Dissolution of a company by voluntary strike off

When is it commercially viable to dissolve a company?

There are a whole host of reasons to strike off a company, the most obvious being when the directors want to retire. However, frequently in large group companies there are often a large number of shell companies not really doing much. In other cases a company within a group may have been set up to exploit an idea which has failed.

Advantages in voluntary strike off

There are many positives in striking off a company such as: reductions in administration, risks and liabilities. It may be advisable to simplify your group structure into a more “lean” and manageable state.Â

Applications for voluntary strike off

The Companies Act 2006 (“the Act”) governs voluntary strike off of a company (ss 1003-1009).

Application are completed by filing form DS01 enclosing the relevant fee. There are a number of rules that bit when submitting the application such as: applications must be made by the company directors or a majority of the directors.

Notification to interested partiesÂ

The person who files the application must within 7 days notify the following parties who on the day of the application are: directors of the company who have not signed the DS01 members employees and creditors.

The Act provides rules which state when a document is delivered. A document such as a DS01 is given to a person if (1) delivered to him, or (2) left at his proper address, or (3) sent by post to him at that address.

Once the application has been filed directors are not absolved from the duty to notify interested parties. Section 2007 of the Act places a continuing obligation on a director to notify were a party becomes an interested party.

If the directors fail in their obligation to notify he or she may be committing an offence. If it is found that the director closes the company with intention to conceal the application then he or she may be imprisoned.

Are there any restrictions on voluntary strike off?

Yes, these restrictions include:

if in the previous three month the company has traded/carried on business and/or changed its name.

Conclusion

It is important to continually review your company structure and assess whether each company is serving its intended purpose.

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