Voluntary Strike Off
There is a common misconception that companies which have either never traded or have ceased to trade can dispense with the necessity to file annual returns with the Companies Office. However, this is not the case and indeed failure to continue to file returns can lead to late filing penalties being incurred, prosecution in the District Court, Companies being struck off involuntarily and the risk of possible action being taken against the Directors by the ODCE (Office of Director of Corporate Enforcements.
However, if a company has never traded, or has ceased to trade and does not have assets or liabilities in excess of €150 and if the Directors do not foresee the company trading again in the future, it is advisable to have the company removed from the register by way of a Voluntary Strike Off.
A Voluntary Strike Off is a less formal, and therefore less expensive, method of dissolving a company compared to a Members Voluntary Liquidation.
Members Voluntary Liquidation
A Members Voluntary Liquidation is the formal process whereby a company which has more assets than liabilities appoints a Liquidator to wind down its affairs in an orderly fashion and any assets or cash left over in the company are then distributed to the shareholders.
Where a company has come to the end of its natural life a Members Voluntary Liquidation is the technically most correct and most permanent method to have it closed.
Creditors Voluntary Liquidation
A Creditors’ Voluntary Liquidation is the more widely known form of liquidation. This is where a company finds that it cannot pay its debts as they fall due and there is no realistic prospect of it being able to do so in the future. Once the Directors come to this realisation they have a legal duty to wind the company up as soon as possible. To not do so, and incur further losses, can have serious repercussions for the Directors.
CFI work with a diverse panel of expert liquidators, suitable to all cases, who are on hand to offer guidance and advice to the Directors of insolvent companies and to assist with the process of winding up their companies.
The process is instigated by the company itself when the directors realise the company is insolvent, they are obliged by the company’s Act to put the company into liquidation.
A company can be wound up by the High Court at the instigation principally of any member or creditor of the company. The Court appoints the liquidator and he/she becomes an officer of the Court and works under its supervision. Under the Companies Act 2014, the Registrar of the Court supplies the copy of the court order to wind up the company to the Registrar.
A petition must be presented to the Court and when a winding up order is made a copy will be submitted to the Registrar by an officer of the Court. The circumstances in which a company may be wound up are stated in section 569 of the Companies Act 2014.
A company may deemed unable to pay its debts, under section 570 Companies Act 2014, if a creditor is owed a sum greater than €10,000 and a demand served on the company at its registered office has not been met within 21 days to the reasonable satisfaction of the creditor.