Not every company lasts forever. At times, businesses go kaput for various reasons, and one such reason is operational inactivity for more than a year. In such cases, the Companies House UK can strike off a company. Company strike-off is a legal procedure that marks the end of a firm’s legal existence.
If you are a business owner in the UK who wants to apply to strike off a company, then this guide is for you. The blog covers the basics of company strike off, how to apply for it, and how to restore it if it is mistakenly struck off.
What Does “Strike-off a Company” Mean?
The terms company strike-off and winding-up are used interchangeably; however, they differ in their scope and eligibility. Striking off a company is a simpler form of dissolution primarily applicable to defunct companies. Thus, a company strike-off means the removal of the firm’s name from the company’s registers. This process is often suitable for dormant or debt-free companies.
How is it different from the winding up of a company? Both are processes for company dissolution. The only difference lies in the company’s activities. An already established company with regulatory operations actively chooses to wind up.
Types of Company Strike-off
The UK Companies Act 2006 describes two types of company strike off:
When a company lies inactive or defunct for over a year, the Companies House lists it as a dormant company. In such scenarios, the Companies House can send a notice to all directors and inform them about the company’s strike-off. This is referred to as compulsory strike off.
Reasons for Compulsory Strike-off
- Failure to file annual returns
- Inactivity or non-trading
- Failure to notify of the change of address
- Any legal breach
Voluntary Strike-off a Company
In this case, the owners themselves initiate the company strike-off procedure. We will later learn about how to apply to strike off a company.
Reasons for Voluntary Company Strike-off
- Retirement of directors
- Dormant status
- Insolvency of debts
- Restructuring of business operations
Why Would a Company Be Struck Off the Register?
The Companies House can strike off a company for the following reasons:
Large corporations often apply to strike off a company when a firm has redundant subsidiaries. In turn, it can centralize them for better management.
At times, companies do not commence operations even after incorporation. The reason can be strategic, market-related, or a product failure. Either the directors or Companies House can commence a company strike-off in such situations.
Striking off a company is relatively cheaper than the winding-up process. A full-fledged dissolution process is time-consuming and requires owners to undergo various legal formalities. On the other hand, a strike-off plainly eliminates the name of the company from the register and cancels its legal status.
You can avoid legal proceedings or hefty fines through a company strike-off, as it legally dissolves the company. You can avail of BSW’s tax compliance services or accounting and bookkeeping services to ensure the timely filing of returns.
A dormant or inactive company does not have any assets or liabilities. Authorities can strike off a company in such cases.
How to Apply for Company Strike Off?
When it comes to applying for a company strike, the process for a voluntary strike off is considered. In a voluntary strike-off, the directors initiate the company's strike-off procedure after receiving shareholders’ approval. You can also strike off a company online. Here’s the quick overview of the process:
Board/Shareholder Agreement
Before applying for the company strike off, the directors should agree to strike off the company. Moreover, before going forward with this, you must also get shareholders’ approval.
Check Eligibility
It is important to check for eligibility before going forward with the company strike off. As per the Companies Act, 2006, the firm should meet the following eligibility requirements:
- The company must not have traded or sold stock in the last 3 months.
- Must not have changed its name in the last 3 months.
- Must not be threatened with liquidation or have agreements with creditors.
- Settle Liabilities
- Close bank accounts, pay off debts, and deal with assets (distribute to shareholders).
Submit DS01 Form
Form DS01 is used to strike off a company from the register. Fill company's number, the company's full name, and the directors' details accurately. Once filled, directors complete and sign Form DS01 and send it to Companies House with the fee.
Note: A limited liability partnership must file the Form LL DS01.
Notify Stakeholders
Within 7 days of submitting Form DS01, directors must send a copy to shareholders, creditors, employees, pension managers, and other relevant parties.
Publish First Gazette Notice
Companies House publishes a notice of the proposed strike off in the Gazette in the city of registration. This gives anyone the chance to object (usually creditors, HMRC, etc.).
Publish Second Gazette Notice
If no objections are raised within 2 months, a second notice is published, and the company is officially struck off from the registers.
What to Do When Your Firm is Wrongfully Struck Off?
Typically, Companies House strikes off a company due to various reasons as mentioned above. Moreover, the compulsory strike off procedure requires the firms to publish an official gazette notice that a particular company is being struck off.
During this window, the directors, shareholders, creditors, employees, or His Majesty's Revenue and Customs (HMRC) can file an objection.
However, in case you happen to miss this time frame, you can follow the procedure to reinstate your company and nullify the company strike-off order. There are two ways to go about it:
Administrative Restoration (simpler, via Companies House)
Who can apply? Only the company’s former directors or shareholders.
You should meet the eligibility criteria:
- The company was struck off by Companies House (compulsory strike-off, not voluntary strike-off).
- The company was trading when struck off.
- Application is made within 6 years of dissolution.
- All outstanding documents (accounts, confirmation statements) are filed.
- All penalties/fees are paid.
Process to Restore Your Firm After Compulsory Company Strike Off
- Apply using Form RT01.
- File missing accounts/returns.
- Pay any late filing penalties.
- Companies House restores the company and updates the register.
Restoration by Court Order
Who can apply? Creditors, shareholders, directors, employees, or anyone with a legal interest.
You should meet the following requirements:
- If the company were voluntarily struck off
- If administrative restoration isn’t available.
Process to Restore a Firm by Court Order
The process of company strike-off is a common way for firms to cease to exist. You can apply for it if you no longer want to trade through your firm or if it is incurring losses. At times, the authorities can also wrongfully remove a firm. In such cases, it is best to follow the legal process for restoration and challenge the order. Business Setup Worldwide not only assists with company formation services but also guides with restoration. Contact us at +971 504808605 or email us and book a free consultation.
