We are all very familiar with the level of uncertainty around the impact of Brexit on the world stage however there is one area of certainty that Irish companies will need to consider and address in the coming weeks/months.
If the United Kingdom (UK) is to leave the European Union (EU) on the 29th of March 2019 with no deal in place any UK resident director sitting on an Irish board of directors will no longer be considered an European Economic Area (EEA) resident Director.
But why is this an area for consideration for Irish companies? In accordance with the Section 137 of the Companies Act 2014 (the Act) all Irish incorporated companies must have at least one EEA resident director.
Up until now Irish companies with a board of directors having a minimum of one EEA resident Director (residing in the UK or any other EEA member state) fulfilled the EEA resident director requirements.
If the UK is to leave the EU with no deal in place any Irish company found failing to fulfill the EEA requirement will be in breach of the Act (if found guilty of such an offence any company or person shall be liable on summary conviction to a fine not exceeding €5,000). In addition to a potential fine such companies may encounter difficulties in meeting its filing requirements with the Companies Registration Office.
Now is the time to look at alternative options for companies relying on a UK resident director in order to fulfill the EEA requirement such as appointing an Irish resident or EEA resident director. As an alternative to adding to the board a company may consider putting a bond in place. The non EEA resident bond is for a two year period and may be used to pay various fines if imposed on the Company. Where a company has no EEA resident director or a bond in place it may make an application to the Companies Registration Office for a certificate stating that it has a real and continuous link with one or more economic activities in the State. Such an application must be accompanied by a statement from the Revenue Commissioners proving that the company has such a link.
Given the looming Brexit deadline now is the perfect time for companies to consider the options available to them and to have a plan in place in the event of a no-deal Brexit.
If you would like to explore the options available to your company in more detail please contact our Corporate Compliance Department who would be happy to assist you in ensuring that your company does not fall foul of the requirement to have an EEA resident director.