November 2007
Introduction
i what does “dissolution” mean?
The dissolution of a company ends its legal existence and its property then belongs to the Crown, more unusually, depending on the location of the company’s registered office, it may belong to the Duchies of Cornwall or Lancaster. The dissolution of a company will take place automatically three months after the Registrar of Companies (the Registrar) has received either:
a. a notice from the official receiver that the winding up of the company is
complete or
b. a notice from the insolvency practitioner liquidator that he/she has
held a final meeting of creditors
A company may also be dissolved following striking off the Register of Companies (the Register), where the Registrar has reason to believe that it is not trading or operating.
A court order is necessary to bring the company back into existence by declaring the dissolution void or restoring it to the Register.
ii what is "deferral of dissolution"?
A company should not be dissolved if there are certain matters still to be dealt with. e.g. if there were to be legal proceedings against the company these would be seriously hindered if the company no longer existed. In the following situations the dissolution of the company would have to be deferred:
a. there is an administrative or Law of Property Act (LPA) receiver in office
b. there is a pension scheme which has not been finalised.
c. the company is or will be the subject of prosecution or disqualification
proceedings.
iii what is an administrative receiver?
An administrative receiver is an insolvency practitioner who has been appointed by a debenture holder. A "debenture holder" is a special type of creditor of the company who holds a charge over its assets and as such, has the power to appoint an administrative receiver.
An administrative receiver is appointed to realise (sell) the company’s assets and pay the preferential creditors and the debenture holder’s debt
An LPA receiver is appointed under the provisions of the Law of Property Act 1925 to sell land or property on behalf of a chargeholder. In such circumstances, the chargeholder will often be a bank. The official receiver must check that the charge is valid, that it has been registered properly and that the chargeholder has a right to sell the property. If so, the LPA receiver will retain his right to sell the property regardless of the winding-up order.
v official receiver’s application for release
When Estate Accounting Directorate (EAD) in Birmingham, issues a certificate of release as liquidator to the official receiver, it also sends notice to the Registrar that the winding up is complete on form NOTCH, LOIS (DO73) – ‘official receiver’s notice to Registrar of Companies of completion of winding-up’ and the Registrar will then proceed to dissolve the company.
But, if a company has an administrative receiver, LPA receiver or company pension scheme administrator in office, the official receiver must take steps to ensure that the dissolution is "deferred".
The official receiver’s application for release need not be delayed - unless there is some prospect of surplus money from the administrative receiver becoming available for distribution, after the debenture holder has been paid. The official receiver can still apply for release but at the same time will apply to have the dissolution of the company deferred to allow the administrative receiver, LPA receiver or company pension scheme administrator enough time to complete his/her duties.
vi notice to administrative receiver, LPA receiver or company pension scheme administrator
In the first instance the official receiver should, before applying for release, write to any administrative receiver, LPA receiver or company pension scheme administrator who may still be in office on form RELADR, LOIS (DO73) – ‘a notice sent to an administrative receiver, LPA receiver or company pension scheme administrator’
This notice states that the official receiver intends to apply for release as liquidator and will apply to the Secretary of State for deferral of the dissolution of the company for two years from the date of his application for release.
The official receiver will apply for dissolution to be deferred as part of the application for release, and the recipient is advised that should a further period of deferral of dissolution be required, it is their responsibility to make such an application to the Secretary of State (EAD) before the period expires.
It is important that care is taken over the completion of form RELADR to ensure that books and papers are not destroyed in error.
A copy of form RELADR, LOIS (DO73) should be sent with the application for release to EAD in Birmingham.
vii prosecution or disqualification proceedings
Where there is an outstanding prosecution or disqualification the dissolution should be deferred for six years.
Where the dissolution is to be deferred, EAD Birmingham will notify the relevant court and the Registrar of Companies that the Secretary of State directs that the dissolution of the company is to be deferred, and giving the date on which dissolution may commence, (unless a further direction is issued). The official receiver will also receive a copy of the ‘directions notice’ from EAD, for filing on the office file.
ix destruction of books and papers
When applying for deferral of dissolution at the same time as applying for the official receiver’s release, care should be taken over any instruction to destroy books and papers to ensure that none are destroyed in error.
Notes:
Where can I find out more?
Insolvency Act 1986 Section 205(3) – Deferral by Secretary of State
Insolvency Rules 4.224 and 4.225 – Dissolution after winding up
Companies Act 1985
Chapter V1 Sections 651 to 658 – Matters subsequent to winding up
Technical Manual:
Chapter 37.8 to 37.10 – Release - Deferral of Dissolution
Chapter 38 – Dissolved Companies – Deferred Dissolution
Chapter 69 – Law of Property Act Receivers
Case Help Manual:
Forms to be used
DSNDIR, LOIS (DO73) – ‘OR’s application to Secretary of State for directions under s203/205’
NOTCH, LOIS (DO73) – ‘Notices to Companies House’
RELADR, LOIS (DO73) – ‘Liquidator (Release) – official receiver’s notice to administrative receiver, LPA receiver or company pension scheme administrator’
RELASS, LOIS (DO73) – ‘Liquidator (Release) – official receiver’s application to Secretary of State for release’
RELSSN, LOIS (DO73) – Liquidator (Release) – Secretary of State’s notice to court of official receiver’s release as liquidator’
Click HERE to view the Flowchart for Deferral of Dissolution
Procedure
1. Receive instruction to apply for deferral of dissolution.
2. If deferral of dissolution is due to disqualification or prosecution purposes, go straight to step 4.
3. Prepare form RELADR, LOIS (DO73), and send to any administrative receiver, LPA receiver or administrator of a company pension scheme if one or more is still in office.
The final paragraph of form RELADR relating to ‘books, papers or other records’ should be amended or deleted as appropriate.
4. Proceed with the official receiver’s application for release whether or not an application for deferral is to be included. See separate procedural instructions in Case Help Manual part – Closing a Case
(When producing form RELASS, LOIS (DO73), one of the two paragraphs in the ‘Deferral of Dissolution’ section should be deleted. If deferral is being applied for, the prompts for ‘free text’ information of why deferral is recommended, and for what period, should be fully completed. If the application for deferral is because an administrative receiver, LPA receiver or company pension scheme administrator is in office, deferral should be requested for a period of two years. If prosecution or disqualification proceedings are outstanding, a period of six years deferral should be applied for. You will also be prompted to add to the text the value of any ledger debit balance to be written off).
5. Prepare form DSNDIR, LOIS (DO73), ‘OR’s application to Secretary of State for directions under s203/s205’
In document production you will be prompted and should select the option ‘under section 205’. You will then be prompted to add the date of form NOTCH, this can be ignored. Reference to form NOTCH, LOIS (DO73) should not be made as this part of the procedure will be completed by EAD in Birmingham, by use of a ‘directions’ letter in place of form NOTCH. You must then add free text to the final paragraph detailing the grounds for the application for deferral of dissolution.
Before printing form DSNDIR, LOIS (DO73) be sure to delete entirely the second paragraph that refers to the form NOTCH.
6. Attach together forms RELADR, RELASS and DSNDIR, all prepared in LOIS (DO73 and pass all papers on for authorised signature in line with local office procedures.
7. Send the signed forms and relevant enclosures to EAD in Birmingham. For details of enclosures refer to Case Help Manual part – Closing a Case
8. Enter application for release and deferral of dissolution details on LOIS (CA26).
9. When release is granted, EAD will send a copy of the certificate of release, form RELSSN, LOIS (DO73) to the local court, and the NOTCH form is sent to Companies House.
10. Enter details of the dates of release and dissolution on LOIS (CA26).