Do you wonder how to gracefully close your business? Contact Future Strategy today for a free consultation. We can help you navigate the complexities of company dissolution and choose the right path forward. This guide provides a clear overview of the two most common methods: voluntary strike-off and members’ voluntary liquidation.
1. Voluntary Strike-Off (Dissolution)
Overview:
Voluntary strike-off, or dissolution, is an informal process for closing down a limited company that is no longer needed. Let’s delve deeper into the details:
Eligibility Criteria for Voluntary Strike-Off:
- Trading Cessation: The company must have ceased trading and other business activities for at least three months before applying for a strike-off.
- Name and Activity Restrictions: During this period, the company should not have changed its name or engaged in any significant activity.
- Debt and Legal Proceedings: There should be no outstanding agreements with creditors or threats of liquidation.
Process:
- DS01 Form Submission: The company directors must submit a DS01 form to Companies House online, accompanied by the appropriate fee.
- Notification: The affected parties (shareholders, creditors, employees, etc.) must be notified within seven days.
- Gazette Notice: A notice will be placed in the Gazette, and after two months (assuming no objections), the company will be removed from the register.
Advantages:
- Simplicity and Efficiency: Voluntary strike-off is straightforward and cost-effective for companies with uncomplicated affairs.
Considerations:
- Debts and Assets: It’s unsuitable for companies with significant debts or valuable assets.
2. Members’ Voluntary Liquidation (MVL)
Overview:
Members’ Voluntary Liquidation (MVL) is a formal process for solvent companies. Here’s a closer look:
Process:
- Declaration of Solvency: Directors swear a Declaration of Solvency, supported by a balance sheet.
- Appointment of Liquidator: Shareholders (members) agree to place the company into liquidation and appoint a licensed insolvency practitioner (IP) as the liquidator.
- Advertisement and Notification: The liquidator advertises the appointment in the London Gazette and notifies creditors.
- Asset Distribution: Assets are distributed to members (either in cash or ‘in specie’).
- Tax Clearance and Dissolution: Tax clearance is obtained, the final return is filed, and the company is automatically dissolved.
Advantages:
- Tax Efficiency: MVL allows tax-efficient distribution of assets.
- Director Protection: Directors face reduced risk compared to other methods.
Considerations:
- Costs: MVL involves higher professional fees.
- Retained Profits: It’s appropriate for companies with retained profits over £25,000.
Choosing the Right Path
Consider the following factors when making your decision:
- Company Profile: Assess your company’s financial position, outstanding debts, and valuable assets.
- Complexity: For straightforward cases, voluntary strike-off suffices. For more complex situations, MVL might be better.
- Professional Advice: Seek advice from us to make an informed choice.
Guiding Businesses Through the Dissolution Process
As a company dissolution firm, your expertise guides businesses toward the right path. If you’re ready to take the next step in closing your company, contact us today. We will provide personalized advice tailored to your unique circumstances. Let’s navigate the dissolution crossroads together!
