Thursday, 22 January 2015

Dissolution/Striking Off Of Companies

Small Business, Enterprise & Employment Bill (“the Bill”) that is proposed to come into force in April 2015.

It is not uncommon for dormant or non-trading companies to be overlooked or company filing requirements not strictly adhered to, especially when the purpose for which they were set-up has not yet been finalised. Often, without close monitoring, the Registrar of Companies will seek to strike such companies off the register, effectively leading to a dissolution of the company and its legal title.

If a director continues to use such a company that fails to adhere to its filing requirements he can be prosecuted under the Companies Act 2006. Additionally, if the Registrar of Companies serves a notice of striking off of such a company from the register, then it may be the case that a director who continues to use the former company’s name will be personally liable for all contracts entered into and matters to which the company would have been liable (had it not been struck off).

Accordingly it is vital to ensure filings at Companies House are kept up to date, both to prevent any personal liability by directors but also to protect against the company being struck off.

Section 91 of the Bill seeks to shorten the notice period for the striking off of such companies, providing for the following amendments to the notice period provided to the company of striking off:

  • That the Registrar of Companies will decide to strike off a company if it does not receive a response within 14 days (rather than one month as currently required) of appropriate notice of striking off;
  • That the Registrar of Companies will publish a notice of striking off in the Gazette 14 days (rather than one month as currently required) after sending a second notice letter (if no response received);
  • That the Registrar of Companies will notify the company of an automatic striking off 1 month thereafter (currently three months).

The above amendments will provide for a striking off over a total period of two months, rather than 5 months as is currently the case (with the likely consequences as outlined above).

Should you require any advice or assistance with these matters, please contact Francis Wilks & Jones who can assist in this regards.