Winding up a limited company – how to dissolve and delete it
The general meeting resolves to dissolve, the resolution is notified to the Register of Business Enterprises, and creditors get six weeks from the announcement to lodge claims. Assets and debts are then settled, the tax positions resolved and an advance assessment requested before the company is deleted. A liquidation distribution can only happen once the creditor period has run – even in a debt-free company.
1. The general meeting resolves to dissolve
A voluntary winding up starts with a resolution of the general meeting under chapter 16 of the Companies Act. It requires the same majority as an amendment to the articles – normally at least two thirds of the votes cast and of the share capital represented. The board normally continues as the liquidation board unless the general meeting decides otherwise.
2. Notify the dissolution to the register
The resolution is notified to the Register of Business Enterprises, which announces it. The announcement is the practical starting gun for the deadline in the next step – not the general meeting itself.
3. Creditors get six weeks from the announcement
Section 16-4 requires creditors to be warned in the announcement that they have to lodge their claims with the chair of the board within six weeks of the announcement. The chair's name and address have to appear. All creditors with a known address should also be notified individually by the company as far as possible. Note the starting point: six weeks from the announcement, not from the resolution. That is also why a winding up takes time even in a company with no debt.
4. The liquidation balance sheet
The board has to prepare a liquidation balance sheet. Where the company has registered a valid resolution to dispense with an audit under section 7-6, the audit requirement does not apply to it. Where the company is subject to audit, it does. That is worth checking before planning the timetable – see Statutory audit
5. Assets and debts have to be settled
The assets are sold or distributed, and the debts covered. Assets that are sold follow the ordinary rules for that asset. Where assets are instead taken out by the shareholder, the withdrawal has to be valued and treated correctly for both tax and VAT. The VAT side is a job in itself: the final VAT return, the sale or withdrawal of stock and fixed assets, and capital items with a remaining adjustment period. All of that is in VAT on winding up and bankruptcy
6. Do not forget the employees
Where the business is to cease, the Working Environment Act's rules on dismissal, notice periods and any consultation apply. Salary, holiday pay, the final settlement and the last a-melding have to be handled, and the employment relationships closed correctly in the reporting – see A monthly checklist for the payroll run Accrued holiday pay has to be paid in the final settlement – see Holiday pay
7. The tax positions have to be settled
On dissolution the tax positions have to be resolved: the gain and loss account, negative balances, carried-forward losses and other positions cannot simply disappear with the company. Where the company has an uncovered loss at dissolution, section 14-7 of the Taxation Act allows it to be carried back against income in the year before the year of dissolution. That is one of the few times a loss can be used backwards, and it is easily missed. The balances and positions involved are explained in Depreciation and The tax return for businesses
8. Request an advance assessment before deletion
Before the company is deleted, an advance assessment of the tax for the year of winding up should be requested, so the tax liability is settled while the company still exists. Where the company is deleted with an unresolved tax liability, sorting it out becomes considerably more complicated – and the shareholders will normally already have received the liquidation distribution.
9. When can the money be distributed?
Section 16-9 sets two central conditions for a distribution to shareholders: the creditor period has to have expired, and the obligations have to be covered or secured. That means even in an entirely debt-free company you have to wait out the creditor period before the liquidation surplus is distributed. A liquidation distribution to a personal shareholder is treated for tax as a realisation of the shares, not as a dividend. The tax base and unused shielding therefore matter – see The shielding deduction
10. Deletion and what lives on
Once the winding up is complete, the general meeting takes the final decision and the company is notified for deletion. But something survives: the retention obligation for accounting records does not disappear. For a limited company the board has to make sure the material is still kept, and company documentation has its own ten-year requirements. See Retention of accounting records Settle who actually holds the archive before the company is deleted – afterwards there is no organisation left to ask.
A voluntary winding up is not a bankruptcy
A voluntary winding up assumes the company can cover its obligations. Where it cannot, insolvency is the question, and different rules and different duties for the board apply – see Served with a bankruptcy petition and Directors' liability and personal liability Choosing a voluntary winding up to escape bankruptcy proceedings is not a viable route: the creditor period and the requirement that obligations be covered or secured stand in the way. We can handle the liquidation accounts, the final VAT return and tax return, the settlement of the tax positions and the reporting throughout.
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This is general guidance, not advice on your specific case. Deadlines, rates and amounts change – always check the current rules, or get in touch with us.
More on starting up and choosing a company form
- Sole proprietorship or limited company – which should you choose?
- When should a sole proprietorship become a limited company – and can the conversion be tax-free?
- How to start a limited company – step by step
- Share capital – what can the NOK 30,000 be used for?
- Contributions in kind – can a car, equipment or a business be used as share capital?
- NUF – what is it, and when does it make sense?
- ANS or DA – what is the difference, and how large is the personal liability?
- Your first year with a limited company – which deadlines and tasks matter?
- The shareholders' agreement – what should it contain, and when do you need one?
- When do you need an accountant – and when can you manage yourself?
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