Dissolution
The costs of retaining dormant companies are often hidden or not calculated and, while each cost element will be relatively small, when added together they can soon mount up. As well as the time needed to administer the companies’ records and ensure compliance, every year there will be filing fees to pay Companies House for the annual return as well as costs for preparing dormant company accounts.
Recognising this, and the need to reduce costs generally, many groups of companies carry out an audit of their dormant companies to determine whether any benefit is derived from their retention.
Where it is decided that a dormant private or public company is not required and can be dissolved, rather than requiring formal liquidation, an application can be made to the Registrar for dissolution.
Before making the application it is very important to establish whether there are any rights or assets held by the dormant company that need to be transferred prior to dissolution. Great care should be taken here as it is not uncommon for assets to be transferred between associated companies by internal accounting entries, but for the legal formalities to record such transfers of assets to be overlooked. In addition, if there are any inter-company loans, these will need to be addressed, as will any credit balances on bank accounts. All this is important as, from the date of dissolution, any remaining assets of the company belong to the Crown. We will prepare all necessary board resolutions, deeds of assignment, deeds of waiver, transfer of business agreements etc. where necessary.
It has been possible to dissolve a dormant company using this simple dissolution process for some time but it has not always been the preferred route. This has been due in part to the fact that, where a company was voluntarily struck off the register, there was a 20 year period in which a member, creditor, or the company itself could apply to court for the company to be restored.
However, on 1 October 2009 the Companies Act 2006 brought in new provisions reducing the period during which an application could be made for restoration to 6 years, making the simple dissolution process much more attractive. It is also now possible to strike off public as well as private companies.
Contact us at info@davidvenus.com or on 01372 465330 for full details.
