Directors of limited companies frequently underestimate the personal risks of strike-off. Dissolution, whether voluntary or compulsory, does not provide the shield many assume.
Voluntary strike-off (DS01 Application)
Sections 1003–1011 of the Companies Act 2006 permit directors to apply for dissolution provided the company:
• Has not traded or changed its name in the last three months
• Is not subject to, or threatened with, insolvency proceedings
• Has no agreements with creditors (e.g., no CVA)
Form DS01 must be signed by a majority of directors. Copies must be sent within seven days to all members, creditors, employees, HMRC, DWP and pension trustees. Failure to notify is a criminal offence carrying a fine or up to seven years’ imprisonment.
The application is published in The Gazette, giving interested parties two months to object. It is important to remember that when published, the application will give notice to creditors that the company is proposing voluntary strike-off, and they are able to object to the strike-off if debts remain unpaid. The registrar of companies will rarely reject an objection where a genuine debt is outstanding and a company has proposed voluntary strike-off.
The creditor can continue to object to any strike-off action which prevents a logistical bar to the strike-off until the debt has been repaid.
Compulsory strike-off
Companies House may strike off a company that persistently fails to file accounts or confirmation statements or has no appointed directors. Two formal warnings are issued. If ignored, a First Gazette notice is published. Without intervention, the company is dissolved and its assets vest in the crown as bona vacantia.
Continuing liability of directors
Dissolution does not extinguish liability for wrongdoing. Section 1032(6) Companies Act 2006 states that the liability of every director “continues and may be enforced as if the company had not been dissolved”.
Directors therefore remain exposed to:
• Disqualification for up to 15 years (Company Directors Disqualification Act 1986)
• Personal liability for wrongful or fraudulent trading (ss.214 and 246ZB Insolvency Act 1986)
• Claims arising from personal guarantees or breach of fiduciary duty
• Criminal prosecution and unlimited fines in serious cases
Creditors may apply for administrative restoration (ss.1024–1028) or court-ordered restoration (ss.1029–1031) to pursue the company or its directors personally.
When is voluntary strike-off safe and appropriate?
Voluntary strike-off is safe and appropriate only for genuinely dormant companies with no liabilities or creditors. Attempting to use the process to defeat legitimate claims is likely to be regarded as misconduct and more often than not, will backfire.
Compulsory strike-off of a trading company almost always triggers investigation by the liquidator, reputational damage, and potential personal consequences for directors.
Directors considering strike-off, or facing compulsory action, should seek specialist legal advice without delay. Early, properly informed action can prevent disqualification, limit personal exposure and, where appropriate, preserve value for creditors.
Contact our expert solicitors today on 0161 696 6170 or fill in our online enquiry form.
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