A company can be dissolved by liquidation and there are three categories of liquidation:
- A voluntary liquidation by the members after the making of a statutory declaration of solvency
- A voluntary liquidation by the members which is ratified by the company creditors
- A court ordered liquidation
In a voluntary liquidation the appointed liquidator must file accounts with the Companies Registration Office and the company is then dissolved 3 months after that.
Every invoice, letter, email or order for goods thereafter should indicate that the company is in liquidation.
Members voluntary winding up
The two main requirements for a members voluntary winding up include:
- A statutory declaration of solvency
- A special resolution must be submitted to the CRO (Companies Registration Office)
The Declaration of Solvency is made on form E1 which involves the directors declaring that they have enquired into the affairs of the company and are of the opinion that the company will be able to pay its debts in full within a period of 12 months from the commencement of the winding up.
Within 1 month/30 days of making this declaration of solvency the members must pass a special resolution to wind up and appoint a liquidator (form G1).
The resolution to wind up must be advertised in Iris Oifigiúil within 14 days of passing the resolution.
Forms E1, G1, and a Notice of Appointment of Liquidator (Form E2) must be filed with the Companies Registration Office.
The statutory basis for the Declaration of Solvency is set out in section 207 of the Companies Act 2014.
Procedure for commencement of a members’ voluntary winding up
Section 579 of the Companies act 2014 sets out the procedure for the commencement of a members’ voluntary winding up in Summary Approval Procedure, which requires a special resolution of the directors.
Alternatively, an ordinary resolution of the directors will be sufficient if the procedure under section 580 of the Companies act 2014 is adopted in respect of companies of fixed duration or a company which is to dissolve on the happening of a fixed event:
a) on the expiry of the period, if any, that is fixed for the duration of a company by its constitution; or
(b) should such happen, when the event occurs on the occurrence of which a company’s constitution provides that the company is to be dissolved;
a members’ voluntary winding up of the company may, alternatively to the employment of the Summary Approval Procedure for that purpose, be commenced in accordance with section 580.
In summary, three forms must be filed with the CRO (Companies Registration Office): E1, E2, and G1 and an advertisement must be placed in the Iris Oifigiúil publication.
A form E3 may be required if the liquidation is not completed within 12 months; E3 is a form in which the Liquidator gives an account of his acts and dealings.
3 months after the date of registration of the final accounts (forms E6 and E5), the company is deemed to be dissolved.
Under section 708 of the Companies Act 2014 a company’s dissolution can be voided within 2 years and returned to liquidation. This procedure involves an application to the High Court.
Qualifications for appointment as liquidator
The qualifications for appointment as a liquidator are set out in section 633 Companies act 2014 and there are 5 categories of individual who qualify.
Eligible individuals include practicing solicitors, members of prescribed accountancy bodies, a person with practical experience of winding ups and knowledge of the law, members of a professional body recognised by the Supervisory Authority, and a person qualified under the laws of another EEA state.
The liquidator will need professional indemnity cover and certain persons are disqualified from acting as liquidator-for example, the company auditor, or an officer or employee of the company.
Section 583 of the Act provides that the company can appoint the liquidator at a general meeting. A general meeting can also remove or replace the liquidator.
Declaration of Solvency
The declaration of solvency form (E1) must be completed correctly and it is vitally important to check it carefully before submitting it to the CRO; if not directions from the High Court will be required.
It also must contain an Independent Person’s report in accordance with section 580(4) of the Companies act 2014 which confirms that the Declaration of Solvency is not unreasonable.
The Independent Person’s report must contain certain prescribed information such as the scope of the work performed by the statutory auditor and the opinion of the statutory auditor that the declaration of solvency is not unreasonable.