Adrian Burke & Associates
Commercial Lawyers, Corporate Lawyers and Solicitors specialising in Corporate Finance, Ireland

Business Termination in Ireland


It is important to ensure that when a business is being wound up it is done so in full compliance with all relevant legal requirements.  A failure to do this could result in a liquidator being appointed by the courts or creditors, with the resulting negative publicity and additional costs.  In certain cases inaction on the behalf of the directors of the company could result in their restriction as directors for a period of years.

There are two standard ways to order the affairs of a company in the Irish jurisdiction; it can be either liquidated or struck off the Register.  The method chosen depends largely on whether the company is solvent or insolvent at the time of the termination.

Liquidation of a Company

A company can be liquidated by; (i) the members, (ii) the creditors or (iii) order of the court.  All three methods ultimately result in the same conclusion, the dissolution of the company.  However, the individual circumstances of the company will influence which method of liquidation is put into operation.

By the Members

Liquidation by the members of the company is less expensive that the other options and the members chose who the liquidator will be, thereby retaining a greater degree of control over the procedure. Once the directors are satisfied that the company is solvent the members can then approve the winding up and appoint a liquidator.  As this method is only available to companies that are solvent at the time their termination is required, it is usually used when a particular scheme of arrangement is being unwound, e.g. a scheme where investors had to retain an interest in property for a number of years to avail of tax breaks, or to wind up companies that have ceased trading and wish to disburse remaining assets to the members. If managed correctly this can be the most time and cost efficient liquidation method.

It is important for company directors to be aware that they may be made personally liable where a members voluntary liquidation is pursued but the company is in fact insolvent.

By the Creditors

This is the most common form of liquidation in Ireland and is used when a company is insolvent.  Company directors have a duty to initiate the winding up of an insolvent company.  A creditor’s voluntary liquidation is actually commenced by the members (typically following agitation from the company’s creditors and/or a fear that continuing to trade may lead to prosecution for reckless trading) usually on the advice of the directors. The liquidator can be appointed by the company, however, the creditors may nominate a different liquidator.  The main advantage of this form of liquidation is that the costs are not as onerous as a court liquidation.

An additional factor to consider is that meetings of both the members and the creditors must be convened by the directors. In calling the creditors meeting a clear warning signal goes out to creditors that the company is in difficulties and this can lead to dissipation of assets as creditors seek to recover materials previously supplied.

By the Court

A compulsory or official liquidation will arise where the High Court is petitioned to have a company wound up. The company itself, a creditor, a contributory, a member, and the Director of Corporate Enforcement are all entitled to make such a petition.  The court appoints the liquidator and he/she becomes an officer of the court and works under its supervision.

Most petitions are commenced by creditors on the grounds that the company is unable to pay its debts.  However, there has been a growing trend in recent years for a company to petition for its own winding up.  This is usually undertaken to avoid dissipation of assets as can happen upon the calling of a creditors meeting.

Although this method of liquidation is more expensive than a creditor’s liquidation, due to costs resulting from informing and taking instructions from the court, the costs may not be significantly higher and a court liquidation has advantages in relation to securing assets.

The Role of the Liquidator

Once appointed the liquidator must collect and realise all the assets of the company, apply the proceeds in satisfaction of his own costs and expenses, procure the payment of creditors in full and the payment of the balance, if any, to the members.

Throughout the liquidation procedure the liquidator is obliged to make various filings to the CRO including final company accounts and these filing requirements increase if the liquidation continues for more than 12 months.  The liquidator must notify various persons connected to the company such as bankers, auditors and solicitors and clearance from the Revenue Commissioners must also be procured. Depending on the industry/business sector within which the company operates, a Liquidator may be subject to additional reporting obligations including notification of the Minister of Enterprise, Trade and Employment. Three months after the registration of the final documents with the CRO the company is deemed to be dissolved. 

If it transpires in the course of the liquidation that the directors are guilty of conduct such as fraudulent or reckless trading, failure to keep proper books or other such offences, the directors may be made personally liable for the debts of the company.

Striking a company off the Register of Companies

Voluntary Strike Off

As an alternative to voluntary liquidation a company can request the Registrar to strike the company off the Register. This is the method most commonly used to wind up a company that has not commenced or has ceased trading. The Companies Act 2014 sets out a formal voluntary strike off procedure. In particular, a company must ensure that all filings required by the CRO and the companies tax affairs are up to date. A special resolution of the company must be passed and a letter of “no objection” must be obtained from the Revenue Commissioners.  

Involuntary Strike Off

The CRO has the power to strike a company off the Register for failure to file its annual returns, a power it has been exercising vigorously in recent years in an effort to improve corporate compliance.  Within three months the CRO can complete the strike off procedure, if remedial steps are not undertaken by the company, shortly after which the company is dissolved.  In addition the CRO may initiate strike off on behalf of the Revenue Commissioners for failure to file outstanding statements. 

It is important to be aware of the extremely serious consequences of strike off; the assets of the company become the property of the State, the company ceases to exist as a legal entity and the protection of limited liability is lost. 

Furthermore an application may be made to the High Court by the Director of Corporate Enforcement for an order to disqualify the company’s directors from acting as directors or having any involvement in the management of any company.  The length of the disqualification period is a matter for the court.

For all of the above reasons it is vitally important that any strike off warning letters received from the CRO are acted upon immediately and not ignored.

Restoration after liquidation or strike off

After strike off has been initiated and before the company is actually struck off and dissolved, the public records of the CRO will show the status of the company as “Strike-Off Listed”. During this time a creditor can notify the CRO of the company’s outstanding debt and request that the company be removed from the strike off list for a period of six months to give the creditor the opportunity to recoup the debt. At the end of the six months a creditor can renew its request if monies are still outstanding provided it can demonstrate to the CRO that it is making reasonable efforts to settle the debt.

Following strike off a company has a 12 month window to apply to the CRO for its restoration to the Register after which it can only be restored by application to the court. A creditor can also make a restoration application to the court.

Following liquidation a court order is necessary to restore the company and must be applied for within 2 years of dissolution.

The above is a very general and simplified summary of the law on the subject matter.  As such you should obtain professional advice before taking any actions as regards you or your company’s affairs.  Should you wish to make enquiries in relation to any of the areas touched on by this article please contact Adrian Burke & Associates.