A “compulsory strike-off” happens when Companies House takes the decision to remove a company from the official register. Many company owners assume their business is most at risk of insolvency, but compulsory strike-offs are much more common. This is because Companies House can strike a company off simply for failing to submit a confirmation statement or a set of accounts. By taking action early you can stop the process and prevent Companies House from dissolving your company.
- Companies House can strike off a company simply for missed filings, undelivered post or having no directors — insolvency is not required.
- The objection window is usually two months from the first Gazette notice, but only 28 days where false registration information is suspected.
- On dissolution, assets and cash pass to the Crown as bona vacantia, bank accounts freeze, and rivals may take the company name.
- Dissolution does not wipe out directors' or members' existing personal liabilities.
- Administrative restoration takes roughly a month, whereas a court order takes four to six.
What Is a Compulsory Strike-Off
In a compulsory strike-off, Companies House will remove your company from the register; the law calls this “striking off”. “Compulsory” in this sense means that Companies House imposes the decision because the company has breached the rules or because it believes the company is inactive. Companies House has the power to seek a compulsory strike-off under section 1000 or section 1002A of the Companies Act 2006 (CA 2006).
When Will Companies House Strike Off a Limited Company?
The Registrar of Companies can remove your company from the register if:
- The company appears to be inactive
- The company was registered using false information, or
- The company does not fix a problem with its registered office address
If the Company Looks Inactive
Companies House can strike off a company if it reasonably believes the company is not trading or operating. This is usually because:
- The company has not submitted its statutory filings (e.g. confirmation statement or accounts)
- Correspondence sent by the registrar to the company’s registered office has been returned undelivered (e.g. where a non-resident director has not received any registered office post), or
- The company no longer has any registered directors
Before acting, the registrar will write to the company to ask whether it is still active. If there is no response, or the registrar is not satisfied that it is active, it will publish a Gazette notice. The notice announces its intention to strike the company off and also goes on the company’s public record. Unless the company shows a good reason not to, the registrar will strike it off at least two months after that notice. The company is officially dissolved once the registrar publishes a second notice confirming this.
If the Company Was Registered Using False Information
Companies House can also strike off a company if it believes the company was set up (or restored) using misleading, false or deceptive information, either in the application or in supporting statements or documents. As with inactive companies, the registrar publishes a first Gazette notice for compulsory strike-off stating its intent to remove the company from the register unless it receives a good reason not to, and the notice appears on the public record. In this case, the company can be struck off just 28 days after the notice, followed by a second notice confirming dissolution.
If the Company Does Not Fix a Problem with Its Registered Office Address
All companies must, by law, keep an appropriate address as their registered office (so not, for example, a PO Box or an address where mail will not reach those acting for the company). If Companies House decides that an address provided is not appropriate, it will write to the company first, giving it 14 days to provide a new address or to object with evidence that the address is appropriate. If the company does neither, or its evidence is not enough, Companies House can switch the address to a default address it holds, though the company can appeal in court.
The company then has 28 days from that switch to provide a proper new address; an appeal brought within that time extends the deadline rather than replacing it. Failing to do so within that time lets the registrar begin strike-off proceedings, again through a Gazette notice with at least two months’ notice, followed by a dissolution notice.
Objecting to a Compulsory Strike-Off
If Companies House has started the process of striking off a company, you can object and stop it. Objections are possible under the rules once the registrar has published the first Gazette notice. The objection window is normally two months, but in some cases it can be 28 days (where the company was registered using false information).
You make an objection through the Companies House online service, quoting the company number and attaching evidence that supports it. The evidence must be less than six months old and must clearly show the full company name, including the correct name ending. An online objection must reach Companies House before the strike-off date given in the notice, while one sent by post or email must arrive at least two weeks before that date.
To halt the process of striking off, Companies House will typically want to see that the company has:
- Brought overdue filings, such as the confirmation statement or annual accounts, back up to date, or
- Corrected an invalid registered office address
Either is normally enough to satisfy the registrar that the company is still active and compliant.
Who Can Object to a Compulsory Strike-Off?
Any interested party can object to a strike-off. This includes shareholders, creditors or anyone with a reason to keep the company on the register. For example, individuals with a legal claim against the company.
Directors, shareholders and creditors can also submit a written objection explaining why the strike-off should not proceed. This may take the form of a letter explaining that the company is actively trading or that dissolution would prejudice a creditor’s claim. If nobody responds or objects within the two-month period, the registrar will issue a second Gazette notice, and the company is formally dissolved on publication.
What Is the Impact of a Compulsory Strike-Off?
It is important to understand what happens to company assets when a company is struck off. Apart from being unable to continue to run the business, there are several consequences, including:
- The assets and cash within the business will pass to the Crown as bona vacantia
- The business bank accounts will be frozen
- Existing business contracts with suppliers, customers, landlords, etc. can no longer be performed or enforced against the company
- Other businesses can use the company’s name
From the perspective of any creditors, once the company has been struck off, they will lose their ability to recover those unpaid debts. This is why it is so important for them to object within the two-month notice period.
Being struck off and dissolved does not clear those behind the company either: any liability a director, officer or member already has continues and can be enforced as if the company had not been dissolved.
Restoring a Company Back to the Register
It is possible to restore a company to the Companies House register in two main ways:
- Administrative restoration
- Court order
The two routes differ mainly in terms of who can use them, the time limits involved and how long they take, as explained below:
Administrative Restoration
Administrative restoration is usually the faster, easier and cheaper route; however, it is only available to former directors or members of the company, and only within six years of dissolution. It also requires the company to have been trading at the time it was struck off, which rules it out for genuinely defunct companies.
As part of the administrative restoration process, you must bring any overdue annual filings up to date, pay any outstanding late filing penalties or fines and obtain a bona vacantia waiver letter if the Crown has already dealt with any of the company’s assets. Because it is a purely administrative process handled directly with Companies House, it takes around a month in our experience.
Court Order (Restoration by the Court)
The court order method of restoring a dissolved company is available to a wider set of applicants, including:
- Creditors
- Former employees with a claim against the company
- Customers and suppliers
- Those responsible for the employee pension fund
- Those with a shared or competing interest in land
- Former shareholders or directors
It tends to be used where:
- Administrative restoration is not available (e.g. if the registrar has refused an application, or the claim is for damages for personal injury, for which there is no time limit)
- The company was not trading at strike-off, or
- Someone other than a director or member needs to apply
The court-order restoration process is much more involved than administrative restoration, requiring a detailed witness statement and a letter from the Treasury Solicitor or Duchy Solicitor confirming that the Crown will not object to the restoration order.
The Difference Between Administrative Restoration and a Court Order
The following summarises the difference between administrative restoration and a court order for restoration.
| Administrative restoration | Court order |
|---|---|
|
Former directors or members only |
Creditors and other interested parties too |
|
Must apply within six years of dissolution |
Also six years, except for personal injury claims, where there is no time limit |
|
Company must have been trading when struck off |
Available where administrative restoration does not apply |
|
Filed using form RT01, with a set fee |
Filed as a formal court claim, with court and legal costs |
|
Usually takes around a month in our experience |
Four to six months in our experience |
In short, if a former director or member of the company applies, administrative restoration is normally the right choice, because it is quicker and simpler than going through the courts. A court order only becomes necessary in more complicated cases, where the registrar has refused an administrative application, the company was not trading when it was struck off or the person applying is not a former director or member.
Compulsory Strike-Offs Are Easily Avoided
It is easy to avoid a compulsory strike-off, principally by submitting any filings on time each year to Companies House. It is also important to ensure that you receive and act on any correspondence from Companies House promptly. If you do find yourself on the receiving end of a strike-off by Companies House, take action early within the deadline to stop the process. This avoids the longer process of restoring the company from dissolution.
Tags: Company Dissolution
