CRO Crackdown: Rising Enforcement Against Defaulting Companies and Directors

The Companies Registration Office’s (CRO) has resolved to escalate its enforcement action against defaulting companies and directors and to commence enforcement action against defaulting liquidators for non-filing offences.   As of March, 200 companies per week were being struck off and it is proposed that this number be ramped up with a view to clearing the backlog of non-compliant companies by the end of the year.   This backlog was caused by the suspension of enforcement action during the Covid-19 pandemic and a further suspension due to issues with the CRO’s own IT system in January 2024.

What is the involuntary strike-off mechanism?

Involuntary strike-off is the mechanism by which the CRO removes a company from the Register for non-compliance with the Companies Act 2014 (‘the Act’). The grounds for strike-off are set out in section 726 of the Act and include a range of filing and compliance defaults including the following;-

• failure to file an annual return for one year;
• failure to deliver to Revenue a statement required under section 882 of that Act;
• failure to provide the relevant insurance bond or a certificate stating that the company has a real and continuous link with an economic activity in the State where a company does not have an EEA-resident director;
• where there are no persons recorded in the office of the Registrar as being current directors of the company; and
• failure to deliver the required beneficial ownership information with the Central Register of Beneficial Ownership of Companies and Industrial and Provident Societies (RBO).

For companies in liquidation, strike-off action may be taken where;-

• no liquidator is acting; or
• where the company’s affairs are fully wound up, but the required liquidator returns have not been filed for six consecutive months.

What are the Consequences of Strike-Off?

The consequences of involuntary strike-off are severe. Once a company is struck off, it ceases to exist as a legal entity and its assets vest in the State.  If business continues post strike‑off, the loss of limited liability can expose the members and directors to personal liability.   Directors may also face disqualification proceedings, and although restoration is possible in many cases, it can be an expensive and time-consuming process.

Recommencement of Prosecution of Companies and Directors

The CRO propose recommencing the prosecution of companies and directors later in the year for failure to file annual returns, which may incur monetary penalties against the company and its directors in respect of each year the annual returns are outstanding up to €5,000 per offence.  A director with 3 such convictions may be disqualified from acting as a director or having any involvement in the management of any company.

Commencement of Prosecution of Liquidators

The CRO also intends commencing the prosecution of Liquidators for non-filing offences before the end of 2026.  It is proposed that the CRO will first carry out a publicity campaign to enable offending Liquidators update their filings.

Recommended action to be taken by directors and liquidators

Directors and liquidators should review their CRO filing and compliance status without delay. In many cases, strike-off and prosecution can be avoided by identifying and addressing defaults early, whether that means filing outstanding annual returns, updating company records and ensuring that required notifications have been delivered to the CRO.  Where a company is already at risk, prompt action is essential. Regular compliance checks remain the best way to avoid unnecessary disruption and to ensure that the company remains in good standing.

Our Team

Our Company Secretarial team provide strategic advice and assistance on corporate compliance, CRO filings and strike‑off exposure, including preventative action and restoration where required.

Please contact our company secretarial manager, Maeve Walsh, at mwalsh@reddycharlton.ie or call 01 6619500 if you have any queries or require any assistance in relation to the above.