The property values in some parts of the local market appear to have finally got back to an upward trend. Making poverty a valuable investment for your pension
Dormant and unwanted companies
Group companies can often become overly complicated with many dormant and unwanted companies within the group. Maintaining these companies on the Register can be costly in terms of meeting compliance with audit, company law and taxation requirements. As such, it is important to regularly evaluate your group companies to determine if all the companies continue to serve the purpose for which they were established and in order to minimise costs.
The options available to companies who wish to voluntarily reduce the number of companies in their group include:
- Voluntary strike off
- Members voluntary liquidation
During 2013 the Companies Registration Office received 4,428 voluntary strike off applications and 1,970 members voluntary liquidations. So what is the difference between these options and what are the processes to follow?
Voluntary strike off
An application for voluntary strike off is made to the registrar of companies under section 311 of the Companies Act, 1963, where
- A company has ceased to carry on business or has never traded,
- Does not intend to re-commence or commence trading,
- Has no outstanding creditors,
- Has no assets exceeding €150,
- Has no liabilities exceeding €150.
Where a company is struck off, the group, a creditor and/or a member has the right to apply to restore the company to the register of companies up to 20 years after the date of dissolution of the company. In such circumstances, any obligations on the company would continue and may be enforced as if the company had not been dissolved.
Should the group for any reason require the company to be restored to the register within 12 months of the date of dissolution of the company, this is a reasonably simple procedure. However, after 12 months of dissolution an application for restoration of the company must be made through the High Court and can be quite an expensive procedure.
Prior to making an application for strike off all statutory filings at the Companies Registration Office (CRO) must be brought up to date and the aforementioned conditions must be satisfied.
Furthermore, a letter from the Revenue Commissioners confirming that they have no objection to striking off the company from the register must be obtained before the strike off procedure can commence.
The procedure for strike off is a follows:
- A Board meeting is held resolving to strike the company off the register,
- A notice is then placed in a daily newspaper of the intention to strike the company off the register,
- The advertisements, letter of no objection from the Revenue Commissioners and statutory form H15 in relation to the proposed strike off are filed at the CRO,
- The company will be formally asked by the registrar of companies on two separate occasions, a month apart, if it still wishes to be struck off. The registrar will then advertise its intention to strike the name of the company off the register and finally, a further month later, the company will be struck off and dissolved.
This is a simpler procedure than liquidation, and is less expensive and less time consuming. The strike off procedure can usually be completed within a six months period.
Members voluntary liquidation
To avail of a members voluntary liquidation a company must be solvent. To ensure this, a majority of the directors must complete a statutory declaration that they are of the opinion that the company will be able to pay its debts in full within 12 months of the commencement of the winding up.
Unlike a voluntary strike off, a members voluntary liquidation can be used if the company has significant assets and liabilities in place at the date of liquidation. As a result, it is often used in conjunction with tax planning to ensure shareholders’ tax liabilities are minimised.
A board meeting and an extraordinary general meeting of the members must be held to pass a resolution to wind up the company. The declaration of solvency which includes a statement of assets and liabilities must be sent to the registrar of companies. Once appointed the liquidator will take charge of the company. This will involve the collection and realisation of assets and applying the proceeds in the following order:
- The liquidator’s own costs,
- Payment of creditors in full,
- Payment of the balance to shareholders in accordance with their rights under the articles of association of the company.
When the affairs of the company are wound up in full the liquidator must prepare a final account demonstrating how the liquidation has proceeded and this is then presented to a general meeting.
Within a week, the liquidator shall send to the registrar of companies a copy of the account and notifying the CRO of the date of holding of the final meeting. The company will be struck off the register three months from the date of registration of this final liquidators return.
The process is normally final after a period of two years from the date of dissolution. Any attempt to restore a company during this two year period must be done via a High Court order under section 310 of the Companies Acts 1963.
Overall, liquidation is a more complex and therefore expensive process. Typically, liquidation takes approximately 6 months to a year to complete.