PricewaterhouseCoopers recently revealed that the UK's 100 largest companies are spending over £30m a year on the administration costs of dormant subsidiaries.  There has however been a relatively straightforward procedure for a private company which is not trading to apply to be struck off the Register since the introduction of section 652A of the Companies Act in 1995. 

A company can apply using a Form 652a to be struck off if, in the preceding three months, it has not:

  1. traded or otherwise carried on a business;
  2. changed its name;
  3. disposed of property or rights for fair value that it held for the purpose of disposal or gain in the normal course of its business or trade; or
  4. engaged in any other activity except one necessary or expedient for making the striking off application, settling the company's affairs or meeting a statutory requirement.  A company can however have settled business debts in the preceding three months.

A company cannot apply if it is subject to any insolvency proceedings or a section 425 scheme of arrangement. 

The striking off is not a means of escape from creditors, for even if a company is struck off and dissolved, creditors and others could apply for it to be restored to the register.  Furthermore, any liability of the directors, managing officers and members continues regardless. 

The Form 652a itself must be accompanied by a £10 fee and must be signed by the sole director, both directors where there are two, or the majority where there are more than two. 

Within seven days of filing the form, copies must be sent to:

  • members;
  • any creditors;
  • employees;
  • managers or employees of any employee pension fund;
  • any directors who have not signed the form; and
  • the VAT office (VAT registered companies only)

The application may be objected to by any interested party.  Relevant objections include:

  • if the company has traded, changed its name or become subject to insolvency proceedings during or after the three months preceding the application;
  • interested parties have not been informed;
  • anything outlined in the Form is false;
  • some form of action is being taken, or is pending, to recover any money owed;
  • legal action such as a winding-up petition, a small claims court action or any other legal action is being taken against the company;
  • the directors have committed tax fraud or any other offence or wrongfully traded.

Following the application, the Registrar will advertise and invite objections to striking-off in the Gazette.  The Registrar will strike the company off within three months of this advertisement if he has no reason to do otherwise (e.g. receive an objection from a creditor or other interested party) and the application has not been withdrawn.  The company will be formally dissolved upon the Registrar's publication of a notice to that effect in the Gazette.

Although there are no suggestions of impropriety, it may be that the number of companies comprised within a group creates transparency issues as well as excessive administrative costs.

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