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Coddan CPM Ltd. – Company Registration Agent in the UK
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Secretarial Compliance

What Happens to the Directors of an Insolvent or Dissolved Company?

What happens to the directors of an insolvent or dissolved company?

The liquidator, administrative receiver, administrator or Official Receiver has a duty to send the Secretary of State a report on the conduct of all directors who were in office in the last 3 years of the company's trading. The Secretary of State has to decide whether it is in the public interest to seek a disqualification order against a director. Examples of the most commonly reported conduct are:

  • Continuing the company's trading when the company was insolvent
  • Failing to keep proper accounting records
  • Failing to prepare and file accounts or make returns to Companies House; and
  • Failing to send in returns or pay to the Crown any tax that is due

What should I do before applying for a company' dissolution & close it down?

There are safeguards for those who are likely to be affected by a company's dissolution. If your private company has creditors, members etc., you are advised to warn all the people, before applying, as any of them may object to the private company being struck off.

Any loose ends should be dealt with before you apply. It is also advisable to notify any other organisation or party who may have an interest in the company's affairs, otherwise they might later object to the application.

Examples include local authorities, especially if the company is under any obligation involving planning permission or health & safety issues, training & enterprise councils and government agencies.

What happens when the registrar accepts an application to dissolve a company? The Companies' Registrar will advertise and invite objections to the proposed striking-off in the London Gazette. The Registrar will strike the company off the register not less than three months after the date of this notice if he sees no reason to do otherwise and the application has not been withdrawn.

The company will be dissolved when the Companies' Registrar publishes a notice to that effect in the Gazette. At the time of striking-off, a letter will be issued to the contact name on dissolution application form confirming the proposed date of dissolution.

Who, how & why the company' dissolution & winding down can be objected? Objections or complaints against the company dissolution must be in writing & sent to the Companies' Registrar with any supporting evidence, such as copies of invoices that may prove the company is trading. Reasons could include:

  • If the company has broken any of the conditions of its application for example, it has traded, changed its name or become subject to insolvency proceedings during the three-month period before the application, or afterwards
  • If the directors have not informed interested parties
  • If any of the declarations on the form are false
  • If some form of action is being taken, or is pending, to recover any money owed (such as a winding-up petition or action in a small claims court)
  • If other legal action is being taken against the company
  • If the directors have wrongfully traded or committed a tax fraud or some other offence