Can compulsory strike off force my company to close?

Company strike off – which is also known as dissolving a company – is one route for a company to close or be closed down.

Many strike offs are initiated by a director who wants to close down their business without going through the liquidation process. Director-initiated strike off involves submitting a request to Companies House – via a DS01 form – to strike the company off the register they hold. Once a company has been struck off, it no longer exists as a legal entity.

However, a company can be struck off against its will, often by the request of Companies House. This is known as compulsory strike off.

If your company has received a first Gazette notice for compulsory strike off, you do have the ability to object to the strike off application and save your company from closure.

In order to have the compulsory strike off application against your company dismissed, you must submit an objection directly to Companies House. You will be required to bring your company’s administrative affairs up to date as part of the process. This may mean submitting missing accounts or confirmation statements.

In order situations, directors may be of the opinion that their company’s useful life has come to an end and they are happy for the company to be struck off. If this is the case, directors do not have to do anything and they can let the compulsory strike off process continue to run. However, if you are in this position, you should be aware that any outstanding creditor of the company can submit their own objection to the proposed compulsory strike off to ensure the company remains active.

It is important to remember than when a company is struck off the Companies House register, it ceases to exist as a legal entity. This means that any outstanding creditors of the struck off company will no longer be able to recover the money they are owed. It is for this reason that creditors may be keen to ensure the company remains active as this affords them a way of chasing the company for repayment.

If the compulsory strike off is allowed to go through, creditors would then need to apply for company restoration if they wanted to recover the outstanding debt. This is a more onerous process than simply objecting to the strike off before it has chance to go through.

For a company with relatively straightforward affairs, strike off can be considered as a viable and simple way of closing a company. Before going down this route however, you should take a step back and consider the full financial position your company finds itself in. Remember, for those outstanding debts, or one with significant assets to distribute to shareholders, liquidation may be a more appropriate way of closing the company. A licensed insolvency practitioner will be able to independently assess your business, its current financial and operational position, and advise you as to the most appropriate next step, whether that be strike off or liquidation.