Starting a business is an exciting journey but comes with many responsibilities. One crucial aspect is keeping your company active and in good standing with the authorities. Otherwise, you and your company could be the subject of various penalties. In extreme cases, a forced shutdown.
In this blog post, we’ll explore the concept of “Compulsory Strike Off” in the UK, where companies can be removed from the Companies House official register if they don’t meet specific obligations.
We’ll discuss the reasons for compulsory strike-offs and provide practical tips to ensure your company doesn’t face this fate, protecting your hard work and investments.
Strike Off Company Meaning
“Strike off company” refers to removing a company from the official register of companies maintained by Companies House. This action effectively dissolves the company and is no longer considered a legal entity. The specific steps and requirements for striking off a company can vary from one country to another, but the general idea is to shut down the company’s operations, settle its debts and obligations, and remove it from the list of active businesses.
A company strike-off could occur because:
- The company has ceased operations.
- The director is nearing retirement.
- The directors simply do not want to continue running the business.
Striking off a company in the UK is a complex process with several legal and financial implications. It is essential to understand the process and the consequences before making a decision.
Types of Company Strike Off
A company strike-off, sometimes called dissolving a company, is the process of removing a limited company from the Companies House register. It no longer exists once the company name is removed from the register (using Form DS01).
There are two kinds of company strikes:
1. Voluntary Strike Off
A voluntary strike-off occurs when the board of directors decides to dissolve the company. A company can be legally dissolved only if it is solvent and has paid its debts.
2. Compulsory Strike Off
A compulsory strike-off occurs when another party, usually Companies House, files a petition to strike off the limited company. Keep in mind that only solvent companies can be dissolved. If any debts remain unpaid, they must be paid in full before the company can be dissolved.
Compulsory Strike Off
The term “compulsory strike off” refers to a procedure in which the Registrar of Companies—a division of Companies House—initiates the removal of a company from the official register of companies. This action is typically taken when a company has failed to meet its statutory obligations and there is a belief that the company is no longer carrying on business or has ceased to exist.
As a result, the company owner will not be able to conduct business using the limited company structure.
Legal Definition of Compulsory Strike Off
Section 1000 of the Companies Act 2006 states that if the Registrar of Companies at Companies House has reasonable grounds to believe that a limited company is no longer trading, they can begin forcibly removing it from the Companies House Register.
When a limited company is removed from the register, it ceases to exist as a business entity.
Compulsory Strike Off Reasons
The reasons why Companies House may strike off a company are usually that the company has failed to comply with specific legal requirements, including but not limited to:
- Failure to Submit Timely Accounts
Companies registered in the UK are required to file annual accounts, which include the company’s balance sheet, profit and loss statement, and other financial information. Failure to submit these accounts on time is a common reason for compulsory strike-offs. Timely submission ensures transparency and compliance with financial reporting regulations. - Failure to Submit an Annual Confirmation Statement
Companies must also file an annual confirmation statement (previously known as the annual return) with Companies House. This statement includes details about the company’s directors, shareholders, registered office address, and share capital. Failure to file this statement on time can lead to strike-off proceedings. - Failure to Pay Required or Penalty Fees
Companies House charges fees for various services, such as filing annual documents and changing company details. Failure to pay these fees, including any penalty fees for late filings, can result in a strike-off. It’s essential to monitor and settle these financial obligations promptly. - The Company Has Not Appointed Directors
A company must have at least one director who is in charge of the company’s affairs. If a company fails to appoint directors or all the appointed directors resign without replacement, the company may be considered inactive, leading to a strike-off. - The Company Has Ceased Trading
If a company has ceased trading activities and no longer continues its business, it may be subject to strike-off proceedings. This typically occurs when a company becomes dormant or when its directors decide to cease operations without formally dissolving the company.
The Company Got Struck Off for Not Filing Accounts
When a company is struck off for not filing accounts, it means that the company has failed to submit its annual financial statements to the Companies House. This failure to file accounts is a serious breach of legal requirements for maintaining a registered company, and it can result in the company being dissolved and removed from the official register of companies.
There are two types of filings with Companies House:
- Confirmation Statement: Every company, including dormant and non-trading entities, must file a confirmation statement. It confirms that Companies House’s information about one’s company is up-to-date.
A confirmation statement must be filed at least once a year but could be filed more frequently. - Company’s Annual Accounts: A company’s annual accounts are documents prepared at the end of a financial year to show how a company performed during the accounting period. The information included in the accounts will be used to prepare a company tax return for HMRC and estimate the amount of corporation tax owed by the company.
Company Strike Off Notice for Confirmation Statement Overdue
When a company fails to file its Confirmation Statement (formerly known as the Annual Return) on time with Companies House, it will receive a “Company Strike Off Notice” due to the late Confirmation Statement.
Companies must submit their confirmation statement within 14 days of the end of their Accounting Reference Date (ARD). Companies House will send a reminder notice if a company fails to submit its confirmation statement on time. If the company still fails to submit its confirmation statement after receiving a reminder notice, Companies House will send the company a strike-off notice.
This strike-off notice will give the company a certain period of time, usually two months, to submit its confirmation statement. If the company fails to submit its confirmation statement within this time period, Companies House will strike the company off the register.
Company Strike Off Notice for Annual Accounts Companies House
A strike-off notice for annual accounts is a formal notice issued to a company that has failed to submit its annual accounts on time. The notice warns the company that it will be struck off the register if its accounts are not submitted within a specific time frame.
The notice is usually sent by email but may also be sent by post. It will include the following information:
- The name of the company.
- The company’s registration number.
- The date by which the company must submit its accounts.
- The consequences of failing to submit the accounts on time.
Companies House will initiate the compulsory strike-off process if the company fails to submit its annual accounts by the deadline specified in the notice. The compulsory strike-off process is formal and involves sending the company notices and warnings. If the company fails to submit its accounts even after receiving these notices and warnings, Companies House will strike the company off the register.
When a company is struck off the register, it ceases to exist legally. This means that the company cannot trade or enter into new contracts. Any remaining assets of the company will be transferred to the Crown.
How Quickly Will Companies House Initiate the Process If the Company Violates Any Rules?
Companies House typically initiates the compulsory strike-off process if a company violates the rules by failing to meet its statutory obligations. The exact timeframe of Companies House’s initiation for the strike-off process can differ, but it typically depends on why the company is being struck off.
For instance:
The company Has not Submitted Its Annual Accounts
After each accounting reference period ends, private companies have 9 months, and public companies have 6 months to submit accounts to Companies House.
The deadline for late filing penalties is extended to ‘More than 6 months,’ but Companies House has been known to initiate the process before accounts are this late.
The Company Has not Submitted a Confirmation Statement
According to Companies House, the confirmation statement must be delivered within 14 days of the end of a company’s review period.
Once this period has passed, your company, its directors, and shareholders will be prosecuted. Ultimately, your company will also be struck from the register.
In theory, Companies House could send the first compulsory strike-off letter—also known as first gazette—15 days after the review period.
The Company Doesn’t Have Any Directors Appointed
When a company has no directors appointed, it is considered in default, and the compulsory strike-off notification letter will be sent out immediately.
In this case, Companies House may take months to act. But why wait? We should be safe by complying with all the legal obligations, right?
Companies House Strike Off Process
Companies House will send warning letters to a company before striking it off for failing to file the required accounts. A change in registered address may prevent the directors from receiving these warnings, but Companies House must still have reasonable grounds to believe the company is no longer trading before striking it off.
The steps of the Companies House strike-off process are given below:
- Companies House sends a letter to the limited company’s registered office stating that the company is being considered for dissolution.
- If no action is taken, Companies House will send a second letter, this time a final notice, with a two-month deadline to take action.
- During this two-month period, the company may respond to the final notice by providing proof that it is still active and trading or by voluntarily applying to be struck off.
- The impending strike off will be publicized in the Gazette, the official journal of public record.
- If no response is received, the company’s name will be removed from the Companies House register, and it will no longer exist as a legal entity.
- The company’s assets will be forfeited and declared Bona Vacantia, then go to the Crown once the company has been struck off.
- If the company still has outstanding liabilities or debts, the directors may be personally liable for these debts even after the company is struck off the register.
- If the director wishes to reinstate the company on the register, he or she must apply to Companies House and go through the restoration process, which can be costly and time-consuming.
Notice for Compulsory Strike Off
A Notice for Compulsory Strike Off in the United Kingdom is an official notice issued by Companies House—the government agency responsible for maintaining the United Kingdom’s company register. This notice informs a company that it is at risk of being struck off the register and dissolved due to non-compliance with its statutory obligations.
There are two types of compulsory strike-off notices:
- First Gazette Notice: The First Gazette notice is published in the Gazette, which is the official record of public announcements published by the UK government. The first gazette notice gives the company 2 months to rectify the default before it is struck off the register.
- Final Gazette Notice: The final gazette is also published in the Gazette and confirms that the company has been struck off the register.
First Gazette Notice for Compulsory Strike Off
A first gazette notice for compulsory strike-off is a notice issued by Companies House informing the public that a company is about to be struck off the official register of companies.
This notice is an official, legally binding announcement published in government gazettes (journals of public record). The location of your company will determine whether the information is published in the London, Edinburgh, or Belfast editions.
What Does a First Gazette Notice for Compulsory Strike Off Mean?
When a company is forcibly struck off, a statutory procedure must be followed, and the first Gazette notice is part of that procedure. Companies House or, sometimes, a creditor can initiate a compulsory strike-off.
The notice informs the general public, suppliers, institutions, and other parties associated with the business that the business will be closed and allows anyone who wishes to contest the closure to do so.
HMRC, banks, and others regularly monitor this public record for notices that may affect them and can intervene if the closure is imminent. A creditor, for example, would do so to recover their debt.
The first Gazette notice gives creditors at least three months’ notice of the intended action, and if no challenges are filed, the company’s dissolution is advertised in the second or final Gazette notice.
Meaning of Final Gazette Dissolved Via Compulsory Strike Off
A “Final Gazette dissolved by compulsory strike-off” is a public announcement that a company has been officially dissolved due to a compulsory strike-off. The Gazette, formerly known as the London Gazette, is the official public record of the United Kingdom. Statutory notices on companies are published there.
A series of events occur before reaching the final stage. They are as follows:
- The Gazette first publishes a first Gazette notice when a company is targeted for compulsory strike-off. This preliminary notice allows two months for any objections to be raised.
- If no objections are raised, or if any objections are resolved satisfactorily, the company is removed from the register.
- A final Gazette notice is published, signaling the company’s formal dissolution.
- The final Gazette notice marks the end of the compulsory strike-off process and serves as a stamp of approval on the company’s dissolution.
Companies House Search
The Companies House advanced search function is a Find and Update company information service feature. It allows users to search the register for specific information about companies and is intended to make it easier for individuals and businesses to access the required information.
The advanced search function, which has been available since November 2021, allows users to search for companies based on various criteria. The company name, registration number, location/registered office address, and incorporation date are all included. Users can also narrow their search results by factors such as the company’s status (active or dissolved) and the type of filing history (confirmation statements or accounts).
An advanced search yields detailed information about each company. Users can also access the company’s filing history, which includes confirmation statements, accounts, and other documents submitted to Companies House. Users can browse the results or download a spreadsheet with up to 5,000 companies.
Company Dissolved Meaning
In the UK, when a company is “dissolved,” it no longer legally exists as a business entity. It has been officially closed down and removed from the Companies House’s register of active companies.
This happens when a company fails to meet its legal obligations, such as filing required documents or paying fees, and it can no longer operate as a business. Once dissolved, the company cannot engage in any business activities, and its assets, if any, may become the crown’s property.
A company could be dissolved in two ways:
- Dissolved via compulsory strike-off.
- Dissolved via voluntary strike-off.
What Happens if a Company Is Dissolved Via Compulsory Strike Off?
When a company is dissolved through compulsory strike-off, the Companies House removes it from the company’s register because it did not follow the rules. The following could happen if a company is dissolved via compulsory strike-off:
- The Company Stops Existing: The company is no longer a legal entity once it is dissolved. It doesn’t exist anymore as far as the law is concerned.
- No More Business: The company can’t do any business, enter contracts, or make money because it doesn’t legally exist.
- Assets Go to the Crown: All assets that belonged to the company during the strike-off will be transferred to the Crown, making them Bona Vacantia or unavailable for use or benefit.
- Legal Consequences: Directors and officers of the company can still be held responsible for any debts or legal issues the company had before it was dissolved.
- Reinstatement: In some cases, it may be possible to restore the company, but this can be a complicated process.
Strike Off a Company: Can I Prevent It?
To keep your company from being struck off, you must respond to any issues Companies House has found. You may also be required to prove with proper documentation that your company is still in operation or to provide a new business address if you have moved and have not updated your information in official records.
You must act quickly and clearly with Companies House to ensure your business can continue operating. Here are some tips on how to not let your company disappear due to a compulsory Strike off:
- File your annual accounts and confirmation statement on time. This is the most important thing you can do, as it shows Companies House that your company is still in business and that you are complying with your legal obligations.
- Make sure that you have at least one director in place. Companies House will start the strike-off process if your company has no directors.
- Pay your annual fee on time. This is a small fee that all companies have to pay to stay on the Companies House register.
If you are having difficulty meeting your legal obligations, contact Companies House. They can assist you in getting back on track.
Can I Object to a Limited Company Being Struck Off?
You can object to a limited company being struck off only if you are a shareholder or other interested party, such as a creditor, and you have a reason to stop the company from being removed from the register.
For example, you may object if you have not been told about the company’s decision to be struck off or if you think the declarations on the company’s application are false. You may also object if you want to take legal action against the company.
You can only object after the notice that the company will be struck off has been published in The Gazette. To object, you need to contact Companies House within 2 months of the date of the notice in the Gazette. Your objection must be backed up by evidence, such as invoices or other documents proving that the company owes you money.
If you object to a limited company being struck off, Companies House will put the strike-off process on hold and investigate your objection. After the investigation, if Companies House finds your objection valid, it will stop the strike-off process. And there will be a suspension or discontinued notice from the authority.
Note: You should object online to the Gazette notice. But if you cannot do that, send your objection by email or post.
What if the Company has Already Been Struck Off?
If the company has already been struck off the register, you must instead seek a court order to restore it. You can only do this in certain situations, such as if they owed you money when they were dissolved.
Can a Compulsory Strike-Off be Suspended?
Yes, compulsory strike-offs can be suspended. A compulsory strike-off suspension means that the dissolution process of a limited company has been halted.
There could be several reasons why your company’s strike-off has been suspended;
- The first reason is that Companies House may have received new information about your company, making it ineligible for strike-off. This could include new filings or a change in the status of your company.
- Someone related to your company’s authority or from interested parties has objected to the strike-off.
- Alternatively, your company’s strike-off may have been suspended due to an ongoing investigation. If this is the case, you must resolve the issues being investigated before your company can be removed from the register.
- Finally, because of a change in the law or other regulatory requirements, your company’s strike-off may have been suspended.
Can a Compulsory Strike-Off be Discontinued?
Yes, a compulsory strike-off can be discontinued. This means removing a company from the Companies House register is stopped, and the company can continue trading.
There are several reasons why Companies House might discontinue a compulsory strike-off, such as:
- The company has filed all of its outstanding annual returns and accounts.
- The company has paid all of its outstanding taxes and other debts.
- The company has provided evidence that it is still trading.
- The company has successfully objected to the strike-off.
If compulsory strike-offs are suspended, companies may live longer, including those that fail to meet their legal obligations.
Under What Conditions Can Creditors Oppose a Compulsory Strike Off?
A company’s compulsory strike-off can be challenged by more than just its directors and shareholders. It may also be in the best interests of company creditors, such as HMRC, to oppose the strike-off. Creditors are likely to file an objection and suspend the application to recover money owed to them before the company is closed.
If the company is removed from the Companies House Register, any remaining creditors must either write off the money owed as a bad debt or seek a court order to reinstate the company, which can be time-consuming and expensive.
How Can Business Globalizer Help You?
We can understand that during a strike-off, many things could be confusing to you. But don’t worry; Business Globalizer is here to help. We have various and amazingly tailored solutions for you.
Our UK company dissolution service is here if you want to dissolve your company with proper legal compliance. If you change your mind after going through the process, a premium business consultation service will be perfect for restoring your struck-off company. We can provide legal help from an accountant and a legal counselor.
FAQs on Compulsory Strike-Off
Q1: How many gazette notices for compulsory strike off?
Answer: There are two Gazette notices for a company’s compulsory strike-off. The Companies House will send the first one (the First Gazette) with a warning and decide on a two-month timeframe, within which the warned company should comply with all the required obligations.
Otherwise, after the determined time is up, the Companies House will strike off the company from the Company’s register and send the final notice (the Final Gazette) confirming that.
Q2: What should I do before starting a company strike off?
Answer: You cannot start a new company until at least 6 months after the old one’s last trading day. You could face charges under the Fraud Act of 2006 if fraud were involved. This means no new bank accounts, no contracts, and so on. So make sure that all of these things happen first.
Q3: What is Bona Vacantia?
Answer: ‘Bona vacantia’ is a Latin phrase that means ‘ownerless goods.’ Bona vacantia is legally transferred to the Crown through the appropriate recipient body.
Q4: What is a compulsory strike off notice?
Answer: A compulsory strike-off occurs when another party, usually Companies House, files a petition to strike off the limited company. Remember that only solvent businesses can be dissolved. If any debts remain unpaid, they must be settled before the company can be dissolved.
Q5: Is a compulsory strike off bad?
Answer: A compulsory strike-off can have far-reaching consequences for directors, shareholders, and creditors. So, you can say it could be bad for your company—if you didn’t want to dissolve it and wanted to continue trading.
Q6: How to stop the first gazette notice for compulsory strike off?
Answer: The first step in preventing a compulsory strike-off is to respond as soon as possible to the Gazette notice. This notice must be sent to Companies House directly and should state the company’s defenses against being struck off, such as proof of the company’s operations or the capacity to make debt payments.
Q7: How soon after the first gazette notice does the strike off occur?
Answer: You will have a minimum of two months from the date of the first Gazette notice before any strike-off action is taken.
Q8: What Is a DS01 form?
Answer: If you voluntarily strike off your company, you must submit a DS01 form.
Q9: How do I get a DS01 form?
Answer: You can complete the form online at Companies House or download it from their website.
Thankfully, the form is straightforward to complete. You’ll need to include:
- The company number.
- The company name.
- The signature(s) of the company’s officers authorizing the strike-off. A majority of the directors must sign the form. If there are two directors, they must both sign.
Q10: What Is the impact of a compulsory strike off?
Answer: If no response is received following the First Gazette notice, the company will be removed from the Companies House register and cease to be a legal person. Assets belonging to the company will be forfeited to the Crown after it have been struck off.
Q11: What if compulsory strike off action has been suspended?
Answer: When a company’s strike-off is suspended, it is typically because unpaid creditors would lose their money if the company were dissolved. You have two months to file an appeal against the strike-off and request that it be discontinued after the Companies House suspends the strike while conducting its investigation.
Q12: Can creditors oppose a compulsory strike off?
Answer: Company creditors, including HMRC, can and often do apply to object to a compulsory strike-off because they are owed money that they will lose access to if the company is struck off.
Q13: What will happen after your company has been struck off?
Answer: You will lose access to company bank accounts if your company is struck off the Companies House register. You will be unable to send or receive funds. To reclaim your bank accounts, you must first restore the company.
Q14: What happens to directors when a voluntary strike off strikes a company off?
Answer: Any debts or obligations incurred by the company after it has been struck off may be the responsibility of the directors. They might no longer be permitted to hold director positions with other companies. A director’s involvement in the company’s failure may also be the subject of an investigation by regulatory bodies like the Insolvency Service.
Q15: How do I stop the first gazette notice for compulsory strike off?
Answer: The quickest way to prevent the notice from escalating is to correct the noncompliance that has caused it. This could include something as simple as updating statutory accounts.
Q16: When Is closing down a business the right decision?
Answer: A company is its owner’s dream. Sometimes, it could be the only meaning of livelihood and a staircase to go above the peaks of success. But sometimes such a situation could arise when closing down a company or business becomes a wise decision.
Your business could be insolvent, the company could lose its future, you could outgrow your business, or your business could outgrow you, etc.—whatever the reason is, closing down a business could become the right decision for you.
Q17: During a liquidation, can a company be struck off?
Answer: Yes, but only if the liquidator fails to file returns showing creditor payments. A company can be struck off if the liquidator doesn’t show that all the debts have been paid. The company can still trade while liquidating but must pay off its debts. Any remaining assets go to pay creditors.
The liquidator is responsible for ensuring money to pay debts, covering expenses, keeping records, filing reports, paying employees, settling claims, and notifying interested parties of changes.
Q18: Can I restore struck off company?
Answer: Yes, you can. You can apply to Companies House to have your struck-off company restored (known as ‘administrative restoration’) if only:
- You served as a director or shareholder.
- The Registrar of Companies struck it off the register and dissolved it within the last six years.
- Your company was still in operation when it was dissolved.
- If anyone else hasn’t already claimed and registered the company for themselves.
Q19: What is a company liquidation?
Answer: Closing a limited company, selling assets, and removing the company from the official register is known as company liquidation.
Q20: What Is the meaning of compulsory strike off discontinued?
Answer: If the compulsory strike-off imposed on your business is discontinued, the strike-off will stop, and your company may resume its operations. In most cases, this indicates that you have adequately addressed Companies House’s requests or claims.
Bottom Line
In a nutshell, a compulsory strike-off could have a destructive impact on your company. Your company and all those included in it could face various issues and immense losses because of this struck-off procedure. Nobody wants that, right?
But if you voluntarily want to strike off the company, that’s another thing. Try to keep your company solvent and transparent about all the debts and required fees from authorities. And let the process run itself. Whatever the case is—compulsory or voluntary—remember to keep copies of your company’s schedule and employers’ liability insurance policy if you have employees.
Other business documents, such as bank statements, invoices, and receipts, should be kept for 7 years after the company is struck off.
At the end of the day, a company is your dream. If you don’t take care of it, comply with the must-follow obligations, and keep it up-to-date with all the required compliances, your dream could be broken.
So, save yourself and don’t let the company disappear.
