Since the historic vote for Britain to leave the EU there has been a lot of discussion and debate on the impact of the Brexit on Ireland. A small part of this is the impact from a Company Law perspective. A lot of the exemptions in the Companies Act apply to companies that are resident in the EEA or subsidiaries of a company that is resident in the EEA.
The obvious points we might see is an increase in the number of UK companies establishing in Ireland by either setting up new companies or registering branches in Ireland. If the UK leaves the EEA this will have an impact on the existing companies registered in Ireland and for an UK businesses setting up in Ireland.
The Act defines an “EEA state” means a state, including the State, which is a contracting party to the EEA Agreement; and an “EEA undertaking” means an undertaking established under the law of the State or the law of any other EEA state.
Non-EEA Director
The Companies (Amendment) Act 2009 amended the original requirement for every company to have a resident Irish director to the requirement to have an EEA resident director.
The Companies Act 2014 continues the requirement to have a director who is resident in an EEA state. The exemptions to this are the company takes out an insurance bond or to obtain a real and continuous link from Revenue.
The bond should be to the value of €25k and which provides that, in the event of a failure by the company to pay the whole or part of each (if any) fine and penalty imposed by the Companies Act 2014 of the Taxes Consolidation Act 1997.
The cost of the bond which lasts for a two year period and should be continuously renewed is approximately €1,500.
The other option to having an EEA director is for the company to apply for a real and continuous link certificate from the Revenue Commissioners stating that they have reasonable grounds to believe that the company has a real and continuous link with one or more economic activities being carried on in the State
A company has a real and continuous link with an economic activity that is being carried on in the State if one or more of the following conditions are satisfied by it—
(a) the affairs of the company are managed by one or more persons from a place of business established in the State and that person or those persons is or are authorised by the company to act on its behalf;
(b) the company carries on a trade in the State;
(c) the company is a subsidiary or a holding company of a company or other body corporate that satisfies either or both of the conditions specified in paragraphs (a) and (b);
(d) the company is a subsidiary of a company, another subsidiary of which satisfies either or both of the conditions specified in paragraphs (a) and (b).
Any companies that have just UK directors or rely on the UK director to satisfy the requirement to have an EEA director will have to examine one of these options.
Financial Statement Exemptions
The exemption from the requirement to prepare consolidated financial statements is provided for in Sec 299 and 300 of the Act regarding subsidiaries of an undertaking registered in or outside of the EEA.
The exemption (Sec 357) to the requirement to file the subsidiary financial statements for with the annual return is only available to subsidiary undertakings of an undertaking that is registered in an EEA state.
Sec 348 also provides for the filing of financial statements for a subsidiary undertaking of a higher EEA holding undertaking.
Qualification of a Liquidator
The qualification to act as a liquidator include a person is entitled under the laws of an EEA state to act as a liquidator in insolvency proceedings and the qualifications.
Registration of a Branch
The registration of an external company (branch) in Ireland have specific requirements for the filing obligations for EEA companies and non-EEA companies. A “non-EEA company” means a body corporate whose members’ liability in respect of such body corporate is limited, which is incorporated in a state that is not an EEA state.
We have already seen an increase in Northern Ireland companies interested in establishing companies in the Republic and these companies will require services and support in setting up businesses south of the border.
How Can CLS Help
We can assist registering a company or a branch in Ireland and arranging a Bond to be put in place. We can also act as Named Company Secretary and provide Annual Company Secretarial Compliance Services
For more information please contact one of the Co Sec Team on 059 9186776 or cosec@clscs.ie
Please Note:
Our CLS Insights aims to bring you practical information and news on Company Law and Company Secretarial. We cover the topics that matter to your business and give practical tips and also the benefit our experiences. Please remember this article is a guide and legal advice should always be obtained. If you have any queries please contact one of the team and we would be happy to help.
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