What is limited company strike off?
Strike off is an informal way of closing down a limited company which is no longer needed or wanted. This process is sometimes known as dissolving a company or company dissolution. Strike off is an alternative to formal liquidation, however, it is not something which is suitable for all companies.
In order to be eligible for strike off, the company must not have any outstanding creditors, must not have traded or changed in name in the past three months, and must not be threatened with liquidation. The company must also not already be in a formal insolvency arrangement with creditors such as Administration or a Company Voluntary Arrangement (CVA).
Due to this, strike off is useful for companies which were set up but never traded from, or those without outstanding liabilities and little in the way of assets to distribute to creditors. If your company is insolvent, meaning it owes money to creditors which it is unable to repay, you will have to consider an alternative way of bringing the company to an end which will typically be via liquidation.
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The strike off process
- Apply using a DS01 form – Strike off is a relatively quick and cheap way of closing an unwanted limited company in Scotland. Directors must submit a DS01 form and pay the relevant filing fee directly to Companies House. This form must be signed by a majority of the company’s directors and copies must be sent to all relevant parties who have an interest in the company, including any outstanding creditors. Once a company is struck off, all assets become ‘bona vacantia’ and automatically pass to the Crown, therefore you should ensure you deal with all outstanding assets before submitting the DS01 form.
- Strike off advertised in the Gazette – Once Companies House have accepted your DS01 form, the proposed strike off will be advertised in the Gazette and any interested parties who oppose the company being struck off will be invited to lodge an objection. This may happen if the company has outstanding creditors who want the company to remain active so that they can recover the money owed to them. If objections are received and upheld, the strike off application will be suspended and the company will continue to remain active.
- Company is removed from Companies House register – As long as no objections are recovered, the company will be removed from the Companies House register two months after being advertised. Once this happens, the company is officially closed and it will cease to exist as a legal entity.
What happens if the strike off application is suspended?
If an objection is received and the strike off process subsequently suspended, other options will need to be considered if a director remains committing to closing their limited company.
One option would be to settle the outstanding matter with the objecting creditor; in reality this means repaying the money owed to the creditor. If this can be done then a new DS01 form can be submitted and the strike off process restarted.
If a company is unable to settle its debts, strike off is unlikely to be a viable option. In these circumstances, formal liquidation by way of a Creditors’ Voluntary Liquidation (CVL) will need to be considered. CVL offers a way of insolvent companies to be formally brought to an end with all outstanding creditors dealt with as part of the process. Assets of the company will be sold with the money raised being used to repay creditors. Any debts which remain after this point will be written off (unless personally guaranteed) and the company will no longer legally exist.
I knew I needed to close my company but I wasn’t sure how to go about this with large debts that I was unable to repay. Scotland Liquidators clearly explained my options and held my hand throughout the entire process.
Catherine Muller | Director
I would highly recommend Scotland Liquidators to anyone considering closing their business. From the first phone call I knew where I stood and what my options were. I cannot thank them enough.
Jonathan Booth | Director
Scotland Liquidators helped me close my company last year after I made the tough decision to stop trading. My advisor was patient, knowledgeable, and supportive from start to finish. Many thanks.
Colin Franklin | Former CEO
