There will be many issues for Irish companies on foot of Brexit. One issue is the requirement to have a director who is resident in one of the EU / EEA countries. Please see below as we briefly outline the issue and specify some methods for dealing with these requirements.
Section 137 of the Companies Act 2014 provides that at least one director of a company on the Irish register of companies shall be a person who is resident in a European Economic Area state1. The Brexit transition period concluded on 1 January 2021 and from that date the United Kingdom was no longer an EEA state.
Who is affected?
This will be an issue for the following:
- a company on the Irish register of companies which on 1 January 2021 does not have an EEA resident director (e.g. a single director company with a UK resident director); or
- a new company applying for incorporation which does not have an EEA resident director.
(1The Company holds a bond
- ?25,000 bond is to discharge any fees or penalties which the Company fails to discharge;
- The surety under the bond must be a bank, building society, insurance company or credit institution2;
- Bond must have a 2 year duration and be in the prescribed form; and
- Such a bond must accompany applications to register new companies which do not have an EEA resident director.
(2) Section 140 Certificate
- Obtain a certificate from the Registrar of Companies that the company has a real and continuous link with one or more economic activities that are being carried on in the state.
Effect of a breach of Section 137 of CA 2014
The company itself and every officer of the company who is in default may be prosecuted and if found to be in breach will be guilty of a category 4 offence which punishable by a fine of ?5,000. The Registrar of Companies is empowered to bring proceedings in the District Court.
Brexit has and will undoubtedly continue to impact business on both sides of the Irish Sea and beyond, in ways we know and those that we have not yet conceived. The above is an example of an administrative issue with which some businesses will now be faced post Brexit, together with some workarounds.
1. EEA is currently the European Union plus Iceland, Liechtenstein & Norway
2. Schedule 2 of the Companies Act 2014 (Bonding) Order 2015
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.