In July 2023 the CRO re-commenced enforcement proceedings issuing 10 week warning notices to companies which are not up to date with their Annual Returns.
1) Introduction
In July 2023 the CRO re-commenced enforcement proceedings issuing 10 week warning notices to companies which are not up to date with their Annual Returns.
This follows a hiatus period, of some 3 years, and since the outset of the pandemic whereby a certain leeway has been afforded to companies to allow time to have returns filing brought up to date.
In October 2023, the first compulsory / involuntary strike off notices will be issued affecting up to 10,000 companies.
2) Grounds for Involuntary Strike Off
Under Section 726 of the Companies Act 2014, the Register may institute procedures for a strike off, and for range of compliance matters including:
- There are no current directors on the register.
- There is no EEA director or bond in place.
- The company has failed to file a Form 11F with the Revenue Commissioners.
- The company is being wound up and reason to believe no liquidator is appointed.
- The company is in liquidation without returns being filed for over 6 months.
- The company has failed to make an annual return per Section 353*
In effect, any company, for which the Annual Return is later for over one year is at risk of receiving an Involuntary Strike Off notice.
3) Consequences of a Strike Off Notice
The consequences of Strike Off notice can be very punitive for a company and its directors, and particularly if it is still trading:
- All of the assets in the company vest in the state.
- The protection of limited liability is lost from the date of strike off.
- The directors of the company are open to disqualification proceedings from the Corporate Enforcement Authority.
- The CRO may take a Section 797 application to the Hight Court to compel the directors to bring matters up to date in respect of annual return filing obligations. The respective directors may also be held liable for the said costs.
4) Director Next Steps / Options available
It would be prudent for directors of companies in receipt of Involuntary Strike Off notices to heed the warnings and act early to mitigate against the risk of more detrimental outcomes.
The options available depend on the circumstances and present operations of the company at hand, and would include:
a) Bring Annual Returns up to date with the preparation of Audited Financial Statements for each year outstanding, and the attendant CRO late filing fees (capped at €1,200 per Annual Return).
b) Consider a Members Voluntary Liquidation – for solvent entities and non-trading entities where the company entity is no longer required in the future.
c) Consider a Creditors Voluntary Liquidation – for insolvent entities with creditor debt, and for which the directors have a duty to conduct an orderly winding up.
By availing of one of these options as befits the company circumstances, directors can look to avoid the risk of more punitive outcomes, and fulfil their statutory duties.
This article is of a general nature in relation to company law requirements and Involuntary Notices. For professional advice call our team at McCarthy Walsh on 01 444 4260 for trusted advice in confidence.
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