Dissolving a company is never an easy decision to make, but it’s one that many directors take when a business has seemingly run its course. Dissolution is a voluntary process however, so that means the winding down process is much more amicable in comparison to an involuntary liquidation, for example.

It also means there could be a viable reason to want to restart a dissolved company again in the future. The brand, name, or image of the company could have retained a strong public reputation, there could be a resurgence in the market and more profits to be made, or it could simply be time for the directors to get back into business.

But the question is can a dissolved company start trading again? Yes, it can restart trading, but only in specific circumstances. Let’s take a look at how you can restart a dissolved company.

What Is a Dissolved Company?

A dissolved company is a former limited company that has been completely removed from the Companies House register. The process is commonly referred to as ‘striking off’. In effect, it means that the company ceases to exist and can no longer trade.

The dissolution process sees the company being wound down. Trading stops, assets are sold off or distributed amongst shareholders, and the name of the company is removed from the register.

Importantly though, dissolution is very different from other forms of winding down, namely, liquidation. Dissolution is a voluntary closure of a company, but it can only occur if there is no debt. Companies that have become insolvent and owe money to creditors cannot simply dissolve the company.

To be dissolved, a company must meet the following criteria:

  • Not be in debt, subject to creditor agreements, or be going through any insolvency process.
  • The company must not have changed its company name in the last three months.

If the company is insolvent or is facing creditor orders, then it’s not possible to just close down, dissolve, and forget about the creditors and paying off those debts.

Can a Dissolved Company Be Reinstated?

Yes, a dissolved company can be reinstated and their name can be placed back on the Companies House register. This means that a limited company that has been reinstated is then able to start trading again. They can hire employees, start selling products and advertising services, and start making money (and taking on debts) all over again.

Because a dissolved company closes without any debt, it could in the future become an attractive prospect to revive, especially if the company’s brand still has good standing in the marketplace.

Companies House allows dissolved businesses to be reinstated as limited companies, as long as certain criteria are met. The process is known as ‘Administrative Restoration’, and it can only be initiated by a former director of the company or by a former shareholder.

Furthermore, the company can only be reinstated if it was only dissolved within the last six years. Longer than six years and the process can’t be started. The company must also have been trading when it was dissolved.

How Long Does It Take to Reinstate a Company and Start Trading Again?

If the basic criteria for reinstating a limited company can be met, then it’s surprisingly simple to restart the company. The process can be achieved in a matter of days and costs £100.

The process requires specific documentation, however. You need to prove you were a director or shareholder, and you need to have completed the relevant application forms for Companies House to process.

It’s always worth seeking independent and impartial advice if you are unsure of the process. Submitting the wrong documents or insufficient evidence can delay the application and cause complications.

Once you’ve received confirmation from Companies House that you’ve been reinstated, then it’s down to you how long it takes to get back up and running again. As soon as you’ve been reinstated and have confirmation that the company is registered again, then you can restart trading.

What If the Company Doesn’t Meet the Criteria to Be Reinstated?

To be reinstated, a company must meet the specific criteria outlined by Companies House. However if the criteria can’t be met, it is possible to take other routes to reinstate a company and begin trading again.

If a company was dissolved more than six years ago or if it had been left dormant for a long period of time before being finally dissolved (and so wasn’t trading when dissolved), then it’s possible to have a court order issued that allows the company to be revived.

Of course, getting a court order is a much longer and more complicated process to go through. Rather than taking a few days, it can take months to get a court order issued. Former directors and former shareholders can start the process by applying with their local county court. It must be a court that deals with bankruptcy, however.

They must collect evidence that demonstrates their relationship to the company, and must provide a detailed witness statement that includes reasons why the court should reinstate the company again.

Interestingly, court orders can also be used by anyone else, other than directors and shareholders, who can prove a legitimate relationship with the former company. This means that former employees (who could be owed wages or have pension issues), or former creditors (who could be owed money) can use a court order to have a company reinstated.

Also Read: How Accountants Can Help Small Businesses

This is a process that’s at the discretion of the courts, but if they approve the company they can start trading again or be chased for debts that may have gone unnoticed.

Always Seek Professional Advice

Reinstating a dissolved company can be a great way to quickly get back into business, but it’s also not the only way. The company could still have ‘baggage’ or a negative image, or it could simply be a better business decision to start afresh, with a new image and new name.

There are lots of different options available, so it’s always wise to seek out impartial and professional advice from financial or business advisors before starting the process.

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