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Irish Company Formation

Involuntary Company Strike Off-Potentially Serious Consequences for Company Directors

company-liquidations

The striking off of a company from the Register of Companies can be voluntary or involuntary.

Elsewhere on this site you can read about the voluntary strike off scheme; in this piece we will take a look at involuntary strike off of a company and how to restore it to the register of companies.

Serious consequences

When a company is struck off the Register of Companies it is dissolved and no longer exists.

This means that

  • Company directors could be held personally liable for debts of the company incurred after strike off;
  • Limited liability protection no longer exists;
  • The company’s property becomes the State’s property.

Involuntary strike off

Involuntary strike off can happen if the Registrar of Companies strikes off for failure to file returns for example; the Revenue Commissioners can also apply to have a company struck off.

If the company has been struck off for less than 12 months then it can apply to the Registrar to have the company restored.

However if the company has been struck off for more than 12 months then an application will have to be made to the High Court to have the company restored to the Register.

This can be a costly exercise.

When making this application by way of Petition you will have to notify

  • The Registrar of Companies
  • The Chief State Solicitor’s Office
  • The Revenue Commissioners
  • The Revenue solicitors
  • The Minister for Finance.

As in the case of the voluntary strike off scheme a restoration application can only be made where all returns are up to date and all penalties and late filing fees paid.

The first step in the application is to obtain a Letter of No Objection from the Companies Registration Office.

Then the application to the High Court will have to be made and if successful the Order of the High Court permitting restoration of the company must be served on the Registrar of Companies within 3 months.

The application to the High Court will be by way of Petition and will involve a grounding affidavit, notice of motion and petition. If successful a further Letter of No Objection will need to be obtained-this time from the Revenue Commissioners.

Conclusion

Company strike off and restoration can be a costly exercise, particularly where an application to the High Court is necessary and all company returns will need to be brought up to date and penalties paid as a starting point.

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Business and Company Law Irish Company Formation

Company Strike Off-The Voluntary Strike Off Scheme for Irish Companies

company strike off

There are two forms of company strike off involving striking the company off the Register of Companies at the Companies Registration Office (CRO)-voluntary and involuntary.

It is important to understand the difference.

Voluntary strike off

Section 311 of the Companies Act 1963 allows the Registrar of Companies to remove companies from the Registrar as part of an administrative voluntary strike off scheme operated by the Companies Registration Office (CRO).

To request a strike off a company director must file a request on a form H15 requesting removal and the power to strike off is a discretionary one.

Voluntary Strike Off Criteria

To avail of the voluntary strike off mechanism a company must

  1. Have ceased trading or never traded
  2. The assets of the company must not exceed €150
  3. The liabilities of the company must not exceed €150
  4. Have filed all annual returns and paid any outstanding penalties up to the date of application for strike off
  5. Obtain a letter of No Objection from the Revenue Commissioners (dated within 6 months of the application)
  6. Advertise it’s intention to be struck off in a national newspaper within 6 weeks prior to the application.

This voluntary strike off procedure, whilst relatively straightforward, is slow and the Registrar of Companies will write to the Company on two separate occasions a month apart to confirm the request for strike off.

The Registrar of Companies must then advertise her intention to strike off the company and a month after this advertisement the company will be struck off and no longer exist.

Consequences of strike off

It is important to note that a company that is struck off, whether voluntarily or involuntarily ceases to exist as a legal entity.

If this occurs then a company which continues to trade could have far reaching and serious consequences for company directors such as-

  • Company property becomes property of the State on dissolution
  • Directors may be held personally liable for company debts as limited liability protection no longer exists
  • Possible application by the Director of Corporate Enforcement to have the directors disqualified or restricted as directors.

Involuntary strike off

Involuntary strike off of companies can occur in number of different scenarios. Involuntary strike off is looked at in greater detail elsewhere on this site.