When a limited company is removed from the Companies House register, it is known as a ‘strike off.’ There are two types of company 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.
What is a voluntary company strike-off?
It happens in entirely voluntary circumstances and is a common way of closing a limited company.
To qualify, the company cannot have traded, changed its name, sold assets, or engaged in any activity unless it is for the purpose of striking off in the previous three months.
A company also cannot be wound-up if it is currently in company administration, subject to a scheme of arrangement or Company Voluntary Arrangement (CVA), or has a receiver or manager appointed over the company’s property.
The process broadly follows these steps:
- A board meeting is held to pass a resolution in writing to apply to close the company.
- Directors sign the application.
- All employees and creditors must be notified of the application.
- An application is then made using a DS01 form.
A notice will be published giving interested parties three months’ notice that the company intends to be struck off.
If there are no objections during this time, the business will be struck-off.
There are several other steps that companies must follow or at least consider, which are detailed in our guide to closing a company.
Voluntary strike-offs are the standard and most efficient method business owners usually use when closing a company. However, they still tend to be complex affairs that require expert knowledge to navigate. At Future Strategy, we can supply that knowledge and reassurance.
What is a compulsory strike-off?
Company strike-offs can be compulsory as well as voluntary. 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 any person 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 simply run the process. 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, known as creditors.
Creditors ultimately want to object and suspend the application if the strike-off is successful and the company is removed from the company register. As a result, they will be unable to recover any money they were owed. Thus they are left with bad debt.
Any leftover assets and cash is transferred to the Crown after dissolution.
If you have been served a notice of an application to close your company. You should contact Future Strategy to help you navigate the inevitable complications that arise when either letting the process take its course or trying to keep your company trading.