USA Company Strike-Offs Are Not Always Voluntary
Did you know that the Companies Registration Office (‘CRO’) is always monitoring the level of compliance with the Companies Acts by Irish registered companies? During Covid, the CRO suspended enforcement actions, such as involuntary strike-offs and director prosecutions, but now we expect they will re-start these measures.
With the filing deadline for companies having recently passed, for companies with a year end of 31 December 2021, it had been estimated that around 11,900 companies had still to file their 2022 Annual Return before the deadline. It’s worth noting that the most common reason for companies being struck-off is the failure to file an Annual Return on time. Each company has a defined Annual Return Date and the Annual Return must be filed, together with appropriate financial statements, within 56 days of that date.
Following an involuntary strike-off, the company ceases to exist as a legal entity and there can be serious consequences including:
- all assets of the company (including monies in a bank account) become the property of the State.
- The protection of limited liability is lost and the owners become personally liable for any further debts incurred by the company.
- Banks may freeze access to bank accounts and may be unwilling to extend credit facilities.
- Directors run the risk of a disqualification order where a company is struck-off involuntarily.
In addition to the dissolution of the company, each director could be prosecuted for non-compliance in relation to the failure to file annual returns. On summary conviction, each director guilty of an offence could be liable to a fine (up to €5,000 per offence) or imprisonment for a term not exceeding 6 months or both.
At Evelyn Partners we work with our clients to ensure that CRO deadlines are met. We also look under the bonnet to see if there are processes or governance tweaks that can support directors’ obligations.
If you would like further information on how we can help or would like to talk to us in relation to filing outstanding returns, please contact our Company Secretarial Lead at Richard.casey@evelyn.com
