Thousands of companies could be struck off the Companies Register in the coming months, according to a warning from formation agent the Company Bureau.

The firm expects a rash of involuntary strike-offs by the Companies Registration Office of firms which fail to file annual returns or ensure their affairs are tax-compliant.

The CRO has terminated the pandemic arrangement under which such strike-offs were put on hold to allow companies to cope with the Covid emergency.

The CRO advises Irish businesses that a company may be struck off the register for a number of reasons, but most commonly if it has failed to file an annual return for one year, the Company Bureau says.

Managing director Paula Horan said: “As businesses focus on getting back on track, it’s so important they also take the time to ensure their compliance with CRO regulations is up to date. This may relate to their main business, or another one that hasn’t been trading much in recent years.

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“There can be very serious consequences for them, their business and employees if they neglect this. It’s important people realise that even if their return is overdue it’s not too late to try and resolve the situation.

“They may be on the ‘strike-off list’ but if it hasn’t actually happened yet, they still have time to act. Unfortunately, depending on the circumstances, there may still be a risk of prosecution at a later date but the important thing is that you act as soon as possible”. 

While rates of business failure are at historically low levels emerging from the pandemic, the rate of failure has again begun to rise, with an increase of 14% in the second quarter on Q1 2022.

That information comes from PwC’s Restructuring Update Q2 2022.

Partner Ken Tyrrell said: “The business failure rate continues at a record low, but there are clouds on the horizon. We are now seeing business failures slowly but steadily increasing, albeit still from a very low base. The economic supports that were put in place during the pandemic have now been removed. 

“Similar supports were removed in the UK during autumn 2021, followed by a very significant pick up in liquidations in the following two quarters. It remains to be seen for how long those organisations under financial pressure in Ireland can stay in business.
 
“Our analysis shows that business failures are beginning to increase slowly but steadily. We expect increased restructuring activity to hit Ireland with an increased level of business failures in the later part of this year and 2023," Tyrrell added.

Photo: Paula Horan and Company Bureau commercial director Andrew Lambe. (Pic: Conor Healy/Coalesce)