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Dissolving a Company or Directors

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Question – I am a director and shareholder of a company and am considering dissolving it and starting again but am not sure whether this is the right thing for me to do especially as I do still want to run my own company!  I am worried that this company being dissolution with impact my becoming a director again with another company.  Is this a problem or am I worrying about nothing?

Answer – I like this question because my advice here is all positive for you.  Firstly, don’t beat yourself up too much for thinking you have to dissolve your company.  Plenty of entrepreneurs have done the same (more than once in some cases!) before they had that lightbulb moment with an idea that went on to make the millions!  If you don’t try how will you know, as they say, so don’t be disheartened and stick at it is my advice.

Anyway, in order to answer this question, I should firstly at why directors choose to dissolve their companies.  There are a number of reasons why companies choose to dissolve and most revolve around numbers, whether that be (a) cash flow problems, which will large, medium or small at some point affect your business.  There are quite factoring companies out there, these days, and they do help with this kind of situation however if this is happening on a regular basis that may be an indication that your business model is not sustainable long term; (b) accounting issues in general, simply not manage the money correctly and is a big issue.  I think the majority of financial directors out there will have, at some time, underestimated the tax or something similar and have scrambled about shoving their hands down the sofa trying that last £10,000 to satisfy the HMRC.  In addition to these partners, disagreements are also something that sometimes means a company has no option other than to dissolve.  Two partners at loggerheads invariable no directors/shareholders agreements containing dispute provisions so as to deal with the disagreement and neither party are willing to accept that they should leave the company and allow the other to push on with their ideas.

In short what I am saying is, that sometimes mistakes are made, for example not asking Shergroup Legal to draft your director’s service/shareholders agreement which would have dealt with the dispute between the partners so that the company could go on, but it is a learning process and providing you learn from it sometimes these little blips are necessary.

Finally, what’s even better news is that not only do I think that these little errors can happen and you should be forgiven…more importantly the Government agree and allow you to have another crack at it!  Yes, you can be a director again so if you do decide to dissolve, pick yourself up, brush yourself down and see if your next idea is the big one!  Good luck

Content Writer​

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Last updated | 19 July 2023

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