The dissolution of a company is a significant legal and financial step that formally ends its existence. However, in the rush to close operations – whether due to insolvency proceedings (such as liquidation), closure of the underlying business or strategic restructuring – many directors and shareholders overlook a critical process: thoroughly assessing and accounting for all of the company’s assets. The consequences of failing to do so can be more severe and complicated than many anticipate. 

What is “Dissolution”?

Broadly, “Dissolution” refers to the formal removal of a company from the register at Companies House, effectively ceasing its legal existence. There are a number of routes which might lead to a company being dissolved, although this is often done voluntarily under section 1003 of the Companies Act 2006, especially where the company has no remaining debts or is ceasing to undertake any further business operations. Once dissolved, the company no longer exists as a legal entity, and any remaining assets become “bona vacantia” – ownerless property that passes to the Crown.

Overlooked assets

In the run up to dissolution, the directors should ensure all assets have been liquidated, transferred or accounted for and should make enquiries in respect of such assets before the dissolution takes place.

Despite this, several types of assets are frequently missed, such as:

  • Dormant or forgotten bank accounts containing cash.
  • Intellectual property (e.g., trademarks, domain names).
  • Property or land registered under the company’s name.
  • Outstanding tax refunds or credits.
  • Legal claims or potential litigation rights.
  • Unclaimed customer debts or receivables.

When a company is dissolved while still holding assets, those assets no longer belong to the company or its shareholders, and instead they vest in the Crown. Recovering the assets typically requires the company to be restored to the register, which can be complex and time consuming. Please refer to our Guide to Company Restorations for further information on the process and types of restoration available.

Best practices to avoid a formal restoration process

To prevent the need for a formal restoration process and the complications it brings, directors and/or shareholders should:

  • Conduct a full asset audit and searches (for example on trademark registers and HM Land Registry) before initiating dissolution.
  • Consult with legal and financial advisors to assess potential claims or receivables.
  • Ensure all financial accounts, tax returns, and statutory filings are up to date and check with your bankers.
  • Consider using a formal liquidation process and the potential appointment of an insolvency practitioner to manage the closure of the business and dissolution of the company.

Dissolving a company should never be treated as a simple form-filling exercise. Failing to check all assets can lead to significant consequences. For directors, thorough due diligence before dissolution is essential, not only to comply with legal obligations, but also to safeguard the value and integrity of the business and its stakeholders.

If you would like to discuss how BHW might be able to help, please contact our corporate team on 0116 289 7000 or email info@bhwsolicitors.com.


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