Closing Your Company: The Rules

by | Nov 2, 2021 | Blog, Running a business

If you want to close your company, you need to ensure that you comply with the points from the Companies Act regarding company closures.

For this process, it is very important to note that this only relates to companies closing that are able to fully settle all creditors and liabilities outstanding. If the company cannot do this, then it will need to consider entering administration. This can be a process that is very straight forwards, but any mistakes can be very costly.

The Regulatory Requirements – Facts from Companies Act

When considering a voluntary strike-off of a company, the rules in Companies Act 2006, s1003 to s1011 apply.

The following points summarise the Companies Act requirements when closing a company via voluntary strike-off under s1003, and are used to support your next steps.

  1. A strike-off application cannot be made if in the past three months:
    • The company name changed.
    • The company traded, including the sale of property and other assets, regardless of whether they form a part of the company’s normal trade (other than settling debts).
    • Is engaged in any activities other than those in connection with the strike-off application, regulatory requirements, or otherwise part of the company closure process.
  2. The following circumstances are those that are likely to result in a strike-off not being allowed. If any might apply, please contact us to discuss:
    • An application to the court on behalf of the company for the sanctioning of a compromise or arrangement and the matter has not been finally concluded.
    • A voluntary arrangement in relation to the company has been proposed under the Insolvency Act that has not been fully concluded.
    • The company is in administration, is entering into administration, or is being wound up via some part of the Insolvency Act.
    • There is a receiver or manager of the company’s property.
    • The company’s estate is being administered by a judicial factor.
  3. When making an application to strike off the company, the applicant must ensure that within 7 days of the application, that a copy of the application is provided to every person who is:
    • A member.
    • An employee.
    • A creditor.
    • A director.
    • A manager or trustee of any pension fund established for the benefit of the employees at any time on the day of application.

Any new members, employees, etc. as listed above, who join after the strike-off application, must receive a copy of the application within 7 days of the first day that they qualify. Please note: It is an offense to fail to communicate with these people.

  • Note for point 3. A person is treated as having received the copy if it is:
    • Delivered to them.
    • Left at their proper address.
    • Sent by post to them at that address.
  • For a creditor, this must be:
    • At the place of business that the company has had dealings with them.
    • If there is more than one such place, at each of them.

For more information or guidance, please download our helpful checklist and contact a member of our team by calling 01454 619900.

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