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Dissolving a Company - Company Dissolution

Is there a way to close my company simply and cost effectively?

Yes, you can close your company. The process is called dissolving a limited company or dissolution

A voluntary dissolution can remove companies from the Companies House Register if certain conditions are met. Most specifically you cannot dissolve a company if it has significant debts.  You cannot dissolve your company unless ALL of the conditions are met (see detailed guide below). Providing you meet the conditions, company dissolution is a very useful and cost effective tool. It means there is no need to incur liquidation costs, no investigation into your directors' activity and very little publicity.....

"This is what I need, but I wish I could get a step-by-step guide to dissolution. I am busy with other things and don't have time to l learn all about the process!

Well now you our UNIQUE and BRAND NEW STEP BY STEP GUIDE TO DISSOLVE YOUR COMPANY. It includes, easy to follow guides - timetables, board resolutions, checklists, letter templates plus all the forms you need and information on how to fill them in.  Email Robert Moore at  to receive your pack.

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Dissolve a company - A detailed guide

If you would prefer frequently asked questions guide to help you understand the longer guide click here "Dissolution frequently asked questions".

This process is also known as a voluntary dissolution. It is a provision in the Companies Act to allow the removal of the company from the Companies Register, typically when the company is dormant.

If the company serves no useful purpose, its dissolution removes the need for the filing of annual returns and accounts. However, bear in mind that the company can only be dissolved (removed from the Companies House Register), if the following conditions apply:

  • The company has not traded for three months; this must be a genuine cessation of trade!
  • The company has no assets, property or cash at the bank.
  • The creditors are circulated, requesting their permission for the company to be dissolved under this process.
  • Creditors are given three months to consider the request to dissolve the company and can reject such a request.
  • The company has not changed its name in this period.
  • The company has not disposed of any property or assets (this may include land and buildings, plant and equipment, debtors and other assets).

Please note that paying off debts does not necessarily constitute trading, but for detailed advice on this and all other aspects of dissolution, please call on 0800 9700539 for further advice.

Dissolving your company cannot be used if:

A formal insolvency procedure is in place, or proceedings have been commenced. These procedures include a CVL, CVA, administration, receivership or compulsory liquidation under the Insolvencies Act 1986, or scheme of arrangement under the Companies Act 1985.

Any petition has been issued against a company (for administration or compulsory liquidation) then dissolution cannot be used.

Advantages of dissolution:

  • It is a quick and clean removal of a dormant company from the Companies House Register.
  • It avoids the costs of liquidation, fees and expenses.
  • It avoids formal investigation into the conduct of the directors as required in liquidation or receivership.

Disadvantages of dissolution:

  • Creditors may reject the application; their permission is required to proceed with a dissolution.
  • Any shareholder, creditor or liquidator can apply to revive the company for up to 20 years after dissolution.
  • They may revive the company of the following applies:
    • Notice required to creditors was not given correctly or adequately
    • It comes to light that the company was trading during the three months period prior to making application to dissolve.
    • It comes to light that some fraud, misfeasance or other unjust action was committed by the company or the directors before or during the dissolution process.
  • Whilst a commonsense approach to collecting assets and distributing them to creditors in proper order usually suffices, there is no prescribed method. This could of course be open to abuse and if performed incorrectly can lead to a revival of the company as above. If you have any doubt as to the application of this methodology please do not hesitate to contact us by e-mail or on our freephone number 0800 9700539.
  • Dissolution cannot terminate leases, HP agreements or contingent liabilities. receivership, administration, CVL, or CVA need to be used whenever such circumstances exist. This is clearly a very difficult technical area and the directors should take proper advice from a turnaround practitioner or insolvency practitioner who is well-versed in the rules in this regard.
  • From a creditors' perspective dissolution avoids a formal investigation into the director's conduct. Of course if any transactions such as a preference, transactions defrauding creditors or basic fraud have been committed dissolution does not afford an investigation into past conduct. If the creditors are of the opinion that such transactions may have occurred they can of course refuse permission and the company will either be liquidated voluntarily or compulsorily.

Alternatives to Dissolving a Company

Leaving a company dormant

This may be an option if you think that you may need the company in the future.  However, you will need to keep in touch with Companies House and file a set of dormant accounts and a statement of conformity each year.  So a bit of a paper work still!

A members voluntary liquidation 

A members voluntary liquidation is a formal process where any assets such as stock, cash, property, and any other assets are "liquidated" and the proceeds are distributed to the members. Also all debts of the company have to be paid off and a statement of solvency declared. This is done by a Licensed Insolvency Practitioner, so there are fees to pay but the process is managed properly and there are tax advantages as well.

"Does my company qualify for voluntary dissolution, I am not sure"?

Call us now on 0800 9700539 and get some expert advice, we'll help you decide if you can dissolve your with our step-by-step programme.

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