Closing a limited company
You usually need to have the agreement of your company’s directors and shareholders to close a limited company.
The way you close the company depends on whether it can pay its bills or not.
The company can pay its bills (‘solvent’)
You can either:
- apply to get the company struck off the Register of Companies
- start a members’ voluntary liquidation
Striking off the company is usually the cheapest way to close it.
The company can’t pay its bills (‘insolvent’)
When your company is insolvent, the interests of the people your company owes money to (its creditors) legally come before those of the directors or shareholders.
You must use the creditors’ voluntary liquidation process.
Your company might be forced into compulsory liquidation if you don’t pay creditors.
You may be able to avoid liquidation by applying for a Company Voluntary Arrangement.
If the company doesn’t have a director
You must appoint a new director if your company doesn’t have one, eg if a sole director has died.
Companies House will eventually strike off a company that doesn’t have a director but this can make it more difficult to manage any company assets.
Shareholders must agree to appoint a new director and may need to vote on it.
If a sole director has died and there aren’t any shareholders the executor of the estate can appoint a new director, as long as the company’s articles allow it.
The new director can close the company.
Let the company become dormant
You don’t have to close your company if it’s no longer trading. You can let it become ‘dormant’ for tax as long as it’s not:
- carrying on business activity
- receiving income
Your company will still be registered at Companies House.
You must still send an Annual Return and accounts to Companies House.
You can keep a limited company dormant for as long as you want.