3 minute read
Challenges for UK Directors on Irish Companies
Brexit has raised challenges for a number of companies and their Directors in the UK and Ireland. Roberts Nathan Partner, and Dublin Chair, Aidan Scollard, explains
The EU and the UK finally reached agreement on a Free Trade and Cooperation Agreement (TCA), avoiding a hard Brexit in late December. As a result, the UK has left the EU and therefore is no longer part of the EU single market and customs union and is now regarded as a third country.
This results in potentially significant changes for UK resident Directors of Irish registered companies as the UK now becomes a third country. Although there are more than 60,000 Irish Directorships of UK registered companies there are also a significant number of UK based directors of Irish companies.
EEA Resident Director Requirement
Companies Registration Office (the Irish equivalent of Companies House) had previously alerted that under Irish company law an Irish registered company must have at least one European Economic Area (EEA) resident Director on the board on an ongoing basis or a bond in place to cover filing liabilities.
Many Directors based in the UK who are either of Irish descent or UK based companies who have established Irish entities as part of their Brexit planning will need to consider this change.
Where an existing Irish company has fulfilled this Director requirement by appointing a UK resident director this will no longer qualify and they should now consider replacing that director or adding an additional director who is an EEA-resident.
This requirement is based on residency, not nationality and so, a company director of Irish nationality who lives in the UK and has done so for a number of years is unlikely to satisfy the EEA requirement in the future.
There are a few options available:
EEA resident
Appoint an EEA resident to your Irish company board.
Put a bond in place
It is possible for a company to put in place a Section 137 Revenue Bond which is an insurance policy that CRO approve in replacement of having an EEA resident individual on the board. This insurance policy covers against fines or penalties incurred to the value of €25,000 for noncompliance and covers the company for a period of two years at which point the company will either need to renew the bond or appoint a director who meets the requirement.
The bonds are relatively easy to put in place but will have a premium cost to maintain for the twoyear period and we have put these in place for a number of clients recently.
The Exception to the Rule – ‘Real and Continuous link’
It is possible for the Directors of an Irish Company who have no EEA-resident Directors to apply to the Irish Revenue Commissioners for a Statement under Section 140 of the Companies Act 2014 which, if granted, will relieve the company from the requirement to hold a Bond or to have an EEAresident director.
This Statement is granted based on the company having a ‘real and continuous link to the State of Ireland’.
This Statement is granted based on retrospective activity and will generally not be granted to a company that intends to have a real and continuous link to the state.
This is a basis that can be used for Irish operating subsidiaries where they can clearly prove that there is a real and continuous activity here in the Irish state, but care needs to be taken on the residency implications for the company also.
Final Word
Company Directors need to consider the implications since the UK has left the EU and consider their options. As with any legal or accounting issue early advice is important.
Contact us if you wish to discuss the impacts of any of these changes to your company structures here in Ireland or any planning requirements or to obtain a bond.
aidan.scollard@robertsnathan.com www.robertsnathan.com
