If you are a Company Director, or planning on becoming one, it's important to be aware of the responsibilities the role takes and the penalties that may arise if you do not take these responsibilities seriously.
The modern structure/concept of a private limited company by share capital was originated in New York in the early 1800’s, and latterly in England in the 1850’s and the early days of Lloyd's of London, as a means of bringing together investors with common aims. As the structure evolved it became clear that the rules governing the running of this type of company had to develop to protect certain interests such as creditors and finance provider's.
Directors carry a substantial responsibility to company shareholders as trustees in ensuring that the company is run efficiently, keeps accounts, files them on time and ultimately makes a profit to distribute among its shareholders in the form of a dividend.
This is well and good under normal circumstances but what happens when the company is mismanaged, loses money, files its accounts late or not at all, continues to trade while insolvent or, worse than all of the above, is run by Directors who are just determined not to run a compliant business?
We have seen many different personalities at the helm of companies over the years and all of the above bring their own share of problems. However, 'advising' a Director who refuses to keep up to date with CRO filings is an impossible task. Ultimately if a company does not file its accounts (even if has not been trading, it still must file accounts by law), it will be 'involuntarily struck off'.
'Involuntary' versus 'voluntary' strike off takes the control over the Directors destiny somewhat away from the Director and places it in the hands of the legal authorities, the 'ODCE' (Office of the Director of Corporate Enforcement) Ireland's corporate enforcement agency.
In our experience an orderly wind down is ALWAYS the best policy via a 'voluntary strike off’.
Involuntary strike off can result in a company director being prosecuted in the high court, being excluded from acting as a director with implications for him acting in similar capacities in other countries.
The new Companies Consolidation, due to become law in 2013, will make directors more accountable so it will even more important to get it right!
Are you clear on what your duties are as a Company Director?
Could your company face Involuntary Strike Off
because the Directors have not ensured compliancy?