October 2007
Introduction
i What does " dissolution" mean?
The dissolution of a company ends its legal existence and its property then generally belongs to the Crown more unusually, depending on 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 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 "early dissolution"?
The Insolvency Act 1986, allows the official receiver to apply for a company’s dissolution at an early stage in its winding up. The procedure for doing so is known as "early dissolution".
This procedure saves time spent in administering those liquidations where there will not be a payment to creditors and there will be no disqualification or criminal proceedings.
The official receiver, when liquidator, may apply to the Registrar of Companies for the early dissolution of a company. This is done where the company has no assets, or the total value of any assets is insufficient to cover the costs of its winding up and the affairs of the company do not need any further investigation.
The time saved in unnecessary administration is achieved by condensing all the obligatory notices to creditors and contributories into one form, NED, LOIS (DO73) – ‘Dissolution – notice under s202(3) of proposed application for early dissolution’ In effect this combines the no meeting notice with the report to creditors and also acts as a ‘closing notice’ (official receiver’s intention to apply for release).
iii Notice of application for early dissolution
Before making an application, the official receiver must give creditors, contributories and any administrative receiver in office at least 28 working days notice of his/her intention to apply for the early dissolution of the company. The form used for this purpose is the NED, LOIS (DO73), detailed above.
Section 202(3) of the Insolvency Act 1986 does not require that notice be given to a Law of Property Act receiver who is still in office however, in practice notice should be given.
iv Administrative receiver or Law of Property Act (LPA) receiver in office
Generally, an application for early dissolution will not be appropriate where an administrative receiver or LPA receiver is still in office.
However, in a small minority of cases, the receiver may agree to the early dissolution of the company, but most likely he/she will require a company to remain on the Register until the receivership has been completed. This is because the dissolution of a company results in any assets becoming Crown property and the receiver would be unable to deal with them. Further, when a company is dissolved by the Registrar of Companies, its file is closed and the receiver will be unable to file any documents at Companies House.
Usually, where there is an administrative receiver or LPA receiver in office, the official receiver will request that the Secretary of State defer a company’s dissolution when applying for his/her release as liquidator in the normal way.
For further information on this procedure, please refer to the Case Help Manual part - Dissolution - Deferral of Dissolution
v Application for Release
After the 28 day notice has elapsed, and where no objection to early dissolution has been received, the official receiver should apply to the Secretary of State for his/her release as liquidator. Application is made on form RELASS, LOIS (DO73) – ‘Liquidator (Release) - official receiver’s application to the Secretary of State for release as liquidator’
By having sent form NED, LOIS (DO73) (notice of proposed application for early dissolution) previously, the official receiver is relieved of the obligation of sending notices to proved creditors reporting his/her intention to apply for release.
When release is granted, the ‘OR Release Team’ of the Estate Accounting Directorate (EAD) in Birmingham will notify both the court and Companies House of the company’s early dissolution and that the winding-up is complete.
vi Appeal against early dissolution
If, after receiving the notice of early dissolution, a creditor, a contributory, or a receiver objects to early dissolution, they may apply to the Secretary of State
(EAD) to override the application on the grounds that:
a. the realisable assets are sufficient to cover the expenses of the winding up
b. the affairs of the company require further investigation
c. for any other valid reason, the early dissolution of the company is inappropriate and therefore that the liquidation continues as if the application had not been made
Also, if the official receiver finds out something new about the company, he/she may ask EAD to stop the early dissolution procedure.
vii Objections to early dissolution
Any objections to the early dissolution application must be referred to the examiner without delay.
Upon receipt of a valid objection EAD, on behalf of the Secretary of State, will instruct the official receiver to proceed with the winding up as if no notice had been given of the intended application for early dissolution. In these circumstances, a report to creditors, etc. would need to be issued.
Note:
This part applies only to "early dissolution" cases. See also, Case Help Manual part - Dissolution - Deferral of Dissolution
Where can I find out more?
Insolvency Act 1986
Section 202 – Early dissolution (England and Wales)
Section 203 – Consequence of notice under s202
Insolvency Rules 1986
Rules 4.224 and 4.225 – Dissolution after winding up
Companies Act 1985
Chapter V1 Sections 651 to 658 - Matters arising subsequent to winding up
Technical Manual
Chapter 37.4 – Early Dissolution
Chapter 38.16 to 38.21- Dissolved companies – Early Dissolution
Chapter 69 – Law of Property Act Receivers
Case Help Manual
Dissolution - Deferral of Dissolution
Forms to be used
NED, LOIS (DO73) - Notice under s202(3) of proposed application for early dissolution
RELASS, LOIS (DO73) – Official receiver’s application to Secretary of State for release as liquidator
NOTCH, LOIS (DO73) – Official receiver’s application to The Registrar of Companies for early dissolution of company under s202(2)
Click HERE to view the Flowchart of the Early Dissolution Procedure
Procedure
1 Receive instruction to apply for early dissolution.
2 Prepare form NED, LOIS (DO73) - notice under s202(3) of proposed application for early dissolution.
(When producing form NED in LOIS document production you will be prompted to add to the text the values of the company’s assets and liabilities).
3 Send a copy of form NED to each creditor, contributory and (if any), to the administrative receiver and any LPA receiver in office, allowing enough time for them to have at least 28 working days notice.
4 Where any objections are received by telephone or in writing they must be passed immediately to the examiner. It is imperative that such matters are dealt with urgently so that, if the objection is valid, the application for early dissolution may be stopped.
5 After 28 days have elapsed without any objection being received an application for release can be made.
In early dissolution cases when the official receiver is applying for release, it is not necessary to send creditors a separate ‘closing notice’.
6 Prepare 2 copies of form RELASS, LOIS (DO73) – Official receiver’s application to the Secretary of State for release.
(When producing form RELASS in LOIS document production you will be prompted to add to the text the value of any ledger debit balance to be written off. You will also need to delete the paragraph requesting deferral of the company’s dissolution).
7 Ensure that all fees, costs and charges have been appropriately charged. Attach the LOLA ledger sheet (glr-41) to form RELASS (1 copy) together with a copy of form NED, both from LOIS (DO73).
8 Before sending to EAD in Birmingham, refer to the application for release (AFR) checklist and only where there are any exceptions, (in most cases there should not be), complete and attach the checklist to the application for release documents.
9 Request the cashier to apply for write off of the debit balance on LOLA (glm-81), if appropriate, and record the AFR date on LOIS (CA26).
10 The signed spare copy (or a photocopy) of form RELASS will be placed on the office file.
11 When release is granted, the OR Release Team of EAD will prepare form NOTCH, LOIS (DO73) - OR’s application to Registrar of Companies for early dissolution of a company under Section 202(2) of the Insolvency Act 1986, and will forward this to the Registrar of Companies, Crown Way, Maindy, Cardiff CF14 3UZ.
12 EAD will also forward a certificate of the official receiver’s release to the appropriate court but the official receiver will not receive a copy. The date of release will be automatically recorded on LOIS by LOLA following write off of any debit balance.