# Company voluntary strike-off



## oldnick (10 Jan 2011)

a rather technical question for experts...

I wish to "strike off" my company  which has now ceased trading, with no creditors and 100k in bank (which represents exact value of shares I put in some years ago.) 
Full annual audited accounts will be prepared as well as no-objection letter from revenue

I note in the H 15 strike off form to be returned to CRO,  that I must declare that company has no assets or liabilities.

Does this mean that i can't strike off because of this 100k share capital sitting in the bank?

Do I have to first apply to high court to reduce the 100k share capital to zero ?-and then apply to CRO for strike off.


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## Gervan (10 Jan 2011)

If the Company has €100K in the bank, but owes you that amount, it has net assets of Nil.


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## simplyjoe (11 Jan 2011)

Company needs to be formally liquidated and shareholders are then returned their capital. I know country liquidators that would complete the liquidation for say 3k plus VAT. There would be no tax as the capital return would equal your original investment. The payment would be treated as capital. 
In order for the share capital to be reduced the company would have had to have traded for 3 years and the reduction would have had to be for commercial reasons for the good of the company. If you could not prove this the Revenue could tackle the distribution as income and apply income tax. The fact that money in the account is equal to the money invested may be seen as a co-incidence. As in all cases before making any decision you should seek professional advice.


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## Joe_90 (11 Jan 2011)

I'm with simplyjoe on this.  You can not have a company struck off if it has €100,000 in the bank.
If you contributed €100,000 for share capital then get the company liquidated get out your €100k then the company has no assets and can be struck off.
You could also sell the shares back to the company under a share buy back but you need to meet the criteria as simplyjoe has said.


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## oldnick (11 Jan 2011)

Many Thanks ! Confirms my suspicions how crazy the system is...

Here i am having paid off every creditor, Revenue , not a cent owed. Everything finished except final audit which also costs a few grand and which will confirm nothing owed  and nothing in the company except original share capital. 

And yet   I have to fork out thousands more to a liquidator to  do, well, basically nothing.

On the other hand , many of my small-business colleagues ,also ltd.companies,  have just stopped trading,done no accounts, owed money to everyone including redundancy ..and ,as they have told me ,nobody has chased them.

Crazy !


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## oldnick (11 Jan 2011)

P.A. - Reading the rules it seems anyone unconnecting from the company can be a liquidator, so perhaps for twenty quid my milkman will do it !


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## Paddy199 (11 Jan 2011)

Is it 100k in reserves or 100k in share capital? Seems a lot for share capital. Normal share capital would be 100 or 1000 but 100k is alot.

Can you not pay yourself a termination payment thereby reducing the bank balance to NIL leaving only share capital and reserves? You can then cease trading and stike off your company. Maybe you can even create a capital gains loss on your investment which can be carried forward indefinitely.

By the way, you don't need an audit if you are liquidating or striking off. You only need a liquidator if your insolvent. Also you don't need accounts as such, if you strike off before your ARD date. All you need is a Trial balance for completing a tax return for Revenue.


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## oldnick (11 Jan 2011)

The amount of cash left over is after the maximum tax fre termination of employment payment for the two directors - me and my wife.
I am sole shareholder in this l.l.c.  and the amount of cash, over 100k, is roughly equal to the fully paid up share capital.
(Amount of fully paid up share capital for travel companies is dictated by law in ireland and should be proportionate to t.o)

No other assets - and not a cent liability.

..but my auditors say I need a liquidator even after they finalise  accounts. After 30 yrs of using auditors and heeding their advice,   I feel odd disputing what they say -or rather the cost of it -but will probably try to do as much D.I.Y.

A real thanks to all posters so far.


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## Joe_90 (11 Jan 2011)

Hi,
I know that while you had a travel agent licence you have to provide the regulator with an audited set of accounts.  
But if you have ceased trading do you still need an auditor?
Ask your auditors about the company buying back your shares might be cheaper.


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## oldnick (11 Jan 2011)

joe90 -you know much... did you do a travel agents books?

You're right -no longer need auditor for final accounts, especially as only a few months trading after the last accounts. And I can't see  or understand why I need a professional liquidator to liquidate basically nothing except my shares.
Anyway will look more closely at company buying back my shares which I assume means I can go down the voluntary strike of route /



thanks for that.


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## Paddy199 (13 Jan 2011)

Totally agree with Joe 90 and your final summary.

You don't need an audit or a liquator. Sounds like your advisors want some wrap up money.


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## oldnick (13 Jan 2011)

Yes, i reckon so.
increasingly am looking at other posts about people owing money ---and I've been talking to friends who have  closed their businesses ,owing a fortune to everyone inc staff redundancies, revenue etc.

 After 30 yrs owing my own business iand paying every bill and tax I'm comnvuinced that the rule in ireland is ...

1 ) close the business owing money to everyone and there''s very little chance you will be pursued. I've seen so many of my fellow travel agents shut up shop without final accounts -anything . And that's the end of the matter. Sometimes a few nasty letters which they ignore...

2)  try to do things 100% correctly and Revenue and every damn legal,accounting and other overpaid official will say -ah you must do this and the fee is this... and if you don't do this, we know you have money so we'll go after you..


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## simplyjoe (14 Jan 2011)

In order to get the remaining 100k at CGT rate you do need to liquidate. The reason you need the last set of accounts is because the liquidator has to be able to ensure that there are no tax liabilities. Before he pays you the 100k he has to ensure that there are no other creditors. The accounts may have to be audited because a) the revenue could object to them not being audited when you have other statutory obligations for audit and 2) non audit of the accounts may lead you to having trouble with obtaining a travel agency again as well as possible personal liability with the ODCE and other regulatory bodies. I feel that your accountant has advised you very well.
I understand your frustration. The system seems to punish the compliant whilst the fly by nights get away free. The CRO, ODCE, Revenue and DSW are a joke in that they allow the non compliant get away scot free whilst the guy that does things right ends up paying huge compliance costs. Makes it very hard for accountants also who end up advising clients to be compliant knowing that this is probably costing them money. The country is littered with laws that no body enforces. I say have more liberal laws but enforce them fully.


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## oldnick (14 Jan 2011)

simplyjoe ....
 -sadly I know that your advice is 100% right. And I know that auditor is a stickler for doing things properly. It's the cost  (and to my mind)  the "double-auditing" (i.e. auditor followed by liquidator) that bugs me.

_I wonder if I could bother you with one question.._

After the auditor  does  accounts which  show that there are no liabilities and no assets, save the share capital,  what, then ,does the liquidator have to do that he'll charge thousands of euros ? My audior reckons he could find a "CHEAP" one for 5k plus VAT - six grand for doing almost nothing !!



I could close the company now but am awaiting refunds from three different govnt sources - redundancy, VAT,travel bond -plus disposing of a lease of the shop, and paying ourselves a termination payment- after obtaining revenue permission for the excess 910kp.p.) payment.
 Absolutely no other transaction.

If the audit shows that there  is nothing owed, is the liquidator then just effectively auditing the auditor ? i.e a sort of "double-audit".

i suppose I'm acting like the grumpy old man here  ???

( My t.o. this final financial year is below threshold for obligatory audit,  and  dont need  audit for travel agency purposes having advised Regulator am not seeking renewal of licence. )


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## Paddy199 (14 Jan 2011)

A liquidator carries a huge amount of responsibility and risk. Long after the company is dissolved, if it is disclovered that a liquidation was not performed by the letter of the law, that liquidator is very exposed to legal action. Also, there are significant external regulatory requirements.

So why don't you prepare an unaudited set of accounts and find a low cost liquidator? Better still, why not get the company to buy back your shares instead of liquidation?


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## simplyjoe (19 Jan 2011)

Paddy199 said:


> So why don't you prepare an unaudited set of accounts and find a low cost liquidator? Better still, why not get the company to buy back your shares instead of liquidation?


 In order for the share capital to be reduced the company would have had to have traded for 3 years and the reduction would have had to be for commercial reasons for the good of the company. If you could not prove this the Revenue could tackle the distribution as income and apply income tax.


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## Paddy199 (19 Jan 2011)

I'm sure he can satisfy both criteria.


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## oldnick (19 Jan 2011)

..well, if reducing the share capital is part of the closing down process I'm unsure that it can be argued it's for the good of the company.


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## jack2009 (25 Jan 2011)

You need to liquidate the company, despite what is posted by others above it will be what is called a members voluntary liquidation.  This form of liquidation is for solvent companies such as yours.

You do not need to prepare audited accounts.

The liquidator does not audit the auditor.  You need an experienced liquidator to liquidate the company even though there is only a bank balance equal to the shares are there is as you can imagine still a certain amount of "red tape" that has to be adhered to.  If everything is a simple as you are stating you should be able to get a quote from an experienced liquidator for around 1,000 to 1,500 as they can just fly through the paperwork.


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## simplyjoe (25 Jan 2011)

You will need to prepare cessation acounts in order to satisfy the liquidator that there are no further tax liabilities else he cant 'distribute' the remaining cash. The question is will the revenue now accept un-audited accounts when the company has an obligation to audit accounts elswhere? A liquidator only charging €1,000 for a liquidation is taking some risk for very little reward.


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## jack2009 (25 Jan 2011)

the revenue will accept un audited accounts. The only people that will not accepted unaudited cessation accounts is the financial regulator. Cessation accounts for a company that has ceased trading and paid off all of its liabilites leaves very little work for an experienced liquidators to look after.


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## Paddy199 (25 Jan 2011)

The Revenue has no legal right to demand audited accounts.

I still can't understand, why the company cannot buy back the shares when it satisifes all the criteria.


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## jack2009 (25 Jan 2011)

Redeeming the share involved a court application which would cost more than an MVL! Section 72 CA 1963!


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## Paddy199 (25 Jan 2011)

What about a share buy back under s.211? (specifically s.213 for private companies)


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## oldnick (25 Jan 2011)

- i've looked at that and there still seems to be red tape and work involved.
If I could find a liquidator for under 2k I'd be delighted !
I'd be happy to get names if anybody knows one.

When I said the liquidator is effectively "auditing the auditor", I meant that if the auditor's final accounts should show the exact position,  and therefore
 is not the liquidator just checking what the auditor has written is correct ?

Incidentally, the govnt is holding a cash bond from the company for six months after cessation of my trading-  in case some client rolls up with a demand.
Pretty good indication ,if not absolute proof, that there are no debtors.

From what i  gather a liquidator is not responsible for any unknown debts due to some hidden or other naughty act of the company. His "risk" extends to something that should have been found out with reasonable diligence. Is this correct?


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## jack2009 (25 Jan 2011)

You are correct the liquidator will most likely get you to indemnify him/her against any "hidden or other naughty acts".


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## Bronte (26 Jan 2011)

Must say this thread is very good on informing people how to go about a liquidation.  Some very knowledgeable people on here.  Should be made a key post.


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## Brendan Burgess (26 Jan 2011)

Bronte said:


> Must say this thread is very good on informing people how to go about a liquidation.  Some very knowledgeable people on here.  Should be made a key post.



Does it add anything to the existing Key Post? 

How to wind up a company which no longer trades

If you feel it does, I will merge the two together. 

Brendan


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## oldnick (26 Jan 2011)

Many Tks for interesting and informative  contributions -and for PM recommendation for a liquidator.I'll contact him. 

In summary it seems from the above advice and my own research.....

1. The voluntary strike off is a great and cheap method - if one has nothing in ,owed by or to the company. One can DIY via CRO.ie or use a company like mystrikeoff.ie who for a few hundred do all the ads and paperwork.
As I have assets, (albeit just one - cash) this method seems no good.

2. could reduce share capital to zilch but the hassle and cost of going thru H.Court etc wouldn't be worth it.

3. could buy-back my shares  which is permitted in various circumstances and regulations for private llc's . Still some cost, paperwork ,hassle and delay in getting approval, but worth pursuing, depending on cost of the "proper" method (4.....

4. Back to square -one which at the end of the day may be the most hassle-free:_
do the final accounts (with or without auditors ) and get a liquidator. 
I gather ,and this is understandable , a liquidator would be happier ( and hopefully cheaper) if he sees  accounts were done by reputable auditor.

So it's a question of providing a clean tidy set of accounts, throw in indemnification to the liquidator, who will say " you are such an honest businessman who has done everything correctly and honestly for thirty years - you must be mentally deranged, so I'll do this for nothing"


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## Paddy199 (26 Jan 2011)

oldnick,

Do me a favour and contact ICC Company formation, Company formations or Omnipro (or another company secretarial specialist) and ask can you do a share buy back under s. 208 - 210 and how much.

A client of ours did this recently and it cost €245 plus VAT to amend the M&A and €295 plus VAT for share filing incl. all filing and stamping fees. 

Do a set of accounts upto cessation (not statutory accounts because your not going to file them with the CRO), then file all your tax returns, Deregister from taxes with revenue, submit your strike off documentation to CRO (prior to your ARD date) and file your own tax returns by the due date. 

The strike off can only happen after you have got that bond back, bought back the shares, and closed and the bank account as you can't have any assets or liabilities.

Assuming you are indemnifying the liquidator, what is wrong with the above approach, assuming you can buyback the shares under s.208-s.210? 
Regards


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## simplyjoe (26 Jan 2011)

I would add to the OPs comments. Some very good informative contributions to this query. Thank you.


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## oldnick (26 Jan 2011)

Paddy -will do.
As I said in my last post it was worth pursuing ,and if it can be done as you state even more worth it.
Will get back on what they say in a couple of weeks -am off to Canaries this w.e. for a week's holiday ( oh, I should say business trip and  claim a 100k travel expenses,like our TDs and ministers )


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## jack2009 (26 Jan 2011)

Paddy199 said:


> What about a share buy back under s.211? (specifically s.213 for private companies)


 
My reading of these sections does not solve the problem as the company does not qualify!  However, I note that you suggested that the op go to get "proper advice" so lets wait and see what the professionals say.

The reasons I dont believe the suggest sections apply is that my reading of the sections indicates that the redemtpion and cancelling of shares only applies to shares that were redeemable.

 Nevertheless if my understanding is incorrect the part goes on to say that the shares being redeemed must be redeemed from profits available for distribution and in this case there are no funds available for distribution.


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## Paddy199 (27 Jan 2011)

Oldnick enjoy your holiday, sorry business trip!, and let us know what the outcome is.

Jack2009 I agree it does sound like it doesn't qualify but there must be some way around it, as our client did not have redeemable shares either from memory.


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## Bronte (27 Jan 2011)

oldnick said:


> , I should say business trip and claim a 100k travel expenses,like our TDs and ministers


 
Only if it's wholly and inclusively necessary for your business, the revenue rules on this don't apply to ministers.


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## Paddy199 (31 Jan 2011)

This should make the process a whole lot cheaper

*ROI -Travel Trade Industry - Removal of Audit Requirement *
Further to the 2008 travel trade review legislation consultation, the Commission for Aviation Regulation ('CAR') has recently issued a notice which relates to the removal of requirement to produce an audit report. Chartered Accountants Ireland had recommended the requirement for an audit should only apply to larger companies in a representation to CAR which would reduce burden on small businesses, particularly in these difficult economic times.


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## Palerider (14 Apr 2012)

How long should the indemnity to the liquidator last and why is this necessary if the directors have completed a declaration of solvency and there are no creditors but cash in the account, I'm looking at this situation now and the indemnity is for 2 years after cessation of the Limited Co.

The liquidator recommended by the Accountant wants this but an enquiry made to another low cost liquidation firm told me that they do not require an indemnity. This is a members voluntary liquidation in a non trading company with a nominal amount of cash in the bank.

We would be satisfied to indemnify the liquidator up to the demise of the company but not  a moment longer.


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