Conditions for company dissolution
There are several conditional requirements for dissolution that your company must be able to meet:
- It must be solvent, there can be no outstanding debt
- There can be no outstanding credit agreements, HP agreements, or leases; and there can be no outstanding liabilities
- The company must not have traded, sold off stock, or carried out business for a period of 3 months prior to being struck off the register. NB it can carry out actions necessary to the shutting down of the business, including getting rid of assets, but it can’t trade. The classic example of this is that the company can sell its delivery vans off during this time, but it can’t sell the products that the vans deliver
- There can be no outstanding legal action against the company, for example winding up procedures, or threats of liquidation
- The company mustn’t have changed its name in the last 3 months
What are the legal processes?
If these conditions are in order, there are several steps that you’ll need to carry out to legally close down the business and dissolve the company:
- Convene meetings of the directors and shareholders of your company (depending on the memorandum and articles) to confirm the authority to start the dissolution process
- Ensure that all employees are paid in full including redundancies, final wages, holiday pay and salaries
- Inform all interested parties including HMRC that the company will be closing; request that your various tax positions are brought to an end
- Pay any final tax bills
- Ensure any outstanding Companies House documents have been filed
- Make sure that all shareholders and directors have a copy of the DS01 form (available from Companies House)
- Ensure that any managers or trustees of employee pension funds are also notified and have a copy of the DS01 form
- Get the company’s accounts and assets in order – make sure that any assets are shared amongst the shareholders before the company is struck off. If they aren’t, assets will go to the Crown
- Close your bank accounts
- Send the DS01 form to Companies House
- Pay £10 filing fee (not from the company cheque book!)
IMPORTANT NOTE: You will need to keep records of your business documents for 7 years after the company is struck off the register. If you’ve employed people, you must keep the employers liability insurance policy for 40 years from the date of the company dissolution.
What happens after I’ve sent the form?
Companies House will be in touch when it receives the DS01 form and if everything is in order, you will receive written acknowledgement. Companies House will advertise the request to strike the company off in the London Gazette. This will have a 2 month notice period attached to it
Can we do this for you?
You are not required to use an insolvency practice when dissolving your company, however some business owners prefer us to oversee the process for them. We charge a flat fee of £900 plus VAT to do this. Feel free to contact us for more information.
Dissolution Review Tool
Legislation is changing with regards company dissolution. The changes are in relation to circumstances where the dissolution process is used to shut down a company that has remaining debts or liabilities. Under the new changes, directors who dissolve companies with existing liabilities may be held personally, financially liable.
Dissolution may not be appropriate for your business. Our Business Rescue Experts can provide free advice on the next steps for closing your business with an initial informal consultation.
Dissolution appears to be the most appropriate route for your company.
You may in fact benefit from a claim for entrepreneurs relief, if you would like to find out more, our business rescue experts will be happy to advise you on the next steps.