Company dissolution is a legal process by which a company is removed from the Companies House Register. Formal dissolution of a company removes the need for filing annual accounts and tax returns. Before a company can apply for voluntary dissolution with the Registrar it must meet the following criteria:
1. The company must have had the same name for a period of at least three months. Any company that changed its name must allow a three month period to pass before applying for voluntary dissolution. Keep in mind that this applies only for the name the company has officially registered with the Companies House, and not the business name it trades under.
2. The company cannot have traded or otherwise engaged in any type of business activity for a period of at least three months prior to dissolution.
3. The company cannot dispose of any property or any other assets for a period of three months prior to applying for dissolution.
4. The company cannot be subject to any other petition (such as insolvency proceedings) before applying for dissolution.
While the rules prohibit selling off long term assets prior to dissolution, the liquidation of items which were incidental to the company's trading operations are permitted. Additionally, company directors are permitted to take steps conducive to clearing up any ongoing business arrangements in order to pave the way for a smooth dissolution.
It should be pointed out that the dissolution procedure is not an alternative to formal insolvency proceedings. A company prior to undergoing dissolution must legally inform their creditors and request their permission to have the company dissolved. All the company's creditors are given three months to consider the request and each creditor are fully within its rights to reject a dissolution request. Finally, even if the company is struck off the registry, creditors, liquidators or shareholders can apply to have it restored in the event that they have not been properly notified of the company's intent to dissolve or if they can prove that the company has traded in the three month period prior to dissolution.
Company Dissolution can be a fast and cost-effective way to strike off a non-trading company from the registrar of companies. If conducted properly, company dissolution lays to rest any questions about property, debts and liabilities that may arise. Dissolving a company avoids the high fees associated with liquidation, and quashes the need of a formal investigation into the director's conduct, something that is required in liquidation or receivership proceedings.
Anyone who wishes to restore a company that has been struck off from the register is required to get a Court Order or through administrative restoration. The Registrar cannot restore a company without a copy of the Court Order or meet the conditions of administrative restoration. Upon receiving a receipt of a Court Order for restoration or confirmation of no objection from treasury solicitors, the Registrar can restore the company's existence as if it had not been dissolved.