In our column this week, Keith O’Donovan (Business Services & Corporate Recovery) of O’Donovan Lavin Accountants & Business Advisors discusses the options available if you wish to close down a Company that you no longer require in Ireland:
There are two general ways to arrange the affairs of a Company; it can either be Struck-off the Company registrar or be liquidated. The chosen method will depend on whether the Company is solvent or insolvent at the period of termination.
A Company can be struck from the Register of Companies in three ways:
- Voluntary Strike;
- Involuntary Strike Off by the Companies Registration Office (CRO); or
- Involuntary Strike Off by Revenue.
Some examples of where we have used Voluntary Strike-offs:
- Company has ceased to trade;
- Company is dormant and has never traded; or
- Company wants to set up as a different company (e.g. private to guarantee)
The Companies Acts provide that a Company may apply to the Registrar of Companies to have the Company voluntarily struck off the Register. Voluntary Strike-Off is at the discretion of the Registrar of Companies.
If a Company has ceased to trade or never traded, has assets or liabilities that don’t exceed €150 and will not re-commence trading before the Company is struck off, the Company is in a position to apply for voluntary strike-off.
A letter of no objection must also be requested from the Revenue Commissioners. This means that all tax affairs must be up-to-date to proceed with this option.
INVOLUNTARY STRIKE-OFF BY CRO
A Company may be involuntarily struck off the Register of Companies if the Company does not file an annual return with the filing deadlines at the CRO. The CRO issues reminder letters to Companies that fail to file on time before they take steps to strike off the Company.
The strike off process will commence with the issue of a strike off notice. One month from the issue of this letter the CRO will advertise their intention to strike off the company in the Registrar of Companies. One month after this the CRO will strike off the Company from the Register of Companies.
INVOLUNTARY STRIKE-OFF BY REVENUE COMMISSIONERS
A Company may be involuntarily struck off by Revenue if the Company has failed to deliver a Statement Form 11F to the CRO. The Company in question will receive notice from Revenue that the Company is to be struck off.
If the Company files the outstanding Form 11F to the CRO within one month of receiving the initial strike off notice, it will avoid being involuntarily struck off. If the Company fails to file this form, it will be struck off within one month from the original notice of intention to have the company involuntarily struck off.
“INVOLUNTARY” VERSUS “VOLUNTARY” STRIKE-OFF
Takes the control over the Directors eventual outcome away from the Director and places it in the hands of the relevant legal authority, the Office of the Director of Corporate Enforcement (ODCE). Involuntary Strike-off can result in a Director of a Company being prosecuted in the High Court and being restricted/disqualified from acting as a Director with implications in similar capacities in other countries.
CONSEQUENCES FOR DIRECTORS IF A COMPANY IS STRUCK-OFF THE REGISTER
It is the legal duty as a Company Director to dispose of a Company within the remit of Irish Company law as not doing so, is a statutory offence. Such a statutory offence, can result in a fine and/or the Directors/s being disqualified to act as a Director or manager of an Irish Company for up to ten years. In addition, there can be serious implications should a Company continue to trade once it has been dissolved. The shareholders no longer have limited liability available to them and any assets in the name of the Company, automatically become the property of the State.
Our next article, will cover more general guidelines for Directors to follow should a Liquidation situation arise and restoration of a Company after Strike-off or Liquidation.
If you have any Business, Financial, Tax or Insolvency queries that you would like answered, please send an email to firstname.lastname@example.org and we will be only too happy to include it in our column. Also, for a free no obligation consultation, please contact the office at (061) 411000.