If you’re involved in running a business, you’ll know that there are a lot of rules and regulations that need to be followed. One of these is the requirement to keep a company registered with the appropriate authorities. However, there may come a time when you need to close down your company. When this happens, you’ll need to go through a process called striking off. In this article, we’ll take a closer look at what a strike off company is and provide a brief discussion about struck off companies.
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1. What is a Strike Off Company?
A strike-off company is a company that has been removed from the official register of companies. This means that it no longer exists as a legal entity and is unable to trade or conduct any business. Essentially, the company ceases to exist once it has been struck off.
2. Reasons for Striking Off a Company
There are several reasons why a company may need to be struck off. These include:
- The company is no longer trading and has no assets or liabilities
- The company has not been carrying on business for at least 3 months
- The company has failed to submit its annual returns and accounts to the Companies House
- The company is dormant and is no longer needed
- The company has been dissolved as part of a larger group restructuring or merger
- The company is insolvent and cannot pay its debts
3. Consequences of Striking Off a Company
Once a company has been struck off, it no longer exists as a legal entity. This means that it cannot enter into any contracts, hold bank accounts, or own property. The directors and shareholders of the company also lose their limited liability protection, which means that they can be held personally liable for any debts or obligations of the company.
4. The Strike Off Process
The strike-off process is initiated by the company itself or by its directors. The first step is to ensure that all outstanding returns and accounts are filed with the Companies House. Once this has been done, the company can apply to be struck off the register.
5. How to Apply for Strike Off
To apply for strike off, the company must complete and file Form DS01 with the Companies House. This form must be signed by a majority of the company’s directors and must include a statement of solvency. The application must be accompanied by a fee of £10.
6. How to Object to a Strike Off
Any interested party, such as a creditor or shareholder, can object to a strike-off by filing a written objection with the Companies House. The objection must be based on reasonable grounds, such as the belief that the company is still trading or that there are outstanding debts or liabilities.
7. Can a Struck-Off Company be Restored?
In some cases, it may be possible to restore a struck off company to the register. This can be done within 6 years of the company being struck off, but it requires the payment of all outstanding fees and penalties. The company must also submit all outstanding returns and accounts to the Companies House.
8. Striking Off vs. Liquidation
Striking off is a simpler and less expensive process than liquidation, which involves the
distribution of a company’s assets to its creditors and shareholders. Striking off is generally only appropriate for companies with no assets or liabilities, whereas liquidation is required for companies with outstanding debts or obligations.
9. Conclusion
In summary, striking off is the process of removing a company from the official register of companies. This is generally done when the company is no longer trading, is dormant or has no assets or liabilities. Striking off has consequences for the directors and shareholders of the company, as they lose their limited liability protection. However, in some cases, it may be possible to restore a struck-off company to the register.
10. FAQs
1. Can a struck-off company continue to trade?
No, a struck off company cannot continue to trade. Once it has been struck off, it no longer exists as a legal entity and cannot enter into any contracts.
2. How long does the strike off process take?
The strike off process typically takes around 2-3 months from the date of application.
3. What happens to a company’s assets when it is struck off?
Any assets that the company had at the time of striking off become the property of the Crown.
4. What is the difference between dissolution and striking off?
Dissolution is the process of formally ending a company’s existence, whereas striking off is the process of removing a company from the register of companies.
5. Can a company be struck off if it has outstanding debts?
No, a company with outstanding debts cannot be struck off. It must be liquidated to ensure that its creditors are paid.
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