AI data buyers are not only interested in businesses that are trading today. Some publish criteria that include companies that have been acquired or wound down, because the records of a closed business can show how work was done just as well as those of a live one. The difficult question is usually not whether the records are useful, but who controls them now and who has the power to sign a licence. This guide walks through the common situations.
This is general information about UK limited companies, not legal advice. Company, insolvency and data protection law turn on the facts, and insolvency procedures differ across the UK. Take advice before acting.
Why buyers look at closed businesses
One buyer we reviewed has a separate category for deals with defunct companies, and another says that operating, acquired and wound-down companies may all qualify. A closed business’s records still show years of real operations. For the people involved, licensing them may be a way to make use of an asset that would otherwise sit in storage until it is destroyed.
Records belong to whoever owns the business that created them, subject to contracts and to data protection law. What that means in practice depends on how the business ended.
If the company was sold by a share sale
In a share sale, the purchaser buys the company itself. The company keeps all its assets, including its records, and simply has new owners. After completion the former owners have no right to license the company’s records, even if they still have copies. Only the company, acting through its current directors, can do that. The sale agreement may also contain confidentiality obligations that bind the sellers.
If the business was sold by an asset sale
In an asset sale, the company sells some or all of its business assets, and the sale agreement decides what goes with them. Records relating to the transferred business often pass to the purchaser, while others stay with the selling company. Read the agreement carefully. It will usually say which records were transferred, whether the seller kept copies and what the seller may do with them. Confidentiality clauses and restrictive covenants often continue after completion.
If the company is in liquidation
When a company goes into liquidation, a liquidator takes control of its affairs, including its books and records, and the directors’ powers largely come to an end. Any decision to license the company’s records, and anything they might bring in, is a matter for the liquidator, acting for the creditors. If you were a director or shareholder of a company in liquidation, speak to the liquidator rather than approaching a buyer yourself. GOV.UK explains the main routes to liquidating a company.
If the company has been struck off or dissolved
A company that has been struck off the register and dissolved no longer exists as a legal person. Under section 1012 of the Companies Act 2006, property that belonged to a dissolved company is generally treated as bona vacantia and belongs to the Crown. GOV.UK’s guidance on striking off a company says the same about remaining assets, and that the company would have to be restored to get anything back.
Whether a dissolved company’s old records count as property that could be licensed is a question for your adviser. What is clear is that the former directors cannot sign a licence on the company’s behalf, because there is no longer a company to bind. If licensing seems worth pursuing, ask a solicitor whether the company could be restored to the register first, and at what cost.
If the company is dormant or has stopped trading
A company that has stopped trading but remains on the register still exists and still owns its records. Its directors can make decisions for it in the usual way, subject to the company’s articles and any shareholder approvals that are needed. Of all the situations in this guide, this is often the simplest one for licensing.
How long records are kept
Records may not survive long enough to license. Under section 388 of the Companies Act 2006, a private company must keep its accounting records for three years from when they are made, and a public company for six. HMRC expects company records to be kept for six years from the end of the last financial year they relate to, and sometimes longer. GOV.UK’s guidance on closing down a company before striking it off suggests keeping business documents such as bank statements, invoices and receipts for seven years after the company is struck off.
These rules cover particular kinds of record and set minimum periods, not limits. Many businesses keep operational records for much longer, while others delete them on a schedule. Find out what actually exists, and where, before discussing licensing with anyone.
Personal data does not disappear when a business closes
Whoever holds the records after a sale or closure is responsible for the personal data in them under data protection law. Old records may contain staff, customer and supplier details that were collected to run a business that no longer operates. Using them for a new purpose, such as AI training, raises the same questions as for a live business, and sometimes harder ones, because it may be difficult to tell the people concerned. Our article on data protection and confidentiality checks covers these questions.
Questions to answer before approaching a buyer
- What happened to the company: a share sale, an asset sale, liquidation, strike-off or dormancy?
- Who controls the records today, and who can sign a licence for them?
- What do any sale agreements, NDAs or customer contracts say about the information?
- Which records still exist, where are they and which years do they cover?
- What personal data do they contain?
- Has anyone else, such as the purchaser of the business or a liquidator, already registered the company with a data buyer?
If the answers point to a clear owner with authority to sign, check the business against the published criteria or read our guidance for business owners. Our practical checklist covers the other criteria buyers publish.
Frequently asked questions
We sold our company in a share sale. Can we license its old records?
Generally not. The company and its records belong to its new owners. Your sale agreement may also restrict how you use any information you kept.
Can former directors license the records of a dissolved company?
No. A dissolved company no longer exists, and its remaining property generally passes to the Crown. Take advice on whether restoring the company is possible and worthwhile.
Does a company in liquidation still own its records?
The company does, but the liquidator controls them. Any decision about licensing is for the liquidator.
How far back do buyers want records to go?
The criteria we reviewed ask for substantial operating history without setting a fixed number of years. Each buyer assesses the records a company actually holds.