Winding up
Members' voluntary liquidation
The members may decide to win up a company when it is no longer required
- The directors make a statutory declaration of solvency
- The members pass a special resolution to commence a voluntary liquidation
- A copy of the special resolution is delivered to the Gazette and the Registrar of Companies
- A liquidator is appointed
Gazette: The official newspaper record in the United Kingdom. The London Gazette is the gazette for companies incorporated in England and Wales
Statutory declaration of solvency
The directors at a directors' meeting make a statutory declaration to the effect that they have made a full inquiry into the company's affairs and that having done so, have formed the opinion that the company will be able to pay its debts in full within 12 months from the commencement of winding, as may be specified in the declaration
This document will include a statement of the company's assets and liabilities as at the latest practicable date before the declaration
Must be made by the directors within the five weeks immediately preceding the date of the passing of a resolution for winding up
Special resolutions of the members
The members pass a special resolution to commence a voluntary liquidation
The statutory declaration of solvency must be delivered to the Register within 15 days immediately following the date on which the resolution is passed
A copy of the special resolution must be delivered to the Gazette within 14 days of it being passed. The gazettes are published weekly
A copy of the special resolution must be delivered to the Registrar within 15 days of it being passed
Appointment of a liquidator
The appointment must be notified to the Gazette and the Registrar within 14 days and must be advertised in the local newspaper
In the general meeting, the company shall appoint one of more liquidators for the purpose of winding up the company's affairs and distributing its assets
On appointment of a liquidator all the powers of the directors cease, except so far as the company in general meeting or the liquidator sanctions their continuance
Creditors' voluntary liquidation
When a company cannot pay its debts, it should follow the procedures for a creditors' voluntary liquidation
Special Resolution of the Members
This must be advertised in the Gazette within 14 days and sent to the Registrar within 15 days
A board meeting to resolve to convene a creditors' meeting is then held
Meeting of the creditors
Must be convened within 14 days of the shareholders' resolution being passed
At leas 7 days notice of the meeting must be given to the creditors of the meeting
Must be notified to the Gazette and advertised in two local newspapers
The directors prepare a statement of affairs for review at the creditors' meeting
Appointment of liquidator
Should be appointed and the appointment notified to the Gazette
The liquidator should be provided with the statement of affairs and is required to send it to the Registrar within 7 days of the creditors' meeting
Submission of documentation to the liquidator
The liquidator is required to prepare accounts for delivery to the Registrar of receipts and payments over the first 12 months in liquidation
A liquidators report must be sent every 12 months until winding up is complete
Compulsory liquidation
Occurs when the company is ordered to wind up by the court
Companies may be wound up by the court is various circumstances
A company registered as a public company has not been issued with a trading certificate more than a year after it was registered
A public company has fewer than two members
The company is unable to pay debts over £750
The court is of the opinion that the company should be wound up on just and equitable grounds
A petition to wind up, which must be advertised in the Gazette, is made to the court
If the petition is successful, a court order is granted
An official receiver is then appointed as the liquidator
The official receiver has a duty to investigate the company's affairs and the causes of its failure
The official receiver may call a meeting of creditors appoint a liquidator in the receiver's place
If they do not, they must notify the creditors and the court
If a liquidator is appointed in place of the receiver, the liquidator must notify the Registrar of their appoint as soon as reasonably practicable
Upon receipt of a notice from the liquidator of the final meeting of the creditors or notice from the receiver that the winding-up is complete, the Registrar will register it and publish its receipt in the Gazette
Voluntary striking off
On application by a company, the Registrar may strike the company's name off the register
The application must be made on the company's behalf by its directors or by a majority of them, and must contain the prescribed information
A copy of the application must be given to certain parties, such as every member, employee, creditor and director within 7 days from which the application is made
The Registrar publishes a notice in the Gazette stating that the registrar may exercise the power under this section in relation to the company and inviting any person to show cause why that should not be done
Three months after the publication in the Gazette, the Registrar must publish notice in the Gazette of the company's name having been struck off
On the publication of the notice in the Gazette, the company is dissolved
Companies House charge a fee of £10 for this service
Striking off in offshore centres
There is no direct cost involved with the training off a company and it requires no action on the part of the directors or members
Company directors who wish for the company to be struck off could simply to pay the annual return and the striking off would happen after a specified period
This is a popular method of dissolving a company in offshore centres in circumstances where the trust company's fees have not been settled or where contact with the beneficial owner is lost
Company directors who allow companies to be struck off must bear in mind that the liability if any, of every director, managing officer and member continues and may be enforced as if the company had not been dissolved
Once a company has been struck off, any assets which it owned become bona vacantia, meaning that they belong to the Crown because they are without a legal owner
Companies can be restored to the companies register by interested parties, such as the directors or members
The effect of restoration is as if the company had never been stuck off in the first place