The company strike off process is being shortened by four weeks, meaning now might be the time for directors to dissolve any companies in their group that no longer serve a useful purpose.
From 10 October 2015, the time period that applies to the company strike off process will be reduced from three months to just two months. The reduction in the time period comes as a result of the implementation of the so-called “accelerated strike off” provisions published in the Small Business, Enterprise and Employment Act 2015.
The shortening of the process provides an opportunity for directors who want to remove dormant or redundant shell and subsidiary companies using the voluntary strike off procedure in the Companies Act 2006.
Those directors who may want to take advantage of the change in the rules could include those in control of a group which has transferred the assets of a company elsewhere in their group after an acquisition leaving the acquired company as a redundant shell.
Directors of firms with unwanted subsidiary companies, or those who set up companies with the aim of exploiting a single idea or goal that proved not to be feasible or where the business opportunity has passed, might also be interested in seeing how they could apply for voluntary strike off.
However, directors looking to apply for voluntary strike off must first complete certain formalities and meet specific obligations. For example, the application must be made on the company’s behalf by its directors, or at least a majority of them, while copies of the application must be given to any shareholders, creditors and employees of the company subject to strike off.
Directors must also be aware that ongoing business, such as a recent company name change or if the company is being wound up, will prevent strike off.