Home 5 Corporate Governance & Regulation 5 Closing a limited company

Closing a limited company

16 May 2024

There are a number of reasons why you may need to close your limited company. This could be because the company structure no longer suits your needs, your business is no longer active, or the company is insolvent.

You might need to close your limited company for various reasons. Perhaps the company structure doesn’t suit your needs anymore, your business isn’t active, or the company is insolvent. Usually, all directors and shareholders must agree to close the company.

The closure method for a limited company depends on its solvency. If solvent, you can either apply to strike the company off the Register of Companies or initiate a members’ voluntary liquidation. The first option is typically cheaper.

Company directors must ensure they settle all assets and liabilities before dissolving the company. This includes settling bills and collecting business debts. Any remaining assets or rights (excluding liabilities) can pass to the Crown as ownerless property on the dissolution date.

If a company is insolvent, you must use the creditors’ voluntary liquidation process. Special rules apply if the company lacks a director, such as when the sole director has passed away.

A company can choose to become dormant. While a company can remain dormant indefinitely, this option incurs costs. Companies often do this during restructuring or to preserve a name, brand, or trademark. Restarting a dormant company usually costs less than forming a new one.

For more information, click here.

Source: Companies House Tue, 14 May 2024 00:00:00 +0100

You may also like these

Here are some more articles that might interest you

Expert Advice

If you’d like more information on anything you’ve read, we’re here and happy to help