As a consequence of the UK leaving the EU, and the ending of the transition period on 31st December 2020, from 1st January 2021, UK (including Northern Ireland) resident directors of companies registered in Ireland are not considered resident in the European Economic Area (the "EEA") for the purposes of section 137 of the Companies Act 2014.
Section 137 of the Companies Act 2014 stipulates that a company on the Company Registration Office’s register of companies must have at least one EEA resident director. Therefore, all Irish companies whose directors are resident in the UK must do one of the following in order to comply:
- Appoint an EEA resident director;
- Put a €25,000 Insurance Bond in place; or
(The EEA-resident director requirement does not apply to any company that holds a bond to the value of €25,000. The bond provides that, if a company fails to pay any fines or penalties, these will be paid by the surety in discharge of the company’s liability up to the value of the bond. The process of obtaining a Section 137 bond involves submitting a bond application to an insurance broker who will issue a bond certificate upon approval of the application. The original certificate, together with a copy of same, must be filed at CRO.
- Prove a 'real and continuous link' with one or more economic activities being carried on in Ireland.
Apply for a Section 140 certificate from the Companies Registration Office (the "CRO") that exempts the company from the requirement to have at least one EEA resident director or have a Section 137 bond. Form B67 is the application and must be accompanied by a statement from the Revenue Commissioners (“ROS”) made within two months of the date of the B67 application to the CRO, that the company has a real and continuous link with one or more economic activities being carried on in the State. In those circumstances, a company is required to demonstrate to the Revenue Commissioners that one or more of the following conditions are satisfied by the company:
- The affairs of the company are managed by one or more persons from a place of business established in Ireland and that person or those persons is or are authorised by the company to act on its behalf;
- The company carries on a trade in Ireland;
- The company is a subsidiary or a holding company of a company or another body corporate that satisfies either or both of the conditions specified in paragraphs (i) and ii);
- The company is a subsidiary of a company, another subsidiary of which satisfies either or both of the conditions specified in paragraphs (i) and (ii).
In choosing which option is best for your company, it should be noted that the Section 140 Certificate will remain in place provided the company retains a 'real and continuous link', whereas the Section 137 bond must be renewed on the expiration of the two-year period. Irish companies whose directors are resident in the UK will also be unable to file any annual returns until the requirements of Section 137 of the Companies Act 2014 is met or one of the above measures is in place.
If you have any queries, please contact our advisory team.
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Whilst every effort has been made by CavanaghKelly to ensure the accuracy of the information here, it cannot be guaranteed and neither CavanaghKelly nor any related entity shall have liability to any person who relies on the information herein. Information given here is for guidance only. Detailed professional advice should be taken before acting on any information contained herein. If having read the guidance here, you would like to discuss further; a member of our team would be pleased to help you.