WINDING UP A LIMITED COMPANY: There are specific procedures to follow if you choose to liquidate a business yourself.
Liquidated companies get removed, also called ‘struck off‘, from the register at Companies House.
From then on, the company stops trading as a business and no longer employs people.
In simple terms, the business would then cease to exist. As a rule, the business assets get sold to pay off any debts when you are liquidating a limited company.
If there is any money left, it would go to the shareholders. But, you cannot access the company bank account without a validation order.
Shareholders must share the money before the company gets struck off the register. Otherwise, it those funds would go to the state. You would need to restore a dissolved company to claim back that money after it got removed.
Types of Ltd Company Liquidation Process
- Creditors’ Voluntary Liquidation: CVL means the company is unable to pay its debts. It also means the creditors get involved if you liquidate your limited company (see below).
- Compulsory Liquidation: This also means the company cannot pay its debts. But, in this case you would apply to the courts to get it liquidated.
- Members’ Voluntary Liquidation: MVL means the company is solvent and can pay its debts. Even so, for some other reason you have decided to close the company.
Note: In some cases, creditors can force a limited company unable to pay its debts into liquidation.
Arranging Liquidation of a Company with Creditors
A company director can make a proposal to stop trading and get liquidated. In this case the company would get ‘wound up‘ if either:
- Enough of the shareholders agree to limited company liquidation.
- The limited company is insolvent and unable to pay its debts.
Getting the Shareholders’ Agreement
You must get an agreement from the majority of the shareholders to wind up a company. That means calling a meeting of all the shareholders and asking them to cast a vote.
By value of shares, 75% of the shareholders must agree to the winding-up process. This is the only way to pass a company ‘winding-up resolution‘. Following a successful resolution, there are 3 important steps to follow:
- You must appoint an authorised insolvency practitioner to act as a liquidator. They will take charge and finish the process for liquidating a company.
- Send the results of the winding-up resolution to Companies House within 15 days.
- Advertise the company resolution in The Gazette Official Public Record within 14 days.
Note: When you liquidate a business yourself, the role and responsibilities of a company director change after appointing a liquidator.
ALSO IN THIS SECTION
Applying to the Court
Check how a director can apply directly to the court to get a compulsory liquidation order. Winding up a company means it gets liquidated (wound up) because the business ceased trading.
Directors after Liquidation
The page explains what happens to directors after their company gets liquidated. Extra details clarify how to gain access to a company bank account after it gets frozen.
Shareholders Voluntary Liquidation
There are several reasons for not wanting to run a company any longer – even if it is solvent. The section explains the process of members’ voluntary liquidation (MVL) of a company.
What does a Liquidator do?
The role of the liquidator is acting as an authorised insolvency practitioner. So, a liquidator is the official receiver who conducts the limited company liquidation process.
Once liquidators get appointed they take over the control of the business. That means when you are closing down a limited company the official receiver will:
- Settle any outstanding contracts or legal disputes involving the business.
- Keep the relevant authorities informed and meet any administration deadlines for paperwork.
- Try to sell any company assets of value and use the money to pay off its creditors.
- Keep creditors updated and informed involving them in decisions where relevant or necessary.
- Pay off the final VAT bill and the costs of putting a company into liquidation.
- Conduct an interview with the company directors. Their role includes making a report explaining why the business got wound up.
- Ensure the company gets removed from the companies register.
Note: A liquidator will act for the interest of the creditors in a creditors’ voluntary liquidation – not the directors.