STRIKING OFF AND DISSOLUTION

A company may be struck off the register and dissolved if:

• it has applied to the Registrar to be struck off, or

• the Registrar himself concludes that it is not carrying on business or in operation.

APPLICATIONS FOR STRIKING OFF

WHO CAN APPLY

A private company which is not trading may apply to the Registrar to be struck off the register. An application might be made where a company is no longer required if, for example, the active directors wish to retire and there is no-one to take over from them; it is a subsidiary whose name is no longer needed; or it was set up to exploit an idea that turned out not to be feasible.

The procedure is not an alternative to formal insolvency proceedings where these are appropriate as creditors are likely to prevent the striking off (see below, WHO TO INFORM and OBJECTIONS). Even where the company is struck off the register and dissolved, creditors and others could apply for the company to be restored to the register (see below, RESTORATIONS TO THE REGISTER).

A private company can take advantage of this procedure if, in the previous three months, it has not:

• traded or otherwise carried on business;

• changed its name;

• disposed for value of property or rights that, immediately before ceasing to be in business or trade it held for disposal or gain in the normal course of that business or trade (for example, a company whose business it is to sell apples could not continue selling apples but it could sell the truck it once used to deliver the apples or the warehouse in which they were stored);

• engaged in any other activity except one necessary or expedient for making a striking off application, settling the company’s affairs or meeting a statutory requirement (for example, a company may seek professional advice on the application, pay the costs of copying the form 652a, etc). A company can, however, apply if it has settled trading or business debts in the previous three months.

A company which is the subject, or proposed subject, of any insolvency proceedings (eg. liquidation, including where a petition has been presented but has not yet been dealt with) or a Section 425 scheme (ie. a compromise or arrangement between a company and its creditors) or whose estate is being administered by a judicial factor is not eligible to apply to use the new procedure.

BEFORE APPLYING

The procedure includes safeguards for those who are likely to be affected by a company’s dissolution. Applicants, if they have creditors, members etc., are advised to check with all the people listed below (WHO TO INFORM) before applying, as any of them may object to the company being struck off. Any loose ends should be dealt with before applying.

It is also advisable to notify any other organisation or party who may have an interest in the company’s affairs, otherwise they might object to the application at a later date. Examples include local authorities, especially if the company is under any obligation involving planning permission or health and safety issues, Training and Enterprise Councils or Government Agencies.

From the date of dissolution, any assets held by a dissolved company will belong to the Crown (see below, ASSETS OF A DISSOLVED COMPANY).

HOW TO APPLY

The Registrar will provide Form 652a on request. Forms are also available from the sources listed on the back of this leaflet.

The form must be signed and dated by:

• the sole director, if there is only one;

• by both, if there are two;

• by the majority, if there are more than two.

You must give the name, address and telephone number of the person Companies House should contact about the application. The form should then be sent, with the fee of £10, to the Registrar of Companies, Companies House, 37 Castle Terrace, Edinburgh EH1 2EB. Cheques must be payable to “Companies House” and the company number printed on the reverse.

WHO TO INFORM

Within seven days of Form 652a being sent to the Registrar, you must provide copies of it to the following:

• members (ie. in most instances the shareholders)

• creditors, (including all contingent and prospective creditors) eg banks, suppliers, former employees if owed money by the company, landlords, tenants, guarantors and personal injury claimants. Also, appropriate offices of the Inland Revenue, DSS and Customs & Excise as tax authorities must be notified of an application if there are outstanding, contingent or prospective liabilities;

• employees;

• managers or trustees of any employee pension fund;

• any directors who have not signed the form.

Anyone who becomes a member, creditor etc., after the application must also be sent a copy of the form within seven days of doing so.

VAT registered companies must, in all cases, notify the relevant VAT office (Finance Act 1985).

HOW TO INFORM

A copy of the Form 652a should be delivered to, left at, or posted to the member, creditor etc. at:

• the last known address (if an individual), or;

• the principal/registered office (if a company or partnership).

NOTE: To notify creditors who have more than one place of business, you must send copies of the form to, or leave copies at all the places of business where the company has had dealings in relation to the current debt(s) (eg the branch that you ordered goods from or who invoiced you).

It is advisable to obtain and retain some proof of delivery or posting.

REGISTRATION

When the Registrar receives the form, it will be checked and, if acceptable, will be put on the company’s public record. An acknowledgement will be sent to the address shown on the form. The company, at its registered office address, will be notified of the application to allow it the opportunity to object if the application is bogus.

OBJECTIONS

Any interested party may have grounds to object to the dissolution of the company.

HOW TO OBJECT

Objections must be in writing and sent to the Registrar of Companies together with any supporting evidence, eg copies of invoices which may prove that the company is trading. Examples of grounds for objecting are:

• the company has breached any of the conditions of its application (eg it has traded, changed its name or become subject to insolvency proceedings) during the three month period before the application, or subsequently;

• the directors have failed to comply with the requirements for informing interested parties;

• any of the declarations on the form are false;

• some form of action is being taken, or is pending, to recover any outstanding monies owed (eg a winding up petition or action in a small claims court);

• other legal action is being taken against the company:

• the directors have wrongfully traded, perpetrated a tax fraud or committed some other offence.

WITHDRAWAL OF APPLICATION

Directors must withdraw the application using Form 652c if a company ceases to be eligible for striking off. This may be because the company:

• trades or otherwise carries on business;

• changes its name;

• disposes for value of any property or rights other than those which it needed to retain to make, or proceed with, the application (eg a company may continue the application if it disposes of a telephone which it kept to deal with enquiries about its application);

• becomes subject to formal insolvency proceedings or makes a Section 425 application, or a judicial factor is appointed;

• engages in any other activity, unless it was necessary or expedient to:

- make, or proceed with, a striking off application;

- conclude those of its affairs that are outstanding because of what has been necessary or expedient to make or proceed with an application (eg paying the costs of running office premises whilst concluding its affairs and then finally disposing of the office); or

- comply with a statutory requirement.

A Form 652c (withdrawal of application) can be completed and signed by any director. The form must be sent to Companies House.

STRIKING OFF AND DISSOLUTION

The Registrar will publish a notice in the Edinburgh Gazette advertising the proposed striking off and inviting objections. If cause to the contrary is not shown and the application has not been withdrawn, the Registrar will strike the company off the register not less than three months after the date of this notice. The company will be dissolved when the Registrar publishes a notice to that effect in the Gazette. At the time of striking off a letter will be issued to the contact name on Form 652a confirming the proposed date of dissolution.

OFFENCES AND PENALTIES

It is an offence:

• to apply when the company is ineligible;

• to provide false or misleading information in, or in support of, an application;

• not to copy the application to all relevant parties within seven days;

• not to withdraw the application when the company becomes ineligible.

Most offences attract a fine of up to £5,000 on summary conviction or an unlimited fine on indictment. If the directors deliberately conceal the application from interested parties, they are liable not only to a fine but also up to seven years imprisonment.

Anyone convicted of these offences may also be disqualified from being a director for up to 15 years.

FEE

A fee of £10 is payable to cover the cost of providing the service. The fee will not be refunded if the application is rejected or withdrawn after its registration. A further fee will be payable for a new application. Any cheques must be made payable to “Companies House” and the company number printed on the reverse.

STRIKING OFF AT THE INSTIGATION OF THE REGISTRAR

There are some limited circumstances in which a company may appear to the Registrar to meet the dual test of being neither in business nor operation. This may be because, for example:

• he has not received documents from a company that should have been delivered to him, or

• mail sent to a company’s registered office is returned undelivered.

Before the Registrar strikes a company off the register, he must inquire if the company is still in business or operation. If satisfied that it is not, he will publish a notice in the Edinburgh Gazette of his intention to strike the company off the register. A copy of the notice is placed on the company’s public record. If cause to the contrary is not shown, the Registrar will strike the company off not less than three months after the date of the notice. The company will be dissolved on publication of a further notice to that effect in the Gazette. At the date of dissolution any assets held by a dissolved company will belong to the Crown (see below ASSETS OF A DISSOLVED COMPANY).

RESPONDING TO INQUIRIES

If the company is to remain on the register, it is important to reply promptly to any formal inquiry letter from the Registrar and to deliver any outstanding documents. Failure to deliver the necessary documents may result in the prosecution of the directors.

OBJECTIONS

The Registrar will take into account representations from the company and other interested parties such as creditors.

EDINBURGH GAZETTE

Notices are published in the Edinburgh Gazette, which is published twice weekly. Copies can be purchased from HMSO, 71 Lothian Road, Edinburgh EH3 9AZ.

ASSETS OF A DISSOLVED COMPANY

Assets held by a dissolved company will be bona vacantia (unowned goods) and will belong to the Crown.

Enquiries regarding bona vacantia property should be addressed to:

The Queen’s and Lord Treasurer’s Remembrancer (Q & LTR)

Crown Office

25 Chambers Street

Edinburgh EH1 1LA

RESTORATION TO THE REGISTER

The Registrar is unable to restore any company to the register without a Court Order. When the certified copy interlocutor is delivered to the Registrar, a company is regarded as having continued in existence as if it had not been struck off and dissolved.

WHO CAN APPLY

Section 653 Companies Act 1985

For those companies struck off following a 652a application: any of the parties who must be notified of the application (see above WHO TO INFORM) can apply to the Court within 20 years of dissolution for the name of the dissolved company to be restored to the register. The Court may order restoration if it is satisfied that:

• the person was not given a copy of the company’s application;

• the application by the company involved a breach of the conditions of the application;

• for some other reason it is just to do so.

The Secretary of State may also apply to the Court for restoration if this is justified in the public interest.

For those companies struck off at the instigation of the Registrar: the company, or a member or creditor of it, can apply to the Court for restoration within 20 years of the dissolution.

Section 651 Companies Act 1985

Where a company is dissolved: the Liquidator or any other interested party such as a creditor, can apply to the Court for the dissolution to be declared void. In most cases an application must be made within 2 years of dissolution. However, an application can be made at any time if the purpose of it is to bring proceedings against a company for:

• damages in respect of personal injuries including any sum by virtue of Section 1(2)(c) of the Law Reform (Miscellaneous Provisions) Act 1934 (funeral expenses), or

• damages under the Fatal Accidents Act 1976 or the Damages (Scotland) Act 1976.

WHERE TO APPLY FOR RESTORATION

Application may be made to the Court with jurisdiction to wind up the company, ie in all cases the Court of Session, or alternatively, for a company whose paid up capital does not exceed £120,000, the Sheriff Court in the Sheriffdom in which the company has its registered office.

SERVICE OF DOCUMENTS

The petition should be served on:

The Lord Advocate

Crown Office

25 Chambers Street

Edinburgh, EH1 1LA,

DX: ED310

and

The Registrar of Companies

Companies House

37 Castle Terrace

Edinburgh EH1 2EB

DX: ED235

The Registrar of Companies, who will require a copy of the petition explaining the circumstances of the company, will accept service by post. Recorded delivery is recommended. He will also accept service by hand at any time during normal office hours.

The Registrar of Companies and/or the Lord Advocate may be represented at the hearing by an agent.

EVIDENCE

The Court will require evidence covering:

• service of the petition on the Registrar of Companies and the Lord Advocate;

The Court will usually require background information on the company. This can be provided in the petition (the form of which is prescribed in the rules of court) and may include:

• when the company was incorporated and the nature of its objects (a copy of the certificate of incorporation and the memorandum and articles of association);

• its membership and officers;

• its trading activity and, if applicable, when it stopped trading;

• an explanation of any failure to deliver accounts, annual returns or notices to the Registrar of Companies;

• details of the striking off and dissolution;

• comments on the company’s solvency;

• any further information necessary to explain the reason for the application.

Before the Court hearing, the Registrar of Companies will normally ask for undertakings for:

• the delivery of any statutory documents to bring the company’s public file up to date;

• the correction of any irregularities in the company’s structure.

COSTS AND PENALTIES

The applicant may be expected to meet any costs of the Registrar of Companies in relation to the restoration. The company may also be required to meet the Registrar’s expenses and any late filing penalty payable for accounts delivered outside the period allowed by the Companies Act 1985.

DELIVERY OF THE ORDER

On completion of the order, a certified copy interlocutor should be delivered to the Registrar of Companies. The company is considered restored upon delivery.

GENERAL ENQUIRIES

For further information, please telephone:- 0131 535 5842.

FORMS

Forms 652a and 652c are available from:

Stationery Section

Companies House

37 Castle Terrace

Edinburgh

EH1 2EB

or Law stationers, accountants or solicitors.