When setting up your company, it is incredibly easy to dismiss the idea of a negative or unfavourable end to your business life. However, as we have gone over many times in the past, it is essential to have a realistic outlook and to be aware of the consequences of your business actions. Today we will be focusing on Involuntary Strike Off. As we are all aware, there are a certain number of requirements of all companies including the filing of annual returns. Non-compliance in this area can result in the company being struck off the register, an action which can have some far-reaching consequences that many business owners may not be aware of.
Failure to file an annual return is the most common reason for strike off in Ireland. In some cases, not filing a return can be a simple case of missing the date accidentally, but in some cases business owners may view being struck off by the CRO as a cheap and easy way of disposing of a company,
Under what circumstances could a company fact involuntary strike off?
- Failure to make an annual return for one year.
- Where the company receives notice in writing from Revenue of failure to deliver a statement.
- Where the registrar may believe that there is no EEA resident director or bond in place.
- The company is being wound up and the Registrar believes that there is no liquidator in place.
- Where the company has already been wound up, but no returns have been made by the liquidator for a period of 6 months.
- No current director is noted in the office.
What does the strike off process involve?
- A non-statutory reminder will be sent to a non-compliant company.
- A strike off notice will be issued which will detail the reasoning behind strike off and ways in which this can be avoided.
- 28 days following this notice, a notice will be published in the CRO Gazette unless remedial actions have been taken.
- 28 days following this second notice, the company will be officially struck off the register.
- A notice dissolving the company will then be published in the CRO Gazette.
- Should a company be struck off for failure to file annual returns, the business owner may face legal issues.
Should your company experience involuntary strike off while still trading, some of the negative consequences include:
- The company ceases to exist as a legal entity from the date of publication.
- The assets of the company become the property of the State.
- The protection of the company’s limited liability is lost from the date of publication, meaning that should trading continue, it is in a personal capacity.
- Banks cannot lend funds to an entity which does not exist.
- Business owners may face legal issues.
Should your company be struck off, it is possible to reinstate a company through the CRO within 12 months of the strike off, by filing all outstanding returns, paying all fees. Alternatively, you can voluntarily strike off your company which will have less of the negative consequences.
We hope that this information will be of benefit to you. If you have any queries or concerns on any business or financial matters, please don’t hesitate to contact us here at EcovisDCA.