Closing A Company: A Recap On Directors’ Duties

Closing A Company: A Recap On Directors’ Duties

By |2019-07-25T16:56:43+01:00July 25th, 2019|Latest News, News|

A director of a company has a number of roles to adhere to under the Companies Act 2014.

One such role would be to identify when the company has reached the end of its life, regardless of whether it is solvent or insolvent.

Once a company identifies that the time has come to close, it should either conclude its affairs by way of liquidation or voluntary strike-off.

Directors should therefore be pro-active in this regard, particularly given the Office of the Director of Corporate Enforcement review into companies where no action has been taken and those companies have been involuntarily struck off the register.

An Insolvent Company

The rule of thumb here is whether a company can pay its debts as they fall due.

If not, then it is important to seek professional advice as early as possible.

Depending on the acuteness of the insolvency, it may not be necessary to proceed with a liquidation, particularly if an examinership, scheme of arrangement or restructure of existing debt obligations are possible.

Candidates that normally meet the criteria to avail of the restructuring processes listed above, generally possess the following characteristics:

• Unable to pay their debts as they fall due
• Multiple financial obligations with financial institutions
• Indebted to the Revenue and are unable to pay current tax liabilities
• Unable to pay wages to employees
• Directors and shareholders have previously expended personal resources to put money into the company and its fortunes have not improved

Every company is different and finding the right process that fits is important.

A Solvent Company

If a company has come to the end of its life and the directors wish to retire or simply move on, then there are also a number of options available to them, including:

• Members Voluntary Liquidation
• Strike off

Candidates that are suited to availing of these processes generally possess the following characteristics:

• Directors are looking to retire and extract cash in the most efficient manner
• Special Purpose Vehicles that have reached the end of their useful life
• Shell companies
• Fund companies whose business have concluded

Under the Companies Act 2014, it is the director’s responsibility to identify when the company has reached the end of its life.

At Baker Tilly, our Corporate Recovery Team can help you at an early stage to advise on the processes.

Need to get in touch? Contact the Corporate Recovery team on (01) 6699999.

You can learn more about Sarah-Jane O’Keeffe, Manager in Corporate Recovery, by visiting her LinkedIn profile here.

About the Author:

Sarah-Jane O Keeffe