What is a compulsory strike off?

Commercial solicitor, Sophie Perry, asks what is a compulsory strike off?

A compulsory strike off is where Companies House have removed a company from the register at Companies House and it is legally dissolved/closed.

You can voluntarily dissolve your company (for various reasons), but this is a separate process and not detailed within this article.

Why is a company struck off?

The reasons why Companies House may strike off a company are usually that the company has failed to comply with certain legal requirements, including but not limited to:

• Failure to submit timely accounts
• Failure to submit an annual confirmation statement
• Failure to pay fees or penalty fees
• The company having not appointed directors
• The company having ceased trading

The process

Companies House are required to send the company two formal letters warning them of the proposed strike off and explaining the issues and reasons.

Please note, these warning letters are usually sent to the company's registered office address, as detailed on Companies House. Therefore, it is important to keep Companies House updated in relation to a change of address. Also, some companies use their accountant or other professional adviser's address, so it is important for company owners to check with their advisers in respect of any correspondence.

The first gazette notice for compulsory strike off

If following these warning letters, Companies House does not receive a response or action in connection with the issues detailed, then they will issue the 'first gazette strike off notice'. This states that the company has two months before it will be struck off the register at Companies House and legally dissolved.

How to stop the compulsory strike off?

If you wish to stop your company being struck off, you shall need to action the requests in the warning letters and liaise with Companies House to facilitate this. Also, the company may be required to prove it is still trading.

However, if you believe the strike off is unjust or Companies House does not have correct details, then you will need send a suspension application to Companies House to state your case in this respect.

If you action the requests of Companies House or have a successful suspension application, it is possible to have the strike off process either suspended or discontinued completely.

Accepting the strike off

Depending on the circumstances, you may wish not to dispute the compulsory strike off i.e. if your company is naturally coming to an end and shareholders and directors are satisfied to this effect. However, it is still important to ensure the following before the strike off takes effect:

• Ensure the company does not have any outstanding debts
• Ensure all the company's assets have been realised/transferred
• Ensure the company has ceased trading

If you want to accept the strike off, but your company has outstanding assets or debts, you need to ensure you follow the formal insolvency process. This involves appointing a liquidator who will guide you through the process of distributing assets and repayments of debts.

Compulsory strike off consequences

If you do not respond to the warning letters or the first gazette strike off notice, then after two months of the first gazette strike off notice your company will be struck off and removed from the register, even if you are still trading.

The consequences of this are:

• All assets owned by the Company at the time of strike off then revert to the Crown – Bona Vacantia, meaning you cannot access or have the benefit of these.
• Your company ceases to legally exist
• You will no longer be able to dispute the strike off
• You will be denied access to financial support
• Directors may face investigation into potential misconduct that led to the strike off (depending on the circumstances)

Holmes & Hills specialist compulsory strike off or Bona Vacantia solicitors, can offer advice on all issues surrounding these topics, so contact us now.