Following Companies House’s decision in April this year to temporarily pause voluntary strike off applications in response to coronavirus (COVID-19), Companies House have confirmed it will resume processing such applications from 10th September 2020.
What this means for existing applications:
Any company that applied to be struck off before July 2020 will be struck off the register in a phased approach over the next four weeks, starting from the 10 September 2020.
For any company that applied to be struck off from July 2020 onwards, the voluntary strike off process will continue as normal after this initial four week period.
New voluntary strike off applications:
This announcement comes as good news for any company intending to voluntarily remove itself from the register, for example if the company is no longer required following the transfer of its business and/or assets to another entity, as Companies House will look to progress new applications after the initial four week period referred to above.
Benefits of removing a company’s name from the register:
Striking a company’s name off the register can have a number of benefits where the company is not otherwise active. For example:
- Corporate administration – Not having to incur the time and costs in keeping the company on the register, such as carrying out the annual filing requirements at Companies House and preparing annual accounts.
- Directors’ duties – Bringing to an end the fiduciary duties owed by an individual director to that company, including the risk of personal liability should those duties be breached.
- Liabilities – Eradicating historic debts owed by the company which are not likely to be enforced but which still create a negative balance sheet for the Group (albeit the company must notify creditors before being struck off the register and future claimants could apply to restore the company to the register within six years of dissolution if they have a claim against it).
Summary of voluntary strike off process:
Before proceeding with a voluntary strike off application, the following points need to be considered by the company’s directors:
- Assets - All the assets owned by the company need to be transferred to another party or otherwise dealt with before the company is dissolved, otherwise the assets will pass to the Crown on dissolution.
- Liabilities - Any existing creditor must be notified that the company is proposing to be struck off the register. Therefore the directors will need to ensure that all liabilities have been accounted for to try and avoid the possibility of the application being objected and/or a creditor making an application to restore the company in the future to pursue a claim.
Once the above points have been dealt with, the company’s directors can then complete and submit the relevant Companies House application form, together with the application fee (which is currently £10).
The application must be signed by the majority of directors, who will need to make certain declarations, including that the company is neither: (a) carrying out specific activities such as trading or continuing its normal business activities; or (b) changing its name or involved in ongoing proceedings (such as a scheme of arrangement or company voluntary arrangement).
Within seven days of applying to have the company struck off, the directors must also notify anyone who, at the time of application, was either a shareholder; director; creditor (including prospective and contingent creditors); or an employee of the company.
Once the application for voluntary strike off is received by Companies House, and they are satisfied that the statutory procedure under the Companies Act has been complied with, a notice will be published in The Gazette to that effect. Companies House will then strike the company off the register not less than two months after the date of publication of the notice, provided that there are no objections to the strike off application. This is the date when the company will officially cease to exist.
If you require further assistance or advice on any of the above, including if you would like assistance with a voluntarily strike off application, please do not hesitate to contact Scott Richardson on 01329 227907 or by email on email@example.com.
The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute, legal advice, and should not be relied upon as advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article. All content was correct at the time of publishing. Legal advice should always be sought in relation to specific circumstances.