Involuntary Strike Off
The CRO continues to address the level of compliance by Irish registered companies. On average, over 7,000 companies are being struck off each year. This programme is continuing, and is being supplemented with a programme of prosecutions of companies and directors.
Companies have requirements under the Companies Acts, independent of a company's requirements with the Revenue Commissioners, and failure to file annual returns can result in a company being struck off the register. Companies which may have settled their affairs with the Revenue Commissioners are still required to tidy up the affairs of the company on the CRO register and may be eligible for Voluntary Strikeoff or will need to liquidate the company.
Consequences of Strike-Off
The consequences of strike off are very serious for a company that is still trading:
- The assets of the company become the property of the State on dissolution of the company;
- Following strike off of a company, it ceases to exist as a legal entity as and from the date on which notice of its strike off is published in the CRO Gazette. The date of this publication is the date on which the company is dissolved pursuant to the Companies Acts 1963-2013;
- The protection of limited liability is lost with effect from that date, and if the business formerly carried on through the company is continued, the owners are trading in their personal capacity;
- Banks should be unwilling to lend money to an entity which has, effectively, ceased to exist;
- There can also be unpleasant consequences for directors of such companies in that a disqualification order may be made against them by the High Court on the application of the Director of Corporate Enforcement.
While it is possible in most instances to have a company restored to the register, this can be an expensive procedure.
Grounds for Strike-off
Under section 12 Companies (Amendment) Act 1982, the Registrar may institute strike off procedures where:
- a company has failed to deliver an annual return to the CRO, or,
- pursuant to section 12A Companies (Amendment) Act 1982, where the company receives notice in writing from Revenue that the company has failed to deliver a statement (Form 11F CRO) which it is required to deliver under section 882 Taxes Consolidation Act 1997 (Revenue strike off).
Companies and their advisers should note that a company may be struck off the register if it has failed to file an annual return for one year.
The strike off process is as follows:
- 1. It is the policy of the CRO to issue non-statutory reminder letters to non-compliant companies.
- 2. The strike off process will commence with the issue of the statutory strikeoff notice. Only one statutory strike off notice is required to be issued under section 12 and section 12A. The notice is sent to the company's registered office per CRO records.
- 3. One month after the statutory strike off notice has issued to a company, a notice of impending strike off will be inserted in the CRO Gazette, unless all outstanding returns have been filed in the interim OR the outstanding statement (Form 11F CRO) has been delivered to Revenue as applicable, prior to that date.
- 4. One month after that notice has appeared in the CRO Gazette, the company will be struck off the register, unless all outstanding returns have been filed, OR the outstanding statement (Form 11F CRO) has been delivered to Revenue, as applicable, prior to that date.
- 5. After a company has been struck off the register, a notice dissolving the company will be published in the CRO Gazette.
- 6. If a company has changed address without notifying the CRO, it may be struck off without becoming aware of the fact. It is important therefore, that the registered address of the company filed at the CRO should be correct.
- 7. It should be clearly understood that the liability (if any) of every director, officer and member of the company continues, after the company has been dissolved and may be enforced as if the company had not been dissolved.
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It should be noted that where a company has been struck off for failure to file annual returns, application may be made to the High Court by the Director of Corporate Enforcement (the Director) for an order pursuant to section 160(2)(h) Companies Act 1990, disqualifying the company's directors from acting as director or having any involvement in the management of any company, together with an order for the legal costs incurred by the Director in bringing such application and the costs incurred by him in investigating the matter. The length of the disqualification period is a matter for the Court.
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