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GAZETTE
A
PRIL
1990
Striking off the Register and
Section 12 of the Companies
(Amendment) Act, 1982
Under sections 125 end 126 of the Companies Act 1963 ('the
Principal Act'), every company is required to make annual returns
1
to the Registrar of Companies. Failure to do so may result in the
company and every officer who is in default being liable to a fine
not exceeding £500.
2
Apart from the question of criminal
sanctions there is also the possibility that in such circumstances
the Registrar of Companies may exercise his power under Section
12 of the Companies (Amendment) Act 1982 ('the 1982 Act') to
strike the name of the company off the register. This power, which
is being used with an increasing frequency, is only exercisable
where the company in question has failed for three consecutive
years to make such annual returns.
The purpose of this article will be and from the date of publication of
to examine the procedure whereby
such companies are struck off, the
problems that this may cause for
the shareholders, employees and
creditors, and finally, the procedure
for restoring the company to the
register.
Procedure for Striking off
3
The Registrar will send to the
company by post a registered letter
inquiring whether the company is
carrying on business.
4
This letter
must state that if an answer is not
received within one month from the
date thereof, a notice will be
published in
Iris Oifigiuil
with a view
to striking the company's name off
the register. If he receives an
answer that the company is not
carrying on business or if within
that month the company fails to
reply to the letter, or fails to deliver
all outstanding returns, then the
Registrar may publish in
Iris Oifigiuil
and send to the company by
registered post, a notice that at the
expiration of one month from the
date therof, the company's name
will be struck off and will be
dissolved, unless cause is shown to
the contrary or all outstanding
returns are made.
Effect of striking off
If the company is then struck off
the register, a notice of this fact
must be published in
iris Oifigiuil
this notice the company is deemed
to be dissolved.
During the period when the
company was on the register it
By
Lyndon Ma c C a nn B . A.
(Mod . ) , M. L i t t ., B.L.
existed as a separate legal person,
distinct from its members.
5
How-
ever, once it has been dissolved, it
ceases to exist in the eyes of the
law. This can have serious
consequences not only for its
members, but also for its creditors
and employees.
The Position of Shareholders
It is a well established principle
of law that because of the separate
and distinct legal personality of the
company, its members do not have
any form of proprietary interest in
its assets and other property.
6
Accordingly, upon dissolution, such
assets and property will not
automatically
vest
in
the
shareholders. Rather, it has been
held in some early cases, that in
such a situation, where the
company has been dissolved, its
property devolves upon the State
as
bona vacantia.
1
In Ireland the doctrine of
bona
vacantia
has been abolished.
8
However, Section 28 of the State
Property Act 1954 expressly
provides that where a company has
been dissolved all real and personal
property (other than land held by it
upon trust for another person)
automatically vests in the State,
subject, in the case of land only, to
such charges or incumbrances as
affected the land immediately
before dissolution. According to the
Act, the Minister for Finance then
holds the property on behalf of the
State. It would seem, therefore,
that as a result of this section the
shareholders will not have any
claim to what was formerly the
property of the company.
This may in turn give rise to
further problems. For example, prior
to dissolution, the company may
have been intending, for one reason
or another, to issue proceedings
against some other party. Whatever
the nature of the intended cause of
action, as the company ceases to
exist upon dissolution such
proceedings certainly cannot be
Lyndon MacCann.
125