(GA) Voluntary Strike Off
Update note in respect of the administrative Voluntary Strike-Off scheme operated under s311 CA 1963 by CRO
On foot of requests for clarification recently from certain accountancy and legal firms, the CRO earlier this year re-published as follows the criteria applicable to a request for Voluntary Strike-Off (VSO) from the companies' register under the administrative VSO scheme that is operated by the CRO :
The CRO, when clarifying the VSO eligibility criteria earlier this year, took the opportunity to align its administrative VSO scheme with the relevant provision of the draft Companies Bill, Pillar A of which has been recently published by the Department of Jobs, Enterprise and Innovation. In particular, we clarified that that the threshold limits of €150 in respect of assets and liabilities apply separately to these respective headings. That is, the text clarified that where a company has, for example, undischarged liabilities of €40,000 but also has assets of €40,000 (typically "called up share capital not paid" (item B.11.5 in the formats in the scheduled to CAA86) of €40,000), it cannot simply net off the two in a balance sheet exercise to assert that it has "no assets or liabilities in excess of €150". The values for assets and for liabilities in this respect are not a net summation as per a Balance Sheet layout. Only where a company's liabilities have been discharged in full and/ or written off by its creditors, can a company validly confirm to CRO that it has no liabilities. Where its outstanding liabilities (including contingent and prospective liabilities) do not exceed €150, only then is a company able to confirm to CRO that it has no liabilities in excess of €150.
In the above example, the company's undischarged liabilities exceed €150, while its assets also exceed €150. Such a company is not eligible for VSO as it does not satisfy the requirement that it have no assets in excess of €150, nor does it satisfy the separate and independent requirement that the amount of its liabilities (including contingent and prospective liabilities) does not exceed €150.
Issued Share Capital Criterion
A further criterion set out in the voluntary strike off provision contained in Pillar A of the draft Companies Bill, which has also applied to the operation of the administrative VSO scheme, relates to a threshold on issued share capital. This criterion required that in the case of a limited company requesting VSO, the amount of issued share capital for the applicant company could not exceed €150.
After the conditions applying to the CRO VSO scheme were re-published, a number of stakeholders made submissions to the CRO asserting that the fact that the assets and liabilities criteria were now clarified as separate requirements meant that the issued share capital threshold requirement was redundant. Issued share capital should not have any separate significance if neither the assets nor the liabilities of the applicant company could each exceed €150 at the date of VSO application.
The CRO has considered these submissions and accepts that they have merit. Accordingly, we propose to remove the third qualifying condition for VSO as to issued share capital from the published guidelines in respect of the administrative scheme operated by CRO, and we will clarify that issued share capital is not to be reckoned when confirming (1) that the amount of the assets of the company do not exceed €150 as well when confirming (2) that the amount of the liabilities of the company do not exceed €150. We will amend our administrative Form H15 accordingly. Further, the CRO is focussing efforts on inputting to the forthcoming Companies Bill and will engage in consideration of whether, in putting the VSO scheme on a statutory footing, an appropriate safeguard should be introduced to ensure that redress may be available in the context of any inappropriate use of the VSO procedure, including by the possible application of the "summary approval procedure", which is utilised in other instances in the Bill, to the VSO procedure. (This may apply to attach personal liability to directors who turn out to have made a false statement in relation to the assets and liabilities of the company at the time of application for VSO).
Please note that if a company applying for VSO is also the owner of a registered business name, the business name registration should be ceased by the company before the VSO process is completed. Form RBN3 ought to be completed by such company prior to strike off. Form RBN3 has no filing fee. It can also be completed online at www.core.ie
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Finally, it should be noted that it is good practice for a company to have a Members' Resolution in place sanctioning the application for VSO of a company before a company proceeds to file Form H15 with CRO.
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