As another Brexit deadline looms, companies will need to consider if a no deal Brexit will leave them in breach of Irish company law.
Section 137 of the Companies Act 2014 (the “2014 Act”) provides that every Irish registered company is required to have at least one director who is resident in the EEA. Failing that, a company is liable to fines under the 2014 Act and the Taxes Consolidation Act 1997, or worse still, section 726 of the 2014 Act provides power to the Registrar of Companies to strike a company from the register if she has reasonable cause to believe that section 137 is not being complied with.
Until now, many companies have relied on a UK resident director to satisfy this requirement, however, if the UK does “crash out” of the EU come October 31st, this will no longer be an available avenue.
If your company has indeed been fulfilling this requirement by relying on a UK resident director, you must act now to ensure you do not default on your statutory obligations. You have 3 solutions;
In theory, the simplest solution, although this may not be an economically viable option for some companies.
This effectively provides an exemption from having an EEA resident director. A bond to the value of €25,000 can be put in place which provides that in the event of a failure by a company to pay the whole or part of a fine imposed in respect of an offence under company or tax legislation, there shall become payable, under the bond, a sum of money to discharge such a fine. Once in place, the bond is effective for 2 years and can be renewed thereafter if required.
To obtain such a certificate, an application can be made to the Registrar of Companies accompanied by a statement from the Irish Revenue Commissioners that the company has a real and continuous link with an economic activity within the state. For so long as the certificate is in force, the company will be exempt from having an EEA resident director. The granting of such certificate will only be on the basis of retrospective activity and as such will unlikely be available to a newly incorporated company intending to have such a real and continuous link.
Whichever option is most suitable for you, our experienced Company Secretarial Team can provide advice and assistance in getting your company Brexit ready.