The Gazette 1990

GAZETTE

A PRIL 1990

Striking off the Register and Section 12 of the Companies (Amendment) Act, 1982

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

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

Lyndon MacCann.

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