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Alex J.
Alex J., Solicitor
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I am writing an article about a company who has been dissolved

Customer Question

I am writing an article about a company who has been dissolved due to non-compliance. Please can you read the following draft (section) and confirm whether or not what I have written is accurate and correct:


Section 216 of the Insolvency Act 1986 (‘Restriction on re-use of company names’), applies where a company has gone into insolvent liquidation, and prohibits the use of the name of (or so similar a name as to suggest association with), the liquidated company by the former directors for a period of 5 years post-liquidation; and to act in contravention of this section individuals may be liable to imprisonment, a fine, or both.

However, in instances where a company has become inactive and waited to be struck-off the register and dissolved this s.216 is not applicable as, essentially, there was no liquidation.

Furthermore, while Section 217 (‘Personal liability for debts, following contravention of s. 216’), and Section 212 (‘Summary remedy against delinquent directors, liquidators, etc.’), make provision for company directors be become personally liable for the company’s debts and other liabilities, again, neither are enforceable should the company be struck-off due to non-compliance.

Section 1003 of the Companies Act 2006 (‘Striking off on application by company’), relates to the voluntary application by a company to be struck-off the register, and the continuing liability of every director which “may be enforced as if the company has not been dissolved”, while Section 1006 (‘Copy of application to be given to members, employees, etc.’), is applicable when a company director applies for voluntary striking-off and is liable for imprisonment for up to 7 years if they do not inform their creditors of the application. However, again, neither are applicable if the company is dissolved by the registrar.

For the layman, this essentially means:
• A company can become in-active by not meeting filing requirements with Companies House etc.
• The registrar, having reasonable cause to believe that the company is not carrying on business, has the authority to strike said company from the register after a period of 3 months after placing a public notice in the Gazette.
• After this 3 month period the company will be automatically dissolved (should none come forward to object), and the directors will be absolved of any risks of imprisonment, fines, or personal liability for the company’s debts which would have applied should they have been liquidated.

By not applying to be voluntary struck-off the register, or being liquidated, the directors are also not legally obliged to inform their creditors of the approaching dissolution – the practical consequence of which being that vulnerable individuals owed monies by the company are unlikely to be able to take advantage of the 3 month window to show cause why it should not be struck-off, and thus are prohibited from attempting to recoup what is due to them, or pursue any legal proceedings against the company.

Moreover, the former company directors are free to continue trading by setting-up a new business under the dissolved company’s name without being in contravention the aforementioned s.216 and s.217.



- Many thanks.
Submitted: 2 years ago.
Category: Law
Expert:  Nicola-mod replied 2 years ago.
Hello,

I've been working hard to find a Professional to assist you with your question, but sometimes finding the right Professional can take a little longer than expected.

I wonder whether you're ok with continuing to wait for an answer. If you are, please let me know and I will continue my search. If not, feel free to let me know and I will cancel this question for you.

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Nicola
Customer: replied 2 years ago.

I'll wait thanks.

Expert:  Nicola-mod replied 2 years ago.
Hello,

We will continue to look for a Professional to assist you.

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Nicola
Customer: replied 2 years ago.
Thanks
Expert:  Nicola-mod replied 2 years ago.
Hello,

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Thank you for your patience,
Nicola
Customer: replied 2 years ago.

Yes, please continue.

Expert:  Nicola-mod replied 2 years ago.
Hello,

We will continue to look for a Professional to assist you.

Thank you for your patience,
Nicola
Expert:  Alex J. replied 2 years ago.
Hi,

Thank you for your question and welcome.

My name is AJ and I will assist you.

In order to pursue a claim under S.216 whether the company has been dissolved the creditor would have to apply to court to restore the company and then put it into insolvent liquidation. This is assuming they have missed the 3 month deadline to object to the striking off. There is an administrative application for doing this http://www.companieshouse.gov.uk/about/miscellaneous/administrativeRestoration.shtml

How long ago was the company struck off?

Kind regards

AJ

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