Dissolving a Company
What does it mean to Dissolve a Company?
Dissolving or ‘striking off’ a company simply means that you wish to close it down by removing its name from the Companies House register. Once a company is removed from the register, legally it no longer exists.
Is Dissolving a company a form of Liquidation?
Dissolution and Liquidation are two separate processes. Dissolving a company is a way to close a company while it is still solvent and has the ability to settle its debts within a 12 month period. Liquidation is a process to close a company that is insolvent, meaning that your liabilities(debts) are in excess of your assets.
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What are my alternatives?
Dissolving a company can often be the right decision for more straightforward situations, though there are many alternatives if your situation is more complicated.
If your company is solvent and has a large amount of assets and creditors that need to be dealt with by a professional insolvency practitioner to avoid further complications a Members’ voluntary Liquidation (MVL) might be your best option for closure of your company. This option is only viable for companies that can settle their debts within a 12 month time period however.
Should your company be insolvent it would be best to consider a CVL or Administration depending on your circumstances.
How can I dissolve my company?
To be able to dissolve your company you must fulfil certain criteria, these are:
Being solvent (assets are in excess of Liabilities)
Have stopped trading or selling stock for at least 3 months
You have not changed names within at least 3 months
You are not being threatened with any other form of insolvency and do not have any agreements with creditors such as a Company Voluntary Arrangement (CVA).