In order to apply for voluntary strike off, the company must complete Form DS01, Striking off application, and file it with the registrar of companies with the applicable fee. The application is made on the company’s behalf by its directors, or a majority of them, as specified in the Companies Act 2006.
Where a company is dissolved, its liabilities shall be extinguished, and therefore there is procedure that the company must follow, to enable interested persons to object to the dissolution. Therefore upon an application for voluntary strike off, the company must ensure that, within seven days from the day on which the application is made, a copy of it is given to every person who is an interested person, including company shareholders, company directors, creditors of the company (including contingent or prospective creditors) and all company employees.
Clearly if the company has significant contingent or prospective liabilities, voluntary strike off may not be advisable, and liquidation may be more appropriate in the circumstances. You should speak to your corporate solicitor about which option would be more appropriate. The strike off route is generally not appropriate in circumstances where a company has outstanding liabilities at the time of dissolution, since a creditor of the company can subsequently apply for the company to be restored to the Companies House register and pursue the debt.
It should be noted that a person commits an offence if he fails to notify interested persons as detailed above. If that person does so with the intention of concealing the application, he commits an aggravated offence punishable by a term of imprisonment.
In addition an application for corporate voluntary strike off must not be made if, at any time in the previous three months, the company has:
- Changed its name.
- Traded or otherwise carried on business.
- Disposed for value of property or rights that, immediately before ceasing to trade or carry on business, it held for the purpose of trading or otherwise carrying on business.
- Engaged in any other activity, except one which is necessary or expedient for the purpose of:
- making the application or deciding whether to do so. This would include seeking professional advice on the application and paying the costs of submitting Form DS01;
- concluding the affairs of the company (for example, registering a transfer of the company’s shares or receiving a payment of a debt); or
- complying with any statutory requirement.
It is important to ascertain whether one of the circumstances listed above applies, as it is an offence for a person to make an application in contravention of any of those points.
Therefore if you are contemplating a corporate voluntary strike off, it is important to ensure that you address the issues raised in this article well in advance of completing the DS01 Form. The ideal scenario is that the company is a dormant shell without assets, employees and creditors at the time that the application is filed with Companies House.
The corporate strike off route is a cost effective and low risk alternative to voluntary liquidation. The attractive advantage of voluntary strike off is that it does not have the costs and risks associated with appointing a liquidator.
About the Author:
The author, Christian Browne is a corporate solicitor and the Managing Director of Summerfield Browne Solicitors. Summerfield Browne Solicitors have offices in London, Birmingham, Oxford, Cambridge, Northampton and Market Harborough, Leicester. Christian Browne is also a legal advisor with the Institute of Directors in London.