If you're thinking about closing down your business, you may have come across the term "striking off" or "dissolution." Striking off is the process of closing down a company that is no longer trading, has no outstanding debts, and is not subject to any legal action or insolvency proceedings. In this comprehensive guide, we'll explain everything you need to know about striking off a company, including the process, requirements, and potential risks.

What is Striking off?

Striking off is the process of removing a company's name from the official register of companies maintained by the Companies House in the UK. This process is typically used by small business owners who want to dissolve their company without going through the more complex process of liquidation or administration.

Why Strike off a Company?

There are several reasons why you might want to strike off your company. Some of the most common reasons include:

The company is no longer trading
The company has fulfilled its purpose
The company is insolvent, but the director(s) wish to avoid the cost and complexity of liquidation
The company has ceased trading and has no outstanding debts or legal action against it
The director(s) wish to retire and dissolve the company

The Striking off Process

The striking-off process can be completed online using the Companies House WebFiling service or by submitting form DS01. Before applying to strike off your company, you must ensure that the company is eligible for striking off. To be eligible, your company must meet the following criteria:

The company has not traded or sold off any stock in the last three months
The company has not changed its name in the last three months
The company is not currently involved in legal action or insolvency proceedings
The company has no outstanding debts
If your company meets the eligibility criteria, you can begin the striking-off process by following these steps:

Step 1: Notify shareholders, employees, and directors

Before you can apply for striking off, you must notify all shareholders, employees, and directors of your intention to strike off the company. This can be done by sending a letter to each of these parties.

Step 2: Complete the application

Once you have notified all relevant parties, you can complete the striking off application online or by submitting form DS01.

Step 3: Wait for confirmation

Once you have submitted your application, you will need to wait for confirmation from Companies House. If your application is successful, the company's name will be removed from the register three months after the date of the notice.

Risks of Striking off

While striking off can be a simple and cost-effective way of dissolving your company, there are also some risks to be aware of. These include:

If the company has any outstanding debts, these will become the responsibility of the director(s) personally
If the company is struck off and then continues to trade, the director(s) could be personally liable for any debts incurred during this period
If the company is struck off and then legal action is taken against it, the director(s) could be personally liable for any damages awarded

Conclusion

Striking off can be a simple and cost-effective way of dissolving your company, but it's important to ensure that your company meets the eligibility criteria and that all parties are notified of your intention to strike off. It's also essential to be aware of the potential risks, including personal liability for any outstanding debts or legal action. If you're unsure about whether striking off is the right option for your company, it's advisable to seek professional advice.