Understanding the Resumption of Involuntary Strike-Offs
Since 2020, the Companies Registration Office (CRO) had paused involuntary strike-offs due to late annual return filings. However, this process has recently been re-initiated. Companies with outstanding annual returns and financial statements have started receiving 10-week notices, urging them to update their records. Failure to comply within this period could lead to the CRO initiating enforcement action, including issuing a strike-off notice. This action primarily targets companies with multiple outstanding returns.
Grounds for Potential Strike-Off
The CRO may consider striking off a company based on several criteria, including:
- Failure to file an annual return.
- Absence of current directors on record.
- Non-compliance with the director residency requirement or the absence of a requisite bond.
- Failure to deliver a statement of particulars by new companies, as notified by the Revenue Commissioners.
- Inactivity of a liquidator during the winding-up process.
Consequences and Remedies
Ignoring annual returns can lead to severe repercussions, including late fees and the loss of Audit Exemption under the Companies (Statutory Audits) Act 2018. Late filing incurs an initial €100 fee, increasing by €3 daily, capped at €1,200 per return. The alternative, a Section 343 application, offers a remedy.
The Section 343 Application Process
- Upon missing the annual return date, directors or agents engage a professional service to prepare the necessary legal documents.
- The directors swear an affidavit in front of a practicing solicitor.
- The application and affidavit are lodged with the District Court and the CRO, respectively.
- The District Court judge hears the appeal, which can be either granted or rejected.
- If granted, the company is allowed to file the late annual return, waiving late fees and audit requirements.
- The granted order must be lodged with the CRO, and the financial statements and form B1 should be filed within the specified timeframe.
Benefits of a Section 343 Application
A successful application can save a company from late fees and a two-year audit requirement, reinstating its Audit Exemption status. The company typically gets 28 days post-order to file the outstanding returns.
Common Pitfalls in the Application Process
It’s crucial to note that an S.343 Application cannot prevent an audit if one is already required, such as under a shareholders agreement or due to prior late filings.
The High Stakes of Non-Compliance
Failure to file annual returns can lead to involuntary strike-off, resulting in severe consequences like loss of assets, limited liability protection, creditworthiness, and potential legal actions against directors.
This re-commencement of involuntary strike-offs signals the CRO’s return to normalcy in enforcing compliance. It’s a critical reminder for companies to stay updated with their filings and seek professional assistance when necessary to avoid the severe repercussions of non-compliance.