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What is a Compulsory Strike Off And Can It Be Stopped?

Written by Robert Moore Marketing Manager 6 April 2022

DS01 form for striking off

A compulsory strike off, also known as a dissolution, occurs when a company's legal existence is removed from the Companies House register.

Why would a company be struck off?

There are various reasons.

It can be voluntary if directors decide they no longer have a use for the company:

  • They want to close the business down and move to another venture
  • Directors reach retirement
  • They have no one to pass the company down to

Note, a DS01 form (pictured) must be completed for this type of strike off.

The other option is a compulsory striking off, issued by a third-party petitioning – most usually the third-party is Companies House. Reasons for the need to strike off often are:

  • Failing to conform to legal requirements
  • Failure to submit timely accounts
  • Failure to submit an annual confirmation statement
  • The company ceasing trading
  • No directors being appointed

Can I stop a compulsory striking off notice?

To avoid a company striking off notice you must be sure to respond actively to Companies House RE any issue they have found with your business. Top tip - bring paperwork and all files up to date. 

Provide any necessary proof of trade, any changes to business details. Just keep Companies House up to date to keep them happy and avoid any unwanted notices.

What is the process for a compulsory strike off?

Well, there must be rational grounds for Companies House wanting to initiate a compulsory strike off. Formal warning letters (at least two) should be sent to the company, outlining the issues and potential of a strike off. If there is no change or action based on these warnings, an initial request to strike the company off, is placed in the Gazette. This leaves a two-month period for any other person to object the application.

If you do not respond to the strike off issued, Companies House can strike your business off the register - if you are trading still or not! There will be no further chance to dispute, the companies legal existance will cease, access to any finanical support will be denied and as a director, you may face investigation. Thus, it is key to act fast if a compulsory strike off notice is issued...even more so if you have a disputing case with evidence.

What are my options following a request to strike off?

This all depends on your plans going forward, for the company.

If you are happy for the company to cease trading, the option is simple – let the process run on, so long you have no debts or liabilities outstanding, all assets have been realised and the company has ceased trading. The company will formally close and be removed from the official register.

If it is the case that you wish to accept the strike off, but have outstanding debts and/or assets then a company liquidation will need to be brought into the mix – contact one of our experts for assistance.

If you intend for the company to remain trading and ultimately dispute the strike off, an application to suspend the request should be filed to Companies House. They will then review, strictly dependent on why the strike off was requested to begin. Issues such as filing of missing accounts, proof of trade and any relevant statements may be required. If there is legitimate proof of company viability, then the strike off is likely to be suspended.

Suspension:

Who can submit an objection?

  • You (directors)
  • Your Shareholders
  • Outstanding Creditors (HMRC included) - Creditors ultimately want to object and suspend the application as if the strike off is successful, and the company is removed from the company register, they will be unable to recover any money they were owed, thus they are left with a bad debt.

Assets remaining?

Following dissolution, any leftover assets and cash is referred to as ‘bona vacantia’, with Crown taking automatic possession.

Of course, you would want to retain ownership yourself, but to do this you will need to submit an objection application to the strike off. Should the objection be upheld, the company continues trading and stays active, with the chance for you to move the assets out of the business or continue trading.

If you do have assets and cash in the business which you need to extract then the obvious route is a members voluntary liquidation.

If you want our digital dissolution pack that has word template letters/forms and a 25 page guide which takes you through the whole process then go to our website or you can request an invoice from robertm@ksagroup.co.uk www.dissolvemycompany.co.uk

Professionals like us, at Company Rescue, can assist you with this. Contact us today.

Category: Insolvency process

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