There are several important aspects to consider if you liquidate your limited company. See how liquidation works, be it compulsory or voluntary, and the role of a director and a liquidator.
WINDING UP A LIMITED COMPANY: There are specific procedures to follow if you choose to liquidate a company 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.
Note: In some cases, creditors can force a limited company unable to pay its debts into liquidation.
A company director can make a proposal to stop trading and get liquidated. In this case the company would get 'wound up' if either:
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:
Note: When you liquidate a business yourself, the role and responsibilities of a company director change after appointing a liquidator.
The role of the liquidator is acting as an authorised insolvency practitioner. A liquidator is the official receiver who conducts the 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:
Note: A liquidator will act for the interest of the creditors in a creditors' voluntary liquidation - not the directors.
Apply to the Court: How a company director can ask the court for a compulsory liquidation order.
Directors after Liquidation: Find out what happens to directors when a liquidator is appointed.
Shareholders' Voluntary Liquidation: MVL is a members' agreement to liquidate a solvent company.
How to Liquidate a Company Yourself in the United Kingdom