If Companies House has decided to dissolve your limited company and started the Strike Off process to remove it from the register, some factors can lead to the action being removed.
A Compulsory Strike Off is dealt with under Section 1000 of the Companies Act 2006. A strict process must be followed, which provides a chance for your company to object to proceedings and prevent it from being taken off the register.
The main consequence is that, once your business has been dissolved, it will cease to exist as a ‘legal person’ and is, therefore, unable to carry on trading or carry out any of the company’s legal functions.
Anyone can submit an objection – whether you, your shareholders or any outstanding creditors (including HMRC).
If you have outstanding creditors who stand to lose monies owed should your company be removed from the register, they will have two months from the date your strike-off application is advertised to submit their objection.
If Companies House decides to hold up the objection of your creditors or HMRC, then your strike-off application will be suspended, and your company will remain active.
What is a Compulsory Strike Off Action?
When a limited company is removed from the Companies House register, it is known as a ‘Strike Off.’ There are two types of Strike Offs – a Compulsory Strike Off and a Voluntary Strike Off.
Once a company has been through the Strike Off process, it ceases to exist and cannot trade, make payments or sell assets.
A compulsory strike-off happens when a third party petitions for a company to be removed from the Companies House register. That petition is usually from Companies House due to companies failing to file accounts or statements.
A notice will be published in the Gazette, with two months granted for anyone to object to the Strike Off.
If you served such a notice to Strike-Off your company, you must act if you wish to continue trading and submit an objection to the application.
If you are happy for the company to close, you can let the process run. However, you should be aware that if you have debts or liabilities, your Strike Off application will likely be objected to by interested parties – i.e., people you may owe money to, known as creditors.
Creditors ultimately want to object and suspend the application as if the Strike Off is successful and the company is removed from the company register. They will be unable to recover any money they were owed; thus, they are left with bad debt. Any leftover assets and cash are transferred to the Crown after dissolution.
Read more about Company Strike Offs.
What Are Your Options If Your Compulsory Strike-Off Action Has Been Discontinued?
Submit your application again: You may get lucky, and your application could slip under the net. However, it’s essential to be aware that your company can be restored to the Companies House register later on, should a creditor be able to give a valid reason.
Pay off any creditors and then re-submit your application: If your business doesn’t owe anything, there’s no reason why your new application shouldn’t be accepted. However, going down this route depends on the debt’s size and your ability to clear it.
Enter into a formal liquidation procedure: This typically involves carrying out a Creditors Voluntary Liquidation (CVL), during which an Insolvency Practitioner will be appointed to manage the company’s affairs and close it down.
Whatever you decide, the best solution is to ask the experts. Here at Future Strategy, we can help you navigate the inevitable complications of letting the process take its course or trying to keep your company trading.
Don’t hesitate to contact us today to find out more.