How to Dissolve a Ltd. Management Company?

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squa

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I am the director (along with 1 other person) of the management company for our estate, which comprises of approx. 80 houses (no apartments). The management company has existed since the developer signed over the title of the common areas on completion of the estate about 4 years ago. Luckily we also have a letter from the local Borough Council stating that they have taken charge of the roads, footpath, lighting, sewers, etc., basically everything except the maintenance of the common areas, i.e. grass cutting. The management company effectively exists to collect a very small maintenance fee in order to pay for the cutting of the grass & also to hold title of the common areas.

The problem which we have, is that only a small percentage (less than 20%) of home owners are actively paying the maintenance fee & this is no longer enough to pay the accountant to file our annual audited accounts or to cover grass cutting costs. The attendance at our AGMs is comical at best, only about 5 of the houses are represented each year, so it's safe to say that home owners really don't care & there's an "out of sight out of mind" approach to the up keep of the estate. I'm confident that when the grass begins to grow up around peoples windows this will prompt some action from those who care, but we no longer have the luxury of time, since the accounts need to be filed before the end of October & there isn't enough money in the account to cover the accountant's fees this time around.

Both myself & the other director do not want to let the company incur fines for late accounts or to be involuntary struck off by the CRO & at this point think it's best that we dissolve the company while it's still liquid. The other director also owns his own business & doesn't want to be associated with a company that's struck off, nor do I for that matter.

My questions are as follows;

1. How do we go about transferring the title to the common areas out of the company's name before we dissolve it? How does this effect the title of each home owner in a real world scenario? (Our account tells us that this will damage the title of each homeowner if the common area is not in good title, but a solicitor friend of mind told me that in reality this is fairly common around Ireland & a lot of common areas are vested in the state anyway. Once there is some sort of residents association in place to collect a fee to pay for the grass there shouldn't be an issue with any potential future sale of a house within the estate)

2. What is the correct procedure to dissolve a Ltd. management company? I looked on the CRO website but my lack of knowledge about Irish companies means that I'm not sure do we chose to "dissolve", "voluntary strike off" or "cease business name"?

Any advice is greatly appreciated.
 
First of all you need to check if there is a reference to the management company in the deeds of your house.

This is very important. If there is its a different ball game.

Who are you going to transfer the title to? In that timeframe I doubt it very much.

In the longer run if there are no references to the management company then its simply a matter of applying for a voluntary strike off if all the affairs are up to date.
 
Hi Joe_90,

Thanks for taking the time to reply, your advice is greatly appreciated. I'd need to look at the deeds to my house to see if there is any reference to the Mgt Co. At a guess there might be reference to "a" Mgt Co. but not the exact one in operation, since it wouldn't have be in place at the time the developer was selling the units. The current Mgt Co. was only registered a couple of years after the estate was completed so the developer could sign off & transfer title of the common areas.

When you say "a different ball game" are you able to elaborate further so we have an idea as to what we might be dealing with?

Is it possible to transfer the title of the common area to the state, since this is effectively what happens if the company suffers an involuntarily strike-off?
 
squa said:
Hi Joe_90,

Thanks for taking the time to reply, your advice is greatly appreciated. I'd need to look at the deeds to my house to see if there is any reference to the Mgt Co. At a guess there might be reference to "a" Mgt Co. but not the exact one in operation, since it wouldn't have be in place at the time the developer was selling the units. The current Mgt Co. was only registered a couple of years after the estate was completed so the developer could sign off & transfer title of the common areas.

When you say "a different ball game" are you able to elaborate further so we have an idea as to what we might be dealing with?

Is it possible to transfer the title of the common area to the state, since this is effectively what happens if the company suffers an involuntarily strike-off?
Click to expand...

This is the second one of these to crop up recently. IF and ASSUMING this co. was set up after the units were sold then you don't have a management company, its just a normal company. A 'real' management company is listed in the lease documents in great detail joining in the conveyance process and the service fee's paid are contractually an obligation to pay and can be recoverable through court. As more and more people have opted out of your voluntary system and you have never pursued payment I suspect you may of been aware of this difference?

On the plus side you have a system to manage the title deed but the other costs are probably disproportionate to what you need to cut your x acres of grass. I doubt the coco will ever want to take the title for this land as they would need to insure it. Its doubtful they will ever cut it. You may be able to set up a voluntary RA to dal with grass and knock on doors to collect??

Ring CRO and ask them about the differences and you should get some legal advice especially if you have other businesses as it could impact on those. The tile may not be associated with the company? or is it? do you have it?

another developer mess.
 
Lantus you are probably correct about the differences between an actual Mgt Co. & just a Ltd. Co. Our accountant always advised us that we could legally pursue payment or impose fines for late payment, but in reality the treat of a fine doesn't scare people who haven't already paid the (minimal) service fee we charge & it only becomes relevant if selling a house, i.e. the sale won't complete until all outstanding charges are paid. But since nobody is selling houses in this estate at the moment, it's a bit of a catch 22 scenario!

I was a bit late to the party on this whole thing in the sense that I only became a director last year following a resignation & I wasn't involved in the original purchase of the house we live in, my wife bought this before I met her. So what I need to do is get a copy of her lease agreement & review it to see if the existing Mgt Co. is specifically named, as you suggested. If not then striking off the company should be straightforward enough, but we still face the problem of where to transfer the title of the common area? One solicitor advised me that we could transfer it back to the individual home owners so that an equal share of the common area is divided equally amongst the number of houses in the estate. However, that would mean that each individual is then personally liable for any claim for damages incurred on a common area, introducing the need for PL insurance & given that people can't even pay to keep the grass cut I don't foresee us being able to keep up payments on a PL premium.

Another suggestion was to stop filing annual accounts & let the CRO strike off the company, which means the common area if the then vested in the state. However we wanted to avoid that as both directors don't want to be associated with a company that's been struck off, especially the one who currently has their own business, Does anyone know if it's possible to resign as a director before a company is struck off or can you only resign if there is somebody to take your place?

As you say, it's a ll a big mess at the moment & the annoying thing is that if even 70% of the houses paid the proposed service fee (€60 pa btw), there would be more than enough to keep everything going. Instead less than 20% are prepared to pay & both directors are left to clean up the mess!
 
We are in a similar situation but all 5 residents do pay towards maintenance but its our first year and we have been told that we need our accounts audited each year as well as doing returns! A figure of €800/year was mentioned! This seems excessive for our simple 5house community! We had to set up a management company to transfer the ownership of the common areas from the developer to us! All 5 have an equal share. Do we need to have a limited management company? Would a residents association do instead? Also outside the walls to thgthge road there is some road frontage that local people often park in but its part of our common areas. Are we liable if something happens to someone there? It's impossible to stop them parking there it seems. Appreciate any advice.
 
@Georgetown,

From what I have learned since becoming a director of our management company, there is a need for the existence of a Ltd. Company in order to retain "good title" to the common areas, especially if the management company is explicitly mentioned in the deeds to each person's house. Without the existence of a valid/liquid Ltd. Company, i.e. your management company, the title to the common areas is vested in the state, i.e. the Minister of Finance. Therefore this means that there is not a "good title" to the common areas. This could potentially cause a problem if somebody in your development wants to sell their house down the line.

From speaking with a solictor friend of mine, the real world implication of this might not be as bad as it sounds - in the past they have encountered situations similar to this regarding the problem with the title & once the seller is happy that some sort of instrument is in place to collect money & take care of the upkeep of the common areas, then generally this isn't an issue.

At the moment a Ltd. Company requires a minimum of 2 directors & is also required to file annual audited accounts, which normally means accountants fees for the Ltd. Company. Otherwise it will be struck off by the CRO & the title to the common areas will be vested in the state as previously mentioned.

Apparently there are some proposed changes to the current Companies Bill being discussed in the Dail & if successful will mean that certain Ltd. Companies can file their own accounts, but this isn't due to be passed into law until 2015 :(
 
@Georgetown, is the company limited by shares or by guarantee, if its limited by guarantee than you have to file audited accounts, if not then there is a possibility that the audit may not be required.
 
Hi guys, I know these comments are old now but I’m just wondering if you managed to close the Management company and transfer the ownership of the common land to the state or somewhere!
We have 40 houses, no apartments and we’re told that the management company was part of the co co conditions/requirement of the estate build. We have since found out that this was in fact incorrect and the co co have said no conditions were added as part of the planning. We have been running the Ltd. Management Company for several years now but we are wanting to get rid of it as it costs more to run than the mo ye we are taking in.
As we have no legal necessity to have the Management company now, can we organise for a solicitor to wind down the company? In the house deeds the land registry shows the Management company as owners of the common land and each resident has an equal share/vote.
It is possible to close the Management company, transfer the common land registry ownership to the state or somewhere/someone (council won’t take it - but they have taken in charge of the estate). While also removing the equal share in each residents deeds so making a house sale will be easier. We are desperate to get rid of the management company. We are in agreement that we/residents will continue to pay for the grass areas to be cut by setting up a local RA.
Any help, advice would be highly appreciated.
 
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