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Ways to liquidate a limited company

Source: Companies House | | 02/10/2018

There are a number of reasons why a limited company may be no longer required and can be shut down. This may be because the limited company structure:

  • no longer suits the needs of its owners,
  • the business is no longer active, or
  • the company is insolvent.

The agreement of all the company’s directors and shareholders to close down the company will be required.

The method for winding up or liquidating a limited company depends on whether it is solvent or insolvent. If the company is solvent, you can apply to get the company struck off the Register of Companies or start a members’ voluntary liquidation. The former method is usually the cheapest. You should also make sure that no business assets are left as any funds left in business bank accounts could revert to the Crown.

Where a company is insolvent, the creditors’ voluntary liquidation should be used. There are also special rules where the company has no director, for example if the sole director has passed away. A compulsory liquidation will be put in place where a company cannot pay its debts and an application is made to the courts to liquidate.



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