because from the date of application for dissolution, the company accounts will be frozen and any money in it will be passed down to the crown. In other words, you will forfeit any money that is in the company account which was not closed or removed before applying for dissolution.
4. Make sure to conclude or resolve any litigation you may have against any entity or that any entity has against you. If there are still legal matters before a judge or magistrate, you cannot apply to have your company dissolved.
5. Liquidation of all company properties must come before applying for dissolution otherwise they become Bona vacantia (vacant properties) and become properties of the Crown.
6. Pay all outstanding debts to creditors and corporation taxes to the HMRC.

Dissolving a company in the UK

1. Apply to the Companies House by filling out the DS01 form online. You should be aware that online applications are faster to process than the ones sent by post. It costs only £8 to apply.
2. Inform all necessary stakeholders within 7 days of the application for dissolution by sending a copy of the dissolution application to them. These include members, shareholders, guarantors, employees, banks, creditors, HMRC, Department of Works and Pensions, pension managers, suppliers, any director who did not sign the DS01 form, landlords or tenants, any other person that becomes any of the above-listed stakeholders within 7 days of the application. Choosing not to inform any of these stakeholders may incur a fine or even up to 7 years in prison for extreme cases.
3. After your application has been received by the Companies House, it will post a notice of your intent in the Gazette (any of Edinburgh, London, or Belfast Gazette depending on your jurisdiction of incorporation) in case there could be an objection from any member of the public, and send you an acknowledgement of receipt. The Companies House will also make a record of your intent in its public record and eventually strike off your company name within 2 months if no legal objection or issues arise.

Can a company be automatically taken off the Companies House register?

The quick answer to that question is yes. There are special occasions when the company registrar deems a company to be qualified to be stricken off its register and they are listed below. 

• The company has not turned in any statutory documents it should be submitting to the Companies House for an extended period.
• Mails from the registrar keep getting returned as sent or not responded to for an extended period.
• The company has no registered director.

When any of the above happens, the Companies House takes action by writing the company at least on two occasions to make inquiries about the company’s transactions and if they still wish to stay in business. If no response was obtained, the Companies House then proceed to publish a notice in the Gazette and if no tenable excuse is given by the company within 2 months it will be stricken off the registrar’s register.

Can the company’s assets labelled “Bona vacantia” be appealed?

As said earlier, any asset cash remaining in a company’s bank account after it has been frozen for dissolution becomes the property of the Crown. The same applies to the properties that were not liquified before the application for company dissolution. These items are then labelled Bona vacantia. However, you can appeal to rescind this decision if you have a good reason for not properly liquidating them to start with.

Can objections be raised about a company’s dissolution process?

Yes. It is for this reason that it is legally required that you inform all affected stakeholders before and after applying for dissolution. Also, if you have any objection to a company being dissolved, you may do so before the 2 months grace period elapses by writing to the company registrar, Companies House.

The following reasons are tenable reasons for objecting to dissolving a company in the UK.

• The company is insolvent within 3 months before application for dissolution,
• The necessary stakeholders were not duly informed,
• The company has pending litigation issues,
• False claims on the dissolution form, or
• Wrongful trading or tax evasion.

What can be done if I change my mind after applying for company dissolution?

Peradventure you changed your mind after you filled and submitted the form DS01 for company dissolution, you can apply again to stop the process provided the company has not been officially stricken off the register. 

Simply fill out the form DS02 to duly inform the Companies House about your decision. You can also fill out the DS02 form if you faulted any of the requirements for company dissolution made out by the Company Act 2006.

Conclusion

Striking out a company from the register of the Companies House can be an easy process if you follow the due process. Cases of insolvency can hinder the voluntary dissolution of companies and being in debt or not duly informing the interested parties may also cause a delay in the process.