- September 11, 2019
- Posted by: mardenco
- Category: Corporate Governance & Regulation
There are a number of reasons why a limited company may no longer be required and can be shut down. This may be because the limited company structure no longer suits a client's needs, the business is no longer active, or the company is insolvent. You will usually need the agreement of all the company’s directors and shareholders to close down the company.
The method for closing down a limited company depends on whether it is solvent or insolvent. If the company is solvent, you can apply to get the company struck off the Register of Companies or start a members’ voluntary liquidation. The former method is usually the cheapest. You should also make sure that no business assets are left as any funds in business bank accounts could revert to the Crown.
Where a company is insolvent, the creditors’ voluntary liquidation process must be used. There are also special rules where the company has no director, for example if the sole director has passed away.
A company can also elect to become dormant. A company can stay dormant indefinitely, however there are costs associated with this option. This might be an option if, for example, a company is restructuring its operations or wants to retain a company name, brand or trademark. The costs of restarting a dormant company are typically less than forming a new company.