A False Sense of Security? CRO to Strike Off Thousands of Companies

The recent CRO Gazette, dated Wednesday, 5 February 2025, reveals companies struck off the register on 31 January 2025 and those slated for dissolution within the next 28 days. This renewed initiative targets companies that have neglected to submit accurate details of directors.

The repercussions of CRO strike off and dissolution are severe, essentially serving as a death knell for companies. Stripped of limited liability protection, companies risk directors being personally liable for debts if they continue to operate post-strike off. Furthermore, directors face potential disqualification for allowing such lapses, a serious offence with far-reaching implications.

The High Court Decision in Cautious Trading

One notable case is that of Cautious Trading Limited, where directors’ failure to file CRO returns led to their disqualification by the High Court. The court’s decisive action, imposing a 5-year ban on both directors and holding them personally responsible for legal costs, underscores the gravity of non-compliance.

The message is unequivocal: non-submission of CRO returns can trigger dire consequences for company directors, emphasising the critical importance of timely compliance and adherence to statutory obligations.

Potential Loss of Credit Status

Companies that miss their CRO annual return filing deadline date by just a few days are now very much under the microscope with credit reporting agencies who have direct access to all the live CRO data and creditors are immediately alerted to any defaults on CRO compliance resulting in possible loss of credit facilities as a result of non filing of the relevant financial statements. The current campaign led by the Registrar of Companies marks the beginning of a significant process that will see numerous companies listed for strike off in the coming months and years. Practitioners are likely to face immense pressure to prevent their client companies from being listed due to non-filing of CRO statutory returns. The challenge lies in preparing and submitting the outstanding annual returns within the limited timeframe stipulated by the statute.

Exploring the Section 343 CRO District Court Late Filing Fee Waiver Application

Practitioners have the option to utilize the Section 343 CRO District Court Late Filing Fee Waiver Application, a valuable yet often overlooked tool in company law. Initially available only in the High Court until 2015, this application now allows for commencement in the District Court to request an extension of the annual return date.

One of the key advantages of this application is that upon securing a return date in the District Court and serving the Registrar of Companies with the necessary documents, the CRO promptly imposes an enforcement block on the company. That means that the Registrar of Companies will pause any strike off action or prosecution. This action provides practitioners with crucial additional time to prepare effectively and, importantly, avoid substantial late filing fees amounting to over €3,600, along with the risk of losing audit exemption status.

The grounding affidavit to the Section 343 application needs to set out the circumstances of the company and identify if it is a small or micro company and give the court details of the approximate turnover and number of employees in the company and a description of what the company does. The affidavit should particularise why there was a failure to submit the annual return on time and a frequent reason given to the court was that the typical accountant was overwhelmed during the Covid 19 Pandemic dealing with client affairs and the matter was overlooked to the detriment of the client company and the practitioner usually takes the blame. Details of possible medical issues or injuries will also be sympathetically received by the court when dealing with these applications taken in the District Court where the registered office is located.

Conclusion

The CRO District Court Late Filing Fee Waiver Application is a wonderful application in the toolkit of a practitioner presenting real solutions to clients that will be of real and immediate benefit in the months and years ahead when the CRO enforcement campaign is in full stream.

It’s not a question of if, but when that happens!

Practitioners need to be aware that companies have been lulled into a false sense of security with regard to CRO compliance over the last 5 years and they need to be fully prepared going forward.