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A private company that is not trading may apply to the Registrar to be struck off the register (Companies Act 1985, s.652). It can do this if the company is no longer needed. For example, the active directors may wish to retire and there is no-one to take over from them; or it is a subsidiary whose name is no longer needed; or it was set up to exploit an idea that turned out not to be feasible and that the company is no longer trading.
This procedure should only be used if the company has no assets and liabilities. If the company is struck off and it owns assets then those assets vest in the Crown.
The procedure is not an alternative to formal insolvency proceedings where these are appropriate, as creditors are likely to prevent the striking off. Even if the company is struck off and dissolved, creditors and others could apply for it to be restored to the register.
A private company can apply to be struck off if, in the previous three months, it has not:
- traded or otherwise carried on business;
- changed its name;
- for value, disposed of property or rights that, immediately before it ceased to be in business or trade, it held for disposal or gain in the normal course of its business or trade (for example, a company in business to sell apples could not continue selling apples during that three-month period but it could sell the truck it once used to deliver the apples or the warehouse where they were stored);
- engaged in any other activity except one necessary or expedient for making a striking-off application, settling the company's affairs or meeting a statutory requirement (for example, a company may seek professional advice on the application, pay the costs of copying the Form 652a, etc). However, a company can apply for striking off if it has settled trading or business debts in the previous three months.
A company cannot apply to be struck of if it is the subject, or proposed subject, of:
- any insolvency proceedings (such as liquidation, including where a petition has been presented but has not yet been dealt with); or
- a CVA.
Any loose ends should be dealt with before applying to be struck off as numerous people who have an interest in the business can object to the application (such as members or creditors). The company should basically only exist on paper by the time the application is made. It is important to note that from the date of dissolution, any assets held by the dissolved company will belong to the Crown. As such, all bank accounts should be closed and all assets sold before the application is made.
The application is made on Form 652a which needs to be signed by the majority of directors (if there are more than two) or all the directors (if there are two or less). This form should then be submitted to the Registrar with a £10 fee.
The following parties should be informed within seven days of submitting the form as they have the right to object:
- members
- creditors
- employees
- managers or trustees of any employee pension fund
- any directors who have not signed the form.
When the Registrar receives the application he will advertise and invite objections to the proposed striking-off in the London Gazette. The Registrar will strike the company off the register not less than three months after the date of this notice if he sees no reason to do otherwise and the application has not been withdrawn. The company will be dissolved when the Registrar publishes a notice to that effect in the London Gazette.
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