Part XIX of the Companies Act 1997 deals with the end of a company’s legal existence.
Section 365 — the moment of removal
A company is removed from the register when a notice signed by the Registrar stating that the company is removed from the register is registered.
A liquidation is completed under section 299 when the liquidator files the final report. The company still exists at that point. It ceases to exist only when the section 365 notice is registered.
Nor is liquidation a precondition. Grounds (b), (d), (f) and (g) below remove companies that have never been in liquidation at all — which is why section 373 is needed to deal with any property left behind.
Section 366(1) — the grounds for removal
(a) the company is an amalgamating company, other than the amalgamated company, on the day the Registrar issues the certificate of amalgamation under section 237;
(b) the Registrar is satisfied that (i) the company has ceased to carry on business, and (ii) there is no other reason for the company to continue in existence;
(c) the company has been put into liquidation and (i) no liquidator is acting, or (ii) the final report documents under section 307(1)(a) have not been submitted within six months after the liquidation is completed;
(d) a request in the prescribed form is submitted by (i) a shareholder authorised by a special resolution of shareholders entitled to vote and voting, or (ii) a director authorised by the board, or any other person, where the constitution so requires or permits — on a ground in subsection (2);
(e) a liquidator submits the section 307(1)(a) documents;
(f) the company’s annual return is at least six months late;
(g) the company has failed to submit any document required under this Act within 18 months of the time required.
| Ground | Who drives it | Notice required |
|---|---|---|
| (a) amalgamation | Automatic on the certificate | None — the amalgamation notices were given under section 234 |
| (b) ceased to carry on business | The Registrar | Section 367 — notice to the company, to chargeholders, and public notice |
| (c) stalled or unfinished liquidation | The Registrar | Section 368 — National Gazette, plus notice to the company and chargeholders |
| (d) the company’s own request | A shareholder or director | Section 368 — public notice by the applicant, plus notice to the company and chargeholders |
| (e) completed liquidation | The liquidator | Section 368 — public notice by the liquidator |
| (f) annual return six months late | The Registrar | Section 368 |
| (g) any document 18 months overdue | The Registrar | Section 368 |
Section 366(2) and (3) — removal on request
(a) that the company has ceased to carry on business, has discharged in full its liabilities to all its known creditors, and has distributed its surplus assets in accordance with its constitution and this Act; or
(b) that the company has no surplus assets after paying its debts in full or in part, and no creditor has applied to the Court under section 291 for an order putting the company into liquidation.
A request under paragraph (d) shall, unless the Registrar agrees otherwise, be accompanied by a written notice from the Commissioner-General of Internal Revenue stating that the Commissioner has no objection to the removal.
This is the practical gate on voluntary removal. A company with outstanding returns or assessments will not obtain the notice, and removal is not a way to escape a tax liability.
Ground (2)(a) is the tidy case: a solvent company that has paid everyone and distributed the balance. Removal is far cheaper than appointing a liquidator.
Ground (2)(b) is the abandoned shell: no surplus assets after paying debts in full or in part, and no creditor has moved for a liquidation. Note what it does not do — it does not compromise the unpaid debts, and any creditor may still apply under section 291 or, after removal, apply to restore the company and then liquidate it so that a liquidator can investigate voidable transactions and insolvent trading.
Sections 366(4) and (5) — the preconditions
(4) The Registrar may remove a company under paragraph (b) only where (a) the Registrar has complied with section 367, and (b) the company has not satisfied the Registrar that it is carrying on business or that reason exists for it to continue in existence.
(5) The Registrar may remove a company under paragraph (c), (d), (e), (f) or (g) only where notice has been given in accordance with section 368.
So every ground except amalgamation requires a formal notice procedure and a period in which the company or an objector may respond. Those procedures — and the objection rights in sections 369 to 371 — are dealt with separately.
Practical points
- Keep the annual return current. Ground (f) needs only six months of delay, and removal extinguishes the company.
- Watch ground (g). Any document required under the Act — a change of directors, a change of registered office, financial statements — unfiled for 18 months is a ground.
- For a solvent wind-down, pay creditors, distribute the surplus, obtain the tax clearance, and use the section 366(1)(d) request rather than a liquidation.
- For a creditor, watch the public notices. Once a company is removed, recovering anything requires restoration.
- For a chargeholder, note that sections 367 and 368 require notice to every person entitled to a charge registered under Part XIII — another reason to keep charge registrations accurate.
Sources
- Companies Act 1997 — ss 234, 237, 291, 299, 307, 365–371, 373; Part XIII
Before relying on anything here, read the current text of the Companies Act 1997 and check for later amendments. If a decision matters to you, get advice — start with the Office of the Public Solicitor, or find a firm in the law firms directory.