Closing a limited company can be necessary for various reasons, such as a change in business needs, inactivity, or insolvency. The process typically requires the consent of all directors and shareholders.
The method for closing a company depends on its financial status. For solvent companies, you can either apply for a strike-off or initiate a members’ voluntary liquidation. The former is generally more cost-effective.
Directors are responsible for ensuring all assets and liabilities are settled before dissolution. Any remaining assets or rights become property of the Crown.
Insolvent companies must undergo a creditors’ voluntary liquidation. Special rules apply if there are no directors, such as in the case of a deceased sole director.
A company can also choose to become dormant, which allows it to remain inactive indefinitely but incurs costs. This might be suitable for restructuring or preserving a company name, brand, or trademark. Restarting a dormant company is usually less expensive than forming a new one.