If you decide to close down your company it is sometimes difficult to understand how to go about doing it. The correct process is likely to be determined upon whether the company is solvent (i.e. able to pay all its liabilities) or not.
It is important to note that you do not always need to use an insolvency process to close down a company. If you have a dormant company or one that has simply come to the end of its life with no assets or liabilities, you can apply to the Registrar of Companies directly for the company to be dissolved.
For more information on Company strike off/dissolution please click here.
If your company has assets or liabilities, the next step is to determine if the company is insolvent.
Where a company has assets of greater value than its liabilities, it is deemed to be solvent. In order to wind up the affairs of the company in a structured manner you should look at entering into a Members’ Voluntary Liquidation. This process is also commonly used by shareholders who wish to extract funds from a company in the most tax efficient manner.
If a company is unable to pay its debts as and when they fall due, it is considered to be insolvent. In such instances directors have a duty to act in the best interests of creditors so as not to prejudice their position further. Directors who wish to close an insolvent company should enter into a Creditors’ Voluntary Liquidation.
If you wish to close your company please contact us today and we will be able to guide you towards the correct procedure to fit your circumstances.