Active Company

‍An active company is a legally registered business entity that is currently trading, filing statutory returns, and meeting all ongoing compliance obligations with the company registry and tax authorities in Ireland.

What is an Active Company exactly?

‍An active company is one that has been properly incorporated and continues to fulfil its legal and administrative duties. This means it has directors who are actively managing the business, it maintains a registered office address where official correspondence can be received, and it files annual returns and financial statements with the Companies Registration Office (CRO) on time. Being active is the default status for most legitimate businesses that are operational and generating revenue.

‍The opposite of an active company is a dormant company, which is registered but not currently trading, or a dissolved company, which has been struck off the register. Maintaining active status requires continuous attention to compliance deadlines and financial reporting. If you fail to file your annual return, pay your fees, or respond to official notices, your company could be marked as non-compliant and eventually struck off, ending its active status.

‍For founders, keeping your company active is essential for accessing business banking, securing contracts, and maintaining credibility with customers and suppliers. An active company can enter into legal agreements, own property, and employ staff, whilst a dormant or dissolved company cannot conduct any business activities.

What are the legal requirements for maintaining an Active Company?

‍To maintain your company's active status in Ireland, you must meet several ongoing legal requirements. First, you must file an annual return (Form B1) with the CRO every year, along with financial statements if your company's turnover exceeds certain thresholds. This filing has strict deadlines, and missing them can result in late fees and potential strike-off proceedings.

‍Second, you must keep your company's statutory registers up to date, including details of directors, shareholders, and any change of registered office. These registers must be available for inspection at your registered office. Third, you must comply with tax obligations by filing corporation tax returns with Revenue and paying any taxes due. Failure to meet these requirements can jeopardise your company's active status.

‍Additionally, you must hold an annual general meeting (AGM) or pass written resolutions in lieu of meetings. Whilst private companies limited by shares are no longer required to hold physical AGMs, they must still approve financial statements and appoint auditors if needed. These governance activities demonstrate that the company is being properly managed.

How does an Active Company differ from a dormant company?

‍The key difference between an active company and a dormant company lies in trading activity. A dormant company is one that has no significant accounting transactions during a financial year, meaning it is not buying, selling, or incurring expenses beyond minor administrative costs. Many startups begin as dormant companies while they develop their product or seek funding before launching.

‍An active company, by contrast, is engaged in regular business activities. It has bank transactions, generates invoices, pays salaries, and files tax returns showing income and expenses. Whilst a dormant company has reduced filing requirements (it may not need to file full financial statements), an active company must provide comprehensive accounts that reflect its trading position.

‍It's important to note that a company can switch between active and dormant status. If you incorporate a company but don't start trading immediately, you can register it as dormant with Revenue. When you're ready to launch, you simply notify Revenue that the company has become active and begin meeting all the corresponding filing obligations.

What happens if my company becomes non-compliant?

‍If your company fails to meet its compliance obligations, it risks losing its active status. The CRO will initially send reminders about overdue annual returns. If these remain unfiled, the company may be marked as non-compliant on the public register, which can damage your reputation with banks and business partners.

‍After an extended period of non-compliance, the CRO may initiate strike-off proceedings, which could ultimately lead to the company being dissolved. During this process, the company cannot conduct business, and its assets become the property of the state. Restoring a struck-off company is possible but involves a complex and expensive restoration process through the High Court.

‍To avoid this situation, many founders use professional company secretarial services to ensure all filings are completed on time. This is particularly valuable for active companies with multiple compliance deadlines, as missing just one can trigger a chain reaction of penalties and administrative headaches.

Can an Active Company be struck off voluntarily?

‍Yes, an active company can apply for voluntary strike-off if the directors decide to wind up the business. This process, known as a Members' Voluntary Liquidation (MVL), involves settling all debts, distributing remaining assets to shareholders, and formally dissolving the company. It's a cleaner exit than letting the company become non-compliant and face involuntary strike-off.

‍Before applying for voluntary strike-off, you must ensure the company has no outstanding liabilities, has ceased trading, and has no assets remaining. You'll need to file a final set of accounts and tax returns, and obtain a letter of no objection from Revenue. The entire process typically takes several months but provides a definitive end to the company's active status.

How does being an Active Company affect fundraising?

‍Investors almost always require that a company be active and in good standing before they will consider investing. During due diligence, they will check the CRO register to confirm the company is active, has no outstanding penalties, and has filed all required documents. A clean compliance history signals that the company is well-managed and reduces legal risk for investors.

‍Active companies seeking equity financing or experiencing an up round must demonstrate not just growth potential but also solid governance. Investors want to see that statutory registers are maintained, annual returns are filed on time, and all director changes have been properly recorded. These administrative details might seem minor, but they are critical indicators of a founder's attention to detail and commitment to building a sustainable business.

What should I do if I want to make my company dormant?

‍If you want to change your company from active to dormant status, you must first ensure it has ceased all trading activities. Notify Revenue that the company is becoming dormant, which will pause your corporation tax obligations. You'll still need to file an annual return with the CRO, but you can submit abbreviated dormant company accounts instead of full financial statements.

‍It's important to remember that even a dormant company must maintain a registered office address and keep its statutory registers up to date. You should also continue to monitor official correspondence, as the CRO will still send notices about filing deadlines. Many founders find that using a professional registered office service helps ensure nothing is missed during dormant periods.