Section 311 of the Companies Act 1963 (as amended) gives the Registrar of Companies power to strike companies off the Register. It is a discretionary power which she will only use if a Director of the company makes a formal request to strike the Company off the Register.
A company can request a Voluntary Strike-off (VSO) provided it meets a number of criteria, to include the following:
- The company has ceased to trade / has never traded.
- The creditors have been paid and its tax affairs are up to date.
- The company should have no assets or liabilities.
- All outstanding Annual Returns and Accounts have been filed with the Companies Registration Office (CRO) at least two weeks before the request for VSO.
The requirement has consistently been imposed by the Registrar that a company applying for VSO should have no assets or outstanding liabilities, whether contingent or prospective, as at the date of the application to the Companies Registration Office (CRO). The foregoing requirement has now been clarified to confirm that this means that the amount of the company’s liabilities (contingent and prospective) must not exceed €150 and that a company does not have (and did not have in the previous 3 years) an issued share capital in excess of €150. A company applying for VSO must also not have assets in excess of €150.
The 3 year period within which companies must not have reduced their share capital to meet the €150 threshold, applies to private limited companies only. Therefore, the three-year restriction does NOT apply to unlimited companies.
The concept of “the previous 3 years” arose in the context of the drafting of the Companies Acts Reform and Consolidation Bill whereby private limited companies will have access to a summary approval procedure to reduce share capital without recourse to the High Court. The period of 3 years is to ensure that the summary procedure might not be mis-used with a view to meeting conditions for VSO.
While this summary approval procedure has no current relevance, the concept of 3 years appeared useful to the CRO in terms of clarifying the fact that it is not intended that companies “bend” their applications to meet VSO conditions but rather that they are cases that properly qualify as the type of company that is suitable for VSO. Therefore, in order to ensure currently, that companies are not reducing share capital simply with a view to applying for VSO, they must declare they have not done so within the 3 years directly prior to the application – otherwise, they must convert to unlimited liability to give the assurance that there is certainty that no creditors are adversely affected by the strike-off.
In light of the many responses CRO received to its clarification of the conditions to be met for VSO, the CRO in conjunction with Company Law Review Group will be re-examining what if any provisions for VSO will be contained in the forthcoming Bill.
Contributed by Deirdre Mooney.
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