Punch group switches to unlimited liability status

Consumer products group, Punch Industries, is switching to unlimited liability status, according to the latest documents filed with the Companies' Registration Office (CRO).

The holding and operating companies in the group, which had sales of over €40 million in 2002, applied to the CRO earlier this month to drop their limited liability status and re-register as unlimited entities.

The move means that their shareholder, the Cork-based Punch family, will lose the protection of limited liability and will be personally responsible for their companies' debts should any of them be wound up.

According to a CRO spokesman, the process of re-registering as an unlimited company is straightforward, but requires a special resolution of shareholders. This means that it needs the support of stock holders with a minimum of 75 per cent of the equity.

However, he added that once a company has switched status, from limited to unlimited, or vice versa, it is difficult to switch back. "We get about 20 or 30 applications like this every week, but it's not a large amount," he said. "There are over 164,000 companies on the register." He added that it was not unusual for holding and investment companies to use unlimited status.

The spokesman explained that companies frequently switched status ahead of winding up and distributing proceeds to shareholders. Liquidating unlimited companies is more straightforward than limited companies.

Another advantage is that unlimited companies are not obliged to file accounts with their annual returns, and can thus keep financial information private. They are also subject to less regulation than limited companies.

There was nobody available from the group to comment on the move when The Irish Times contacted Punch Industries at the weekend. The company has facilities in Cork, Dublin, Scandinavia and Scotland.

A number of large, privately held Irish companies, including Dunnes Stores, Superquinn and Glen Dimplex, are owned by unlimited companies.