What are the reasons a company strike off application may be rejected? Shaun Barton, partner at Company Closure, explains the company strike off process.

What is a company strike off?

A company strike off means taking a company off the Companies House register. ‘Striking off’ a company is also known as ‘dissolving’ a company.

Strike off is designed as a way for a solvent company to bring its affairs to an end without the involvement of a licensed insolvency practitioner. This lack of professional involvement not only speeds up the process but also significantly reduces the associated costs.

When a company has no creditors and no significant assets, liquidation is not likely to be the most efficient or cost-effective way of closing the business when the time comes. Instead, applying to have the company struck off may be the best way of managing such a situation.

What is the company strike off process?

A company applies to be struck off by submitting a DS01 directly to Companies House together. This application will be advertised in The Gazette with any interested parties invited to lodge an objection if they have a valid reason why the company should not be struck off. As long as no objections are received, the company will be dissolved two months later.

For companies which have never traded, have previously laid dormant, or never really got off the ground, strike off is often the most appropriate way of closing an unwanted company. When a company meets the criteria for strike off, the process is quick, straightforward, and efficient.

Why might a company strike off application be rejected?

Problems can occur, however, when companies who do not qualify for strike off attempt to circumvent the liquidation process by submitting a DS01 form regardless of whether they meet the criteria. You can only strike off your company if it:

• has not traded or sold off any stock in the last three months
• has not changed names in the last three months
• is not threatened with liquidation
• has no agreements with creditors, for example a company voluntary arrangement (CVA)

While there is nothing stopping the director of an insolvent company applying to have their business struck off, they should also expect one or more creditors to file an objection once they become aware of this.

Once a company is struck off the register held at Companies House, it ceases to exist as a legal entity. As limited companies have the benefit of limited liability this means that any debts owed by the company belong to the company and are not the responsibility of the individual directors. Therefore, any debts which remain outstanding at this point are effectively written off, leaving creditors unable to pursue the monies owed to them.

When a company applies to be struck off, this is advertised in The Gazette. The company is also required to send a copy of the application to any creditors, shareholders, or other interested parties. Once a creditor becomes aware of a debtor’s intention to dissolve, it is highly likely that they will submit an objection to the application to block the strike off and ensure the company remains active.

What are the options if a strike off application has been rejected?

Should a strike off application be rejected for any of the above reasons, there is nothing to stop a company reapplying and restarting the process. However, it is highly likely that any future attempts to strike off the insolvent company will be met with the same response from creditors.

Therefore, if the company is insolvent and has no chance of effecting a successful turnaround, then steps do need to be taken to bring the company to an orderly end. In this situation, this is best achieved by placing the company into liquidation voluntarily by way of a creditors’ voluntary liquidation (CVL).

A CVL is a formal insolvency procedure which can only be entered into under the guidance of a licensed insolvency practitioner. As part of the process, the insolvency practitioner will assume control of the company, liaise with creditors, and work towards bringing its affairs to an end. Creditors will be repaid as far as possible from the proceeds of any company assets, with any debt still remaining at this stage being written off as the company is dissolved at Companies House.

Opting for liquidation ensures that an insolvent company is closed in an orderly way in full accordance with the Insolvency Act 1986. A formal liquidation process also significantly reduces the chances of the company later being restored to the Companies House register by creditors, something which can happen if a director is initially successful in striking off an insolvent business.

About the author

Shaun Barton is a partner at Company Closure and boasts a wealth of experience in helping directors of distressed companies understand their options. A director-facing adviser, Shaun is often the first point of contact for business owners in financial distress, consistently delivering expert advice when it is needed the most.

See also

Place an insolvency notice

A guide to creditors' voluntary liquidation (CVL)

Creditor duty: what directors need to know

Monthly UK insolvency statistics - September 2023

Find out more

Strike off your limited company from the Companies Register (GOV.UK)

Strike off a company from the register (DS01) (GOV.UK)

Insolvency Act 1986 (Legislation)

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Publication date

7 November 2023

Any opinion expressed in this article is that of the author and the author alone, and does not necessarily represent that of The Gazette.