What is a company dissolution?

A company dissolution is the act of a company being removed – or struck off – from the Companies House register. Once a company has been dissolved, it cannot carry on any more trading and no longer exists as a separate legal entity under the eyes of the law.

In this post, we’re going to look at the need-to-know information for company dissolutions. Let’s get started.

Why dissolve a limited company?

A company can be dissolved voluntarily or involuntarily.

Voluntary dissolution – Companies are dissolved voluntarily for a number of reasons but ultimately it will be because the company shareholders decide that the company is no longer required.

Perhaps the business has run its course, or maybe the business never got going in the first place. Rather than pay for the continued upkeep of the company, the directors may decide to close the company, thereby avoiding, amongst other things, ongoing filing fees.

Another common reason for a voluntary dissolution is that a company has missed its annual account deadline. When this occurs – if accounts are filed late – the company will automatically incur a fine (starting at £150 and increasing depending on how late the accounts are delivered).

Rather than file accounts after the deadline, some business owners decide to avoid the penalty and dissolve the company instead. This is permitted by Companies House.

Involuntarily dissolution – Companies are dissolved involuntarily (by Companies House) if they fail to keep up with their company filing obligations, such as the confirmation statement, annual accounts or company tax returns.

Is it always possible to dissolve a company voluntarily?

No, there are scenarios when a company can’t be dissolved, such as:

• The company has traded within the last three months
• It has changed its names within the last three months
• It is currently the subject of legal proceedings 
• It is in liquidation (when a company needs to close but has outstanding liabilities) or is entering liquidation 
• It is in a credit agreement

How long does a voluntary company dissolution take?

Once a company has filed the DS01 – Strike off a company from the register form, it will typically take 2-3 months for the company to be closed.

It is worth noting that when a company has been dissolved, Companies House will continue to hold information on it. A company’s registration and dissolution files will remain on the Companies House public register for a period of 20 years.

Do you need help dissolving a limited company?

With our dissolution service (£69.99 plus VAT), we’ll take care of your company’s dissolution from beginning to end. 

We’ll complete and file the DS01 form, take care of the board resolution to approve the dissolution, and ensure everything goes as smoothly as possible.

• Find out more about our Company Dissolution Service

So there you have it, the company dissolution explained.

Please leave a comment if you have any questions.