Dissolution
Also known as a voluntary dissolution, this is a provision in the Companies Act to allow the removal of a company from the companies register. If a company serves no useful purpose, its dissolution removes the need for filing annual returns and accounts.
Dissolution can only be utilised if:
- The company has not traded for 3 months
- There are no assets or cash at the bank
- Creditors must be circulated requesting permission for dissolution
- Creditors must be given 3 months to consider the request and can reject it
- The company cannot change its name during the period
- The company is not allowed to dispose of either assets or property
Should any insolvency procedure be in place, a company cannot be dissolved.
REMEMBER:
Dissolution cannot terminate leases, HP agreements or contingent creditors. Where such creditors exist, Receivership, Administration, CVL or CVA need to be used.
Directors must seek professional advice before taking steps to dissolution.