A Comparison of Closing a Company in the UK and France
The procedures for closing a company in the UK and in France, while similar, do have some differences. This is due to the variations in national legislation and bureaucracy.
Both countries have two types of company dissolution; one that is voluntary – in the UK this is Voluntary Dissolution, and in France it is Transmission Universelle De Patrimone (TUP) – and one that is enforced. Compulsory Liquidation is the enforced form of closure in both countries.
In the UK the Companies Act states that a company may be voluntarily dissolved and taken off the Companies Register if it is dormant or not fulfilling its purpose. For this process to run smoothly, the company must not have any assets or have ceased trading for at least three months, and permission from creditors must also be obtained. Voluntary Dissolution is a much preferred option for closure as it is a quick and simple process with few expenses and no formal investigation requirements. The major problem that may prevent the company closure is if the creditors do not grant approval for the dissolution. Other methods of closure will need to be pursued if this occurs.
In France the fastest and most efficient way of closing your company in France is to use Transmission Universelle De Patrimone (TUP). It involves merging the closing company into an existing company or legal entity and is significantly cheaper than Compulsory Liquidation. The TUP method was implemented into French company Law in 2001 by the NRE and so avoids much of the strict traditional regulations. TUP also only requires the minimum of formalities which avoids a formal investigation into the company and its directors. It is possible to close the company whether it is trading or dormant with TUP. Using TUP is a quick and clean dissolution process that also provides the merger with new taxation benefits. A chartered accountant must conduct the dissolution of your company and merge into the existing one.
If voluntary closure of your company is not possible for whatever reason, Compulsory Liquidation occurs. This is the last resort when closing a company and may be required if the company is deep in debt, if the company has not begun trading within a year of registration, or if it is felt to be in the public’s best interests. As it is enforced, compulsory liquidation is an expensive and lengthy process involving the high court. In the UK the closing company must pay any outstanding tax to HMRC and pay any additional debts once the creditors have started the petition for closure. In France Compulsory Liquidation includes the submission of certified copies of the decision for dissolution to the commercial court, notification to the commercial register and tax authorities of new status, submission of final accounts, and publication of a closure notice in a national French newspaper.
Compulsory liquidation is disadvantageous for every party involved as it is a much longer and more expensive process, and there are many more chances for you to incur criminal or damages charges.